Landlords in the state of Texas won a battle over their ability to conduct residential evictions when a federal court struck down the Centers for Disease Control’s (CDC) broad eviction moratorium last Thursday. On February 25, Judge John Barker of the Eastern District of Texas granted summary judgment in favor of a group of landlords in a challenge to the CDC’s eviction prohibition on constitutional grounds.
The plaintiffs in this case challenged the CDC’s Temporary Halt of Residential Evictions to Prevent the Further Spread of COVID-19, which was initially enacted in September 2020 and was recently extended to March 31, 2021. Notably, the CDC’s global prohibition on evictions was much broader than what was implemented by the CARES Act, which only applied to federally backed mortgage loans.
In a decision that was narrowly tailored to only address the CDC’s authority under the commerce clause, Judge Barker found the agency lacked authority to prohibit residential evictions because they were not substantially related to interstate commerce such that federal intervention was justified.
Important to the court’s analysis was the fact that the CDC moratorium did not prevent the charging or collecting of rent. Thus, the moratorium was not economic in character, as there was no effect on the landlord and tenants’ financial relationship. Further, the court noted that the CDC’s findings regarding the need for the moratorium focused primarily on public health issues — which belong to the states’ police powers — rather than any regulation of commerce.
The Court’s Opinion
The court ultimately determined that the criminalization of the use of state eviction proceedings to enforce property rights trespassed into an area of state concern. Of particular importance to the court was the fact that there is no historical federal regulation analogous to the CDC’s eviction ban. Judge Barker closed by commenting that, “[a]lthough the COVID-19 pandemic persists, so does the Constitution.”
The Department of Justice filed a notice of appeal Saturday to the Fifth Circuit, where it will be evaluated by another generally conservative court.
The Effect of the Decision
The effect of this ruling is somewhat limited in practice, however, as various foreclosure and eviction moratoriums already remain in place until the summer for federally backed mortgages. On February 16, 2021, the U.S. Department of Housing and Urban Development extended the moratoriums on single-family foreclosures and real estate owned (REO) evictions for all FHA-approved mortgages until June 30, 2021, through Mortgagee Letter 2021-05. Further, on February 25, 2021, the Federal Housing Finance Agency extended the moratoriums on single-family foreclosures and REO evictions for Fannie Mae and Freddie Mac until June 30, 2021.
While this decision appears to afford relief at first glance, the current federal guidelines and rulings continue to make evictions (and by extension foreclosures) fraught with danger. Lenders and landlords should remain wary and tread carefully prior to initiating eviction proceedings.