Federal Circuit Ruling Opens Door for Landlords to Sue for Pandemic Rent Losses

In a landmark decision with significant implications for property rights and emergency policymaking, the U.S. Court of Appeals for the Federal Circuit has ruled that landlords may pursue constitutional claims against the federal government for rent lost during the COVID-19 eviction moratorium.

Background

The federal government enacted a series of emergency measures aimed at stabilizing housing and preventing mass displacement in response to the COVID-19 pandemic. Among them was a nationwide eviction moratorium issued by the Centers for Disease Control and Prevention (CDC), which was in effect from September 2020 until August 2021.

Plaintiffs range from “mom and pop” property owners to large-scale operators. The named plaintiff, Darby Development Company, owns a portfolio of apartments, office, and warehouse space. Darby is estimated to manage over 1,000 apartments in the Charleston market.[1]

Plaintiffs first filed a complaint in July 2021 asserting that the moratorium deprived them of the fundamental right to exclude non-paying tenants—a core element of property ownership. The moratorium effectively compelled them to bear the financial burden of a public health measure without reimbursement. This, they argued, constituted a regulatory taking under the Fifth Amendment, which prohibits the government from taking private property for public use without just compensation.[2]

The Court of Appeals decision allows the case to proceed to further litigation, signaling that emergency government actions remain subject to judicial review when they impose significant burdens on private property owners. Members of the Federal Circuit have expressed that this decision is unlikely to be the final word, as it is almost certain that the federal government will appeal to the Supreme Court.[3]

Potential Implications

The government stands to be vulnerable to what are likely billions of dollars in claims from owners if the decision is upheld. Many landlords were required to continue to provide housing while shouldering costs of property taxes, maintenance, and debt service—all without the benefit of rental income.

This case has the potential to reshape risk management strategies across the real estate sector by raising fundamental questions about the boundaries of property rights during emergencies. In response, landlords may seek to strengthen lease agreements with more comprehensive force majeure and government action clauses. Additionally, there may be a growing demand for insurance products that cover rent loss due to regulatory interventions.

The ruling also raises concerns about its potential chilling effect on future emergency responses. Increased exposure to takings claims could lead to delays, narrower interventions, or reliance on less effective voluntary actions in times of crisis. The attention around this case could prompt greater engagement from policymakers and industry stakeholders to clarify how compensation mechanisms should function within emergency frameworks.

[1] “Apartment owners, Darby Development v. United States”

[2] DARBY DEVELOPMENT COMPANY, INC., ET AL., v. UNITED STATES.

[3] “Landlords Can Sue Government For Missed Rent During Pandemic, Appeals Court Finds”