A lawsuit is pending between a national trade association for rental property owners and the federal government.

The National Apartment Association (NAA) on July 27, 2021, filed a lawsuit in the U.S. Court of Federal Claims to recover money losses for residential landlords who have lost income due to the U.S. Centers for Disease Control and Prevention’s (CDC’s) federal eviction moratorium.

Though it is a similar move to the National Association of Realtors’ (NAR) official complaint filed last November seeking to lift the federal eviction moratorium, the NAA is the first trade association to seek compensation for the CDC’s hotly debated policy.

In September 2020, the CDC imposed a ban on evictions from residential rental properties which was set to expire by December of that year. Since December, the eviction moratorium has been extended multiple times, up until the most recent extension (after it was said to be the last) until October 3, 2021.

The federal eviction moratorium has since been struck down by the U.S. Supreme Court as unenforceable. Thus, it may only be reinstated again through congressional order or at the state level, as in California.

The NAA lawsuit, in addition to seeking money losses on behalf of rental property owners, also seeks assurance from the national public health agency that the federal government can never enact a similar measure again.

The lawsuit, NAA et al. v. The United States of America, is available to all rental housing providers who have lost income as a result of the federal eviction moratorium and are operating where the moratorium applies. However, because the state of California enacted more stringent conditions to the moratorium than those established by the CDC, California landlords are not eligible for joining in the lawsuit.

The lawsuit’s argument hinges on violations of the U.S. Constitution. The NAA claims the CDC eviction moratorium circumvented the right for:

  • individuals to access the courts;
  • creating contracts with others devoid of government interference;
  • demanding compensation when an owner’s property is taken by government action; and
  • federal government power to be limited.

Even amid the NAA seeking compensation for lost income during the pandemic, $46 billion in federal funds has been set aside to help landlords who have lost money under the moratorium and are waiting to be distributed.

Emergency Rental Assistance and the CDC eviction moratorium

Despite Emergency Rental Assistance (ERA) being available to tenants and landlords across the nation, it has been a struggle to access those federal, state and local funds.

For starters, awareness of the program’s existence has been slow to reach landlords and even slower to reach tenants. A May 2021 Urban Institute survey shows 40% of landlords and 57% of tenants are unaware of ERA.

Further, many landlords and tenants do not apply to ERA out of confusion. The application process varies by state, with some states needing the landlord to apply first, and others requiring the tenant to initiate the application.

Also, even when the tenant and landlord are approved to receive ERA, funds are being dispersed at a snail’s pace. The Housing Initiative at Penn discovered that since California’s rental relief program was enacted in March 2021, only 10% of its funds had been distributed to qualifying tenants by June 2021.

According to the NAA, using data from the Urban Institute and Mortgage Bankers Association (MBA) based on 2020 and 2021 estimates, $27 billion in rental debt remains uncovered by ERA because total national rent debt estimates include up to $73 billion, while a lower $46 billion has been allocated to landlords through ERA.

Despite the slow rollout and the remaining debt uncovered by ERA, it’s not too late to apply. California landlords with tenants who are delinquent on rent may be eligible to receive a full 100% reimbursement of missed payments. To do so, the tenant needs to successfully apply to ERA by visiting: http://housingiskey.com or by calling 1-833-422-4255.

Stay tuned to firsttuesday for more developments on the NAA lawsuit, how emergency rental assistance is being distributed and updates on California’s eviction moratorium.

Related article:

U.S. Supreme Court set to weigh in on eviction moratorium — again