New Court Ruling Gives Landlords a Constitutional Right to Seek Repayment — What That Means for You

New Court Ruling Gives Landlords a Constitutional Right to Seek Repayment — What That Means for You

New Court Ruling Gives Landlords a Constitutional Right to Seek Repayment — What That Means for You

A major legal decision has landed, and it could change the way landlords recover losses stemming from government-mandated restrictions. On June 6, 2025, the U.S. Court of Appeals for the Federal Circuit denied a rehearing in the case Darby v. United States, upholding a prior ruling that landlords have a constitutional right to seek compensation when government action, like the CDC eviction moratorium, affects their rental income.

If you own rental property, this ruling could have real implications for how you approach losses, negotiations, and legal recourse. Here’s what it means — and how to protect yourself going forward.

What Happened: Darby v. United States (in simple terms)

  • During the COVID crisis, the federal government, through the CDC, imposed a nationwide eviction moratorium. This prevented landlords from evicting tenants under certain conditions to limit the virus spread.
  • Some landlords — especially small, independent ones — found themselves unable to collect rent from tenants who might otherwise have been evicted.
  • In the Darby case, property owners argued that this moratorium amounted to a “taking” under the Fifth Amendment if they weren’t compensated for their losses.
  • The court agreed that landlords do have a path to pursue compensation when government actions in emergencies interfere with property rights, and that this right is constitutionally protected.

In short: a government action that forces landlords to forgo rent may be legally considered a type of “taking,” and courts now affirm that landlords have a right to seek repayment under certain conditions.

Why This Ruling Matters for Landlords in Western New York

This isn’t just legal jargon. It has real implications for landlords who suffered losses because they couldn’t enforce leases during certain mandates. Here’s why:

  • Right to Recover Losses: If a government order limits your ability to evict or enforce lease terms, this ruling supports your right to compensation for those losses.
  • Stronger Negotiating Position: Knowing this legal precedent may strengthen your position in disputes or mediation with tenants, housing authorities, or municipalities.
  • Planning for Future Disruptions: Landlords may now take extra steps (such as documenting losses, keeping records, and adding lease protections) to be ready in case of future mandates.

What Landlords Should Do Now (Steps You Can Take)

  1. Review Your Records
Go back and document any periods when you couldn’t collect rent, enforce leases, or evict legally because of government restrictions.
  2. Consult an Attorney
This isn’t a simple “claim your money back” process. You’ll want legal counsel to evaluate viability under your state’s laws, statutes of limitations, and how local courts might interpret the ruling.
  3. Strengthen Future Leases
Update your leases to include stronger emergency clauses, tenant obligations for rent even during disruptions, and documentation requirements.
  4. Insurance & Loss Mitigation
Look into insurance products that may protect against loss of income, and maintain reserves to weather disruptions.
  5. Stay Informed of Local Policy Changes
Keep tabs on city or county-level eviction moratoria, tenant protection laws, or rent freeze proposals so you’re not blindsided.

Limitations & Things to Keep in Mind

  • Not every case will qualify — whether you can recover depends on how your local and New York state laws interact with federal rulings.
  • Compensation is not guaranteed — you’ll have to prove your losses and that the government action imposed a burden.
  • Courts may limit or deny claims if the statute of limitations has passed or if the landlord did not properly document claims or enforce lease terms.

How Great Lakes Real Estate Helps Landlords

Even though this is a legal ruling, real estate professionals can play a supporting role:

  • We help ensure your leases, listings, and property disclosures are strong and legally informed.
  • We connect you with experienced attorneys and financial advisors who understand landlord laws in New York State.
  • We advise on property valuations and helping you maintain your portfolio during uncertain times.
  • We stay on top of local housing policy changes so you’re ready for shifts in tenant laws or regulations.

Whether you own one rental or manage a full portfolio, this ruling is a reminder that property ownership comes with both risks and rights—and having the right professionals in your corner makes all the difference. The Great Lakes Real Estate team stays informed on the latest housing laws, market shifts, and landlord protections to help you make smart, secure decisions about your investments. If you’d like to understand how this decision could impact your properties in Western New York—or if you’re ready to expand your portfolio—call us today at (716) 754-2550 to connect with one of our experienced agents.