Lawsuits Greet Biden’s Latest Attempt at a Eviction Ban

The eviction moratorium? It’s back—at least for the time being—and commercial real estate groups are up in arms.

Under direction from the Biden administration, the Centers for Disease Control and Prevention announced a new “temporary” eviction moratorium into place on Tuesday, Aug. 3. By the morning of Aug. 5, real estate and landlord groups filed lawsuits, challenging the legality of the move, according to a complaint filed by the National Apartment Association, Darby Development Company, GWR Management, McLean Investments, and Shander International.

“As a result of the CDC Order and their consequent inability to exercise their constitutional  property rights and contractual rights, property owners in the United States have suffered enormous economic consequences,” the complaint states in part.  “Without limitation, while continuing to incur all costs of  ownership, they have been unable to evict non-rent-paying tenants from rental units and to generate income by leasing those units to rent-paying tenants.  The CDC Order has appropriated the owners’ right to exclude. Estimated financial losses industry wide amount to tens of billions of dollars.”

Not all evictions have been prevented, according to real estate lawyers who have spoken over time to GlobeSt.com. The moratorium requires renters to have filled out a declaration and to have met a number of conditions. But, still, many tenants have gained protection from the moratorium, which costs the associated landlords income.

“The Biden Administration’s new eviction moratorium is bad policy that fails to address the nation’s existing, and growing, level of rent debt,” Bob Pinnegar, president and CEO of the National Apartment Association, tells GlobeSt.com. “Rather than eviction moratoriums, the rental housing industry wants to see rental assistance distribution drastically streamlined.”

“Small landlords, particularly those of owner-occupied two-flats and three-flats, are a long-established source of affordable housing in otherwise prohibitively expensive markets,” Terra Gross, founder of Illinois law firm Attuned Legal, and who has been representing some small landlords on a pro bono basis, tells GlobeSt.com. “These landlords often rely on rental income from their tenants to make ends meet and are facing difficult conflicts with scared tenants who live in a neighboring unit, haven’t paid rent for many months, and simply don’t answer the door anymore. We’re likely to see increased foreclosures among owner-occupied rental properties if small landlords don’t receive targeted assistance quickly.”

The lack of targeted assistance is a key issue. Although Congress appropriated $46.5 billion in rental assistance in December, little has reached people, with “only $3 billion [having] been distributed to renters by state and local governments,” as Nancy Pelosi wrote in a letter on July 30, 2021.

The administration has said an extension is necessary to deliver more of the aid that arguably should have already been provided. The administration could appeal an existing district court order to immediately enforce an end to the moratorium, “but because the Supreme Court has already ruled that the necessary congressional authorization is lacking, those appeals would almost certainly be futile,” Bert Spence, a partner with RumbergerKirk, tells GlobeSt.com.