The eviction moratorium may violate the Fifth Amendment Taking Clause that forbids the government from taking private property for public use without just compensation.
Two federal judges, one in Ohio and one in Texas, recently ruled that the U.S. Centers for Disease Control and Prevention’s (CDC) pandemic eviction moratorium is unconstitutional. Last year, the U.S. District Court for the Northern District of Georgia rejected arguments that CDC exceeds the agency’s statutory authority, and the District Court for the Western District of Louisiana upheld the moratorium.
There are now four district court rulings on the legality of the moratorium, with two supporting each side. Several of these decisions are now headed for review by the federal appellate courts, and the U.S. Department of Justice is appealing a ruling from a federal judge in Texas.
This likely won’t be the end of it.
Cares Act moratorium
Part of the Coronavirus Aid, Relief, and Economic Security Act enacted in March 2020 in response to the COVID-19 epidemic, included a 120-day eviction moratorium for properties that participate in specified federal programs or with specified federally backed loans.
This eviction moratorium lapsed on July 27, 2020. On Aug. 8, President Trump directed executive agencies to “take all lawful measures to prevent residential evictions and foreclosures resulting from financial hardships caused by COVID-19.”
CDC emergency order
In response, in September 2020, the CDC issued an emergency order instituting a sweeping moratorium that makes it a crime for any landlord or property owner to evict a covered person from a residence. The CDC policy barred evictions until the end of the year initially, then the order was extended until March 31, and now, until June 30. The CDC policy extends to any residential tenant who makes a sworn declaration stating that they:
- Are unable to pay rent due to a coronavirus-related job loss or income reduction, qualified for a direct stimulus payment under the CARES Act, or expect to earn less than $99,000 or $198,000 if filing a joint tax return.
- Have made their best efforts to obtain all available government assistance to cover rent.
- Are unable to pay full rent due to a substantial loss of household income, loss of compensable hours of work or wages, a layoff, or extraordinary out of pocket medical expenses.
- Are using best efforts to make timely partial payments of rent that are as close to the full payment as the individual’s circumstances may permit, taking into account other non-discretionary expenses; and
- Eviction would likely render the tenant homeless or force him/her to move into and live in close quarters in a new congregate or shared living setting because the tenant has no other available housing options.
The U.S. District Court for the Northern District of Ohio ruled that the agency exceeded its authority because the CDC is limited to dealing with infected animals, objects, or properties. The U.S. District Court for the Eastern District of Texas ruled that despite the public health benefit of the moratorium, it was an unprecedented exercise of federal government power in what should be a state matter.
In addition to the rulings, there has been debate around the order forbidding any owner of rental housing from evicting covered tenants even if the owner is struggling to pay his own bills, wants to quit the rental business, and move into the unit. This may violate the Fifth Amendment Taking Clause that forbids the government from taking private property for public use without just compensation. A similar eviction ban was imposed by New York City that the Competitive Enterprise Institute challenged in the 1980s and won.
Given the unprecedented nature of the COVID-19 pandemic and the valid risk that a massive wave of eviction could drive up infections and destabilize the economy, it’s a possibility that the judges’ decisions will be struck down. Neither judge issued an injunction and the declaratory judgments were limited to the plaintiffs, meaning the decisions do not extend nationwide. The Department of Justice noted in announcing its appeal to Terkel v. CDC, “decision . . . does not extend beyond the particular plaintiffs . . . and it does not prohibit the application of the CDC’s eviction moratorium to other parties. For other landlords who rent to covered persons, the CDC’s eviction moratorium remains in effect.”
Without an injunction, the decision has very limited effect. Nonetheless, the ultimate outcomes of Terkel v. CDC and Skyworks v. CDC could have important implications for other courts considering the scope of government action in response to the COVID-19 pandemic, particularly if it is upheld on appeal or ultimately heard by the U.S. Supreme Court.
Polina is Sundae’s Sr. Director of Research and Lead Economist. She has more than 15 years of valuation experience across commercial and residential real estate. Her background includes stints with Cushman & Wakefield, Hanley Wood, and Standard & Poor’s. Polina graduated with a double major in Economics and International Relations from the University of California at Davis and has been a CAIA Charter Holder since 2010.