Dive Brief:
- The number of landlords seeking compensation from the federal government for losses stemming from the COVID-19 eviction freeze has risen to 2,633 claims in Darby Development Company, Inc. v. United States, according to the fourth amended complaint, filed at the end of August in the U.S. Court of Federal Claims.
- The plaintiff landlords successfully argued in 2024 that the nearly yearlong eviction freeze during the pandemic cost them rental income and violated their Fifth Amendment rights. Now, legal teams are discussing how much the government should pay those affected as the parties move toward a settlement agreement.
- In earlier complaints, affected landlords asked for $26 billion in restitution. John McDermott, co-counsel with Dorsey & Whitney for the plaintiffs, told Multifamily Dive that he thinks the amount the government will actually pay is closer to $1 billion.
Dive Insight:
In order to slow the spread of COVID-19, the Centers for Disease Control and Prevention extended the March 2020 CARES Act’s nationwide eviction moratorium multiple times. That action constituted a “taking” by the federal government because landlords were unable to exercise their constitutional property rights and were not adequately reimbursed for lost rental income, according to the complaint.
Although the federal government did provide rental assistance, including through the Emergency Rental Assistance Program and the American Rescue Plan Act’s Homeowner Assistance Fund, the programs were slow to start and the rental housing industry still lost tens of billions of dollars due to the eviction moratorium, per the complaint.
Darby Development Co. and other landlords filed suit against the United States in the Court of Federal Claims, claiming that the CDC’s action constituted a physical taking of property. The court dismissed the argument in 2022, but in August 2024, the U.S. Court of Appeals for the Federal Circuit reversed the decision and ruled that the government was nonetheless liable.
In June 2025, the Federal Circuit denied the government’s petition for a rehearing and reaffirmed property owners’ right to bring takings claims against the government — opening up the possibility of billions of dollars in restitution.
The ruling that the moratorium constituted a physical taking of the property was key, Anna Wills, associate at law firm Duane Morris and member of its Real Estate Practice Group, previously told Multifamily Dive.
“Part of the reason this case is so interesting is because the eviction moratorium temporarily removed one of the key sticks in the bundle of rights of property ownership: the right to exclude,” said Wills. “The majority determined that constituted a physical taking of the property, as opposed to a regulatory one, which is generally much harder to prove.”
Time has run out for more landlords to join the Darby case. However, the Darby ruling nonetheless opens up more possible avenues for reimbursement for lost income, according to Wills.
“If you own property in a state that had its own, stricter eviction moratorium, you should consider consulting an eminent domain attorney in your state about the statute of limitations for bringing a de facto taking claim against the state government,” Wills said.
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