Real Estate

Alabama and Georgia Realtors sue Trump administration over ‘unconstitutional’ eviction ban

The Alabama Association of Realtors and the Georgia Association of Realtors have filed a federal lawsuit seeking to have the court vacate a nationwide eviction ban issued by the Trump administration in September.

The order, issued by the Centers for Disease Control and Prevention (CDC), bans evictions through Dec. 31 for renters making no more than $99,000 this year, or up to $198,000 for couples.

Criminal penalties for landlords who violate the order include “a fine of no more than $100,000 if the violation does not result in a death or one year in jail, or both, or a fine of no more than $250,000 if the violation results in a death or one year in jail, or both, or as otherwise provided by law.” For organizations, the fines can rise to $200,000 if a death does not occur and up to $500,000 if one does. 

The U.S. Department of Justice (DOJ) would enforce the penalties. 

The National Association of Realtors and other housing groups blasted the order because it does not set aside funding for renters or property owners. The trade group warned that the moratorium would cause “chaos” in the rental housing sector and “bring more havoc” to the economy. Landlords, apartment owners and housing industry groups launched legal battles against the order in October.

In September, NAR’s Legal Action Committee voted to provide $100,000 to support the Alabama and Georgia associations’ litigation against the Trump administration’s order. “While the Order is helpful in keeping renters in their homes for now, it will create a massive eviction crisis when past payments become due, and will also likely result in raised costs for consumers due to increased rents and maintenance costs,” the committee wrote to NAR’s board of directors in mid-November.

The Alabama and Georgia Realtor associations, which have more than 17,000 members and more than 44,000 members, respectively, filed suit on Nov. 20 against the U.S. Department of Health and Human Services (HHS), HHS Secretary Alex M. Azar II, the DOJ, U.S. Attorney General William P. Barr, the Centers for Disease Control and Prevention, CDC Director Robert R. Redfield and CDC Acting Chief of Staff Nina B. Witkofsky.

Other plaintiffs include Danny Fordham, an AAR member and licensed associate broker who manages 75 residential properties in Montgomery County, Alabama, through two limited liability companies, which are also plaintiffs in the case; and Robert Gilstrap, a GAR member and licensed broker who owns about 40 properties managed by Title One Management, also a plaintiff.

According to the complaint, individual landlords such as the plaintiffs — not institutional investors — own and manage 72 percent of rental properties. The plaintiffs argue that the moratorium shifts the pandemic’s financial burdens from 30 million to 40 million renters to 10 million to 11 million landlords.

“The CDC’s goal of easing the economic impact of COVID-19 is laudable. But in attempting to do so without statutory authorization or following the rulemaking process required by the Administrative Procedure Act (‘APA’), the CDC has unilaterally shifted billions of dollars in economic burdens from one group of Americans, renters, to another, landlords,” the complaint said.

“In many cases, these landlords, including Plaintiffs here, are small business owners who have themselves suffered economic losses as a result of the pandemic. The Eviction Moratorium will cause landlords across the country to lose [$55 billion to $76 billion] in unpaid rent — and billions more if the Eviction Moratorium is extended into 2021.”

The eight-count complaint alleges the federal law the CDC invoked to institute the moratorium — Section 361 of the Public Health Service Act — does not give the CDC authority to adopt a nationwide moratorium on evictions. The complaint also claims the CDC violated the Administrative Procedure Act, which the plaintiffs say required the CDC to give notice and solicit comment before enacting such a major rule.

The complaint alleges the CDC also violated the Regulatory Flexibility Act (RFA), which requires agencies to consider the impact of a rule on small businesses.

“Although the federal government declared COVID-19 an emergency in January 2020, the CDC delayed issuing the Eviction Moratorium for eight months. The CDC had ample time to conduct a rulemaking throughout 2020 — before passage of the CARES Act, during the time period in which the CARES Act’s temporary eviction moratorium was effective, after the President’s Executive Order, and even now during the effective dates of the Eviction Moratorium,” the plaintiffs’ attorneys wrote in a motion for expedited summary judgment filed the same day as the complaint.

“Similarly, the CDC’s decision to bypass the requirements of the Regulatory Flexibility Act — in particular, the requirement to consider the impact on small businesses, a category that includes millions of landlords like Plaintiffs — cannot be justified.”

The moratorium is “arbitrary and capricious” in violation of the APA, according to the complaint.

“[T]he CDC failed to reasonably explain why the eviction moratoria adopted by 42 states throughout the COVID-19 pandemic are insufficient to tackle the problem that the CDC sought to address,” the complaint said.

“In addition, the CDC failed to reasonably explain how the CDC’s implementing regulation authorizes it to regulate the entire U.S. rental property market. The CDC failed entirely to weigh the Eviction Moratorium’s costs against its benefits.”

The CDC also did not explain why only residential renters are covered under the moratorium and not other people who might travel or suffer homelessness if forced out of their homes, plaintiffs’ attorneys wrote in the summary judgment motion.

“The CDC failed to explain why the rule bars eviction from residential properties, but does not protect homeowners or hotel guests or seasonal tenants — all of whom would contribute to the spread of COVID-19 if, according to the CDC, they are ejected from their homes,” they wrote.

Lastly, the plaintiffs allege the moratorium is “unconstitutional” because it violates the Takings Clause of the Fifth Amendment, which prohibits the taking of private property without just compensation, and the Due Process Clause of the Fifth Amendment, which requires “at minimum, fair notice and an opportunity to be heard” when a government action deprives an individual of a protected property interest.

In the motion for expedited summary judgment, the plaintiffs ask the court for an “expedited review” of the moratorium, in part because the CDC has indicated that it may extend the ban into 2021. Ultimately, the motion seeks to have the court vacate the moratorium on an expedited basis, rendering it void.

The Alabama Association of Realtors, the Georgia Association of Realtors, the HHS, the DOJ, and the CDC did not respond to requests for comment. Inman will update this story if and when we hear back.

Email Andrea V. Brambila.

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