Apartment owners, Darby Development v. United States
The Darby Development Company, Inc. v. United States lawsuit is a landmark case for apartment owners, whose rights and livelihoods were profoundly impacted by the COVID eviction moratorium. Through their perseverance and legal advocacy, they have secured a significant victory and set the stage for a broader reckoning with the limits of government power and the protection of private property rights.
It began as a ripple—a health crisis that soon swelled into a tidal wave, reshaping the lives of millions. By early 2020, COVID had swept across the nation. In response, the federal government enacted unprecedented measures to protect public health, including a series of eviction moratoriums. For apartment owners, these orders would become the source of both anguish and a historic legal battle.
On September 4, 2020, the Centers for Disease Control and Prevention (CDC) issued an order halting residential evictions nationwide. The order applied to nearly all rental properties, preventing landlords from evicting residents for nonpayment of rent if certain conditions were met. The ban was extended several times lasting well into 2021. For apartment owners, this meant months of uncertainty, unpaid rent and mounting frustration.
Among those affected were the plaintiffs in Darby Development Company, Inc. v. United States—a group of rental property owners ranging from small “mom-and-pop” landlords (owners of 1 to 4 units, making up over 95 percent of U.S. landlords) to larger corporate owners. Their stories paint a vivid picture of the lockdown’s impact on the rental housing industry and the ease with which federal agencies were able to assume control of private assets.
Maria and Tom are a retired couple who owned a four-unit apartment building. For years, their rental income had supplemented their retirement savings. When the lockdowns hit, two of their residents lost their jobs and stopped paying rent. The eviction moratorium left Maria and Tom powerless to remove these residents or find new ones who could pay. Their savings dwindled as maintenance costs, property taxes, and mortgage payments continued unabated.
On a larger scale, corporate owners faced similar struggles. Darby Development Company, Inc., the lead plaintiff, is based in South Carolina and managed 1,219 apartments primarily in the Charleston market. The company’s executives watched as unpaid rent piled up, threatening their ability to pay staff, maintain properties, and keep the lights on. Across the country, rental property owners—both large and small—found themselves caught between a public health crisis and a financial precipice.
The legal battle begins
By July 2021, frustration had turned to action. The National Apartment Association, along with 38 original plaintiffs, filed suit in the U.S. Court of Federal Claims. Their argument was simple: the CDC’s eviction moratorium constituted a “taking” of private property for public use, requiring just compensation under the Fifth Amendment. The lawsuit was open to all rental housing providers who had been damaged, and the stakes were high—by the end of 2020, more than 10 million delinquent residents owed $57 billion in back rent, with another $17 billion accruing since then.
The plaintiffs’ complaint alleged that the CDC order had abrogated several constitutional rights: the right to access the courts, the freedom to contract, the right to demand compensation when property is taken by government action, and the limits of federal power. For apartment owners, the moratorium was not just a financial burden—it was an affront to their rights as property owners.
The federal government moved to dismiss the case, arguing that the CDC’s order was not a compensable taking because it was not authorized by Congress and had been struck down by the Supreme Court. The government also pointed to the billions of dollars in emergency rental assistance that had been appropriated to help landlords and residents. However, many apartment owners argued that these funds were slow to reach them and did not cover the full extent of their losses.
On May 17, 2022, the Court of Federal Claims granted the government’s motion and dismissed the complaint. The court ruled that the CDC’s moratorium did not constitute a taking because it was not an official act, and that the government could not be held liable for unauthorized actions. The decision was a blow to apartment owners, who felt that their losses had been dismissed by the very system designed to protect their rights.
The appeal: A glimmer of hope
Undeterred, the plaintiffs appealed to the U.S. Court of Appeals for the Federal Circuit. The case attracted significant attention, with amicus briefs filed by the National Association of Home Builders, National Association of Realtors, and the New Civil Liberties Alliance. These organizations argued that dismissing the takings claim would set a dangerous precedent, encouraging government overreach and undermining property rights…
June 17, 2025
Originally Published in Yield PRO