Multifamily Challenge to Eviction Moratorium Fails for Now

Friday the 13th upheld its superstitious reputation for the multifamily industry. A federal judge allowed the newly extended residential eviction moratorium to stand for now because of a complex legal technicality.

“The repeated extensions are harming landlords so much so that now landlords are among the homeless the moratoriums sought to protect,” Michelle Quinn, a partner at law firm Gallet Dreyer & Berkey, tells GlobeSt.com. Many smaller landlords have been hard hit by the requirement to keep in place tenants not paying rent under the moratorium while not receiving compensation necessary to pay their own mortgages and operating costs.

“With this decision, the current system New York has in place for enforcement of resident lease obligations is effectively the honor system,” Michael Feldman, CEO of Choice NY Companies, tells GlobeSt.com.

When the Biden administration directed the CDC to extend the housing eviction moratorium yet again, it might have seemed that the action had a poor chance of standing up to a legal challenge. And yet it just did on Friday, with the new moratorium 

After all, the Supreme Court had seemed to say in June that the CDC lacked the authority to do so and only left the previous extension through July to stay in place so more of the rental rescue funds could be distributed.

But by July 30, according to Speaker of the House Nancy Pelosi, only $3 billion out of an originally allocated $46.5 billion had made its way into the hands of those who needed it. After Congress failed to extend the moratorium, the Biden administration did so without additional authority for another two months.

On Friday, federal judge Dabney Friedrich denied legal efforts by some in the multifamily industry to end the moratorium, even though she had previously said days earlier that it was hard not to conclude that the administration was engaging in a “degree of gamesmanship,” as the National Law Journal reported.

The reason for Friday’s decision was a technical one. Friedrich “was precluded from halting the ‘new’ moratorium due the controlling order of a higher court, despite recognizing that the Supreme Court of the United States already determined that the CDC lacks authority to impose an eviction moratorium,” says Quinn.

The D.C. Circuit of the U.S. Court of Appeals had previously ruled to allow the moratorium to stand for the time being. As Friedrich wrote in her decision: “But the Court’s hands are tied.  The Supreme Court did not issue a controlling opinion in this case, and circuit precedent provides that the votes of dissenting Justices may not be combined with that of a concurring Justice to create binding law.”

“Today’s opinion may appear to be a setback for the plaintiffs, but it represents a very necessary step forward in the national debate over the eviction moratorium,” 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, adding that the ruling “is a promising signal that this dispute may finally be coming to a head.”