Understanding the Fifth Amendment Takings Clause: The “Just Compensation” Requirement for Property Owners in the Covid Rent Eviction Moratorium

The Constitutional Promise: A Foundational Right

The Fifth Amendment to the United States Constitution contains one of the most critical protections for property owners in the entire Bill of Rights: “nor shall private property be taken for public use, without just compensation.” This seemingly simple 14-word clause represents a profound constitutional commitment: the government cannot commandeer or destroy private property to serve the public interest without paying for it. It embodies the principle that fairness demands society, not isolated individuals, bear the costs of public programs.^1^3

Yet during the COVID-19 eviction moratorium crisis, this fundamental constitutional promise was tested—and in many cases, violated—as governments prevented landlords from evicting non-paying tenants without providing any compensation. Understanding the Takings Clause is therefore essential to understanding why those moratoria violated landlords’ constitutional rights.

What the Takings Clause Protects: Beyond Just “Land”

The first misconception about the Takings Clause is that it protects only real estate—actual land and buildings. In reality, the clause protects all forms of “property” as understood in constitutional law, including property rights and interests that flow from ownership.^2^1

Property rights are often conceptualized as a “bundle of sticks“—a collection of individual rights and powers that together constitute ownership. These sticks include:^3^2

• The right to possess the property^1
• The right to exclude others from the property^2^1
• The right to use the property as the owner sees fit^3^2
• The right to transfer or alienate the property (sell it, give it away)^1^3
• The right to collect rent from tenants on rental property^2
• The right to enforce lease terms and collect payment owed under contracts^1
• The right to evict those who breach lease obligations^2

The Supreme Court has repeatedly emphasized that even if the government leaves some sticks in the bundle, taking any essential stick violates the Takings Clause if compensation is not provided. As the Court stated in Horne v. Department of Agriculture (2015):^3^2

“Whether the government may avoid the categorical duty to pay just compensation for a physical taking of property by reserving to the property owner a contingent interest in a portion of the value of the property, set at the government’s discretion. The answer is no.”^1

Two Categories of Takings Requiring Compensation

Courts recognize two distinct types of government actions that trigger the Takings Clause and require just compensation:

1. Physical Takings (Per Se Takings)

A physical taking occurs when the government physically appropriates, invades, or occupies private property—either directly or by authorizing third parties to do so. Classic examples include:^3^1

• The government condemning land to build a highway (direct government appropriation)^2
• The government building a dam that floods private property^1
• The government or government-authorized parties physically entering and occupying property^3^1

The defining feature: Physical takings require compensation automatically, regardless of public purpose or government justification. As the Supreme Court explained in Loretto v. Teleprompter Manhattan CATV Corp. (1982), a permanent physical occupation authorized by government is a taking without regard to the public interests that it may serve.^2^1

Importantly, the Supreme Court has held that the physical invasion need not be by the government itself—it can be by third parties acting under government authorization. In Cedar Point Nursery v. Hassid (2021), the Court held that a regulation granting union organizers the right to physically enter and occupy private agricultural property constituted a physical taking, even though it was a third party (organizers), not the government, doing the invading.^3^2

2. Regulatory Takings

A regulatory taking occurs when government regulation restricts a property owner’s use or economic enjoyment of property so severely that it is tantamount to a taking, even though the government hasn’t physically appropriated or occupied the property.^1

To evaluate regulatory takings, courts apply the three-factor test from Penn Central Transportation Co. v. City of New York (1978):^2

1. Economic Impact: How much has the regulation diminished the property’s value?
2. Interference with Investment-Backed Expectations: Did the owner reasonably expect to be able to use the property as they planned?
3. Character of the Government Action: Is it a legitimate police/regulatory action or something more confiscatory?^1

Regulatory takings claims are fact-intensive and require case-by-case analysis, but importantly, courts will find a compensable regulatory taking when the economic burden is severe enough.^2

The “Just Compensation” Standard: Fair Market Value

When a taking occurs—whether physical or regulatory—the Constitution requires “just compensation.” But what does “just compensation” mean?

The standard answer is fair market value—the price at which the property would sell between a willing buyer and a willing seller at the time of the taking, in an arms-length transaction, neither party under pressure.^3^2

For rental property specifically, this means:

• Lost rental income that would have been generated during the taking period^1
• Lost use and enjoyment of the property by the owner^2
• Any diminished property value resulting from the taking^2
• Interest on the judgment (to account for the time value of money during the period the property was taken)^2

The guiding principle is straightforward: The property owner should be placed in the position they would have occupied absent the government taking.^1

Application to COVID-19 Eviction Moratoria: Where Just Compensation Failed

The eviction moratoria imposed by the CDC and various state and local governments during COVID-19 exemplify how the Takings Clause applies in practice—and how it was violated.

What was taken:

By preventing landlords from evicting non-paying tenants, the government took critical property rights:^3^2

• The right to exclude non-paying tenants from the property—acknowledged by the Supreme Court as “one of the most fundamental elements of property ownership”^3^2
• The right to enforce lease terms by evicting tenants in breach^2
• The right to collect rent by preventing landlords from replacing non-paying tenants with paying tenants^1
• The right to possess and control the property^2

The physical invasion:

The moratorium effected a physical taking because it authorized tenants (third parties) to physically occupy landlord property indefinitely without paying rent and without the landlord’s consent. This is precisely what Cedar Point Nursery said constitutes a per se physical taking: government-authorized invasion of property by third parties.^3^2

Was compensation provided?

No. The government appropriated landlords’ property rights and rental income but provided zero compensation to landlords. While the government eventually appropriated $25 billion in emergency rental assistance to tenants, landlords whose rents went unpaid for years received no direct compensation.^1

The quantifiable injury:

By January 2021—just five months into the CDC moratorium—industry analysts estimated that over 10 million delinquent renters had accumulated approximately $57 billion in unpaid rent obligations nationally. This represented a direct taking of landlords’ property (their right to collect income) without just compensation.^2

Why the Government Cannot Avoid Compensation by Calling It “Regulation”

A critical question emerged during COVID-19 litigation: Can the government avoid the Takings Clause by characterizing a property taking as a “regulation” of the landlord-tenant relationship rather than a taking?

The answer, established by Fifth Amendment precedent, is no. As courts have repeatedly held:

• Form matters less than substance. The government cannot circumvent constitutional protections by merely labeling its actions as “regulation.”^3^2
• The Constitution protects against means, not just ends. Even if regulation pursues a legitimate public purpose (pandemic relief), the means used to achieve it must comply with constitutional protections.^3^2
• A confiscatory regulation is still a taking. As Justice Holmes wrote in Pennsylvania Coal Co. v. Mahon (1922): “While property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.”^1^2

In the context of eviction moratoria, courts have recognized that distinguishing between “regulation of the landlord-tenant relationship” and “physical taking” requires examining the actual operative effect of the regulation, not its label. A regulation that prevents all evictions of non-paying tenants operates, in effect, as a compulsory transfer of property (rental income) from the landlord to the tenant, and thus functions as a taking regardless of whether it is styled as “regulation.”^3^2

The “Public Use” Requirement: Does It Justify Uncompensated Takings?

The Takings Clause contains a “public use” requirement: “private property shall be taken for public use, without just compensation.” Some argued that because eviction moratoria served a public purpose (preventing homelessness), the taking was constitutional even without compensation.

But this fundamentally misunderstands the Takings Clause. The clause does not say the government can take property for public use without compensation; it says takings for public use are permitted only if just compensation is provided.^1^2

As the Supreme Court explained in Kelo v. City of New London (2005):

“The sovereign may not transform private property into public property by taking it for the general public good without just compensation.”^3^2

Put differently: Public purpose justifies the taking; just compensation is the price.^1^3

If the government wants to achieve a public goal (pandemic relief, housing security), it can. But it must either:

1. Compensate the affected property owners (as Oregon did, allocating $150 million to compensate landlords), or
2. Find alternative means that don’t concentrate the cost on a narrow class of citizens^2^1

The government cannot achieve public purposes by conscripting private property without paying for it—even if the public purpose is important and legitimate.^3^2

Recent Case Law: The Takings Clause Vindicated

Recent litigation over COVID-19 eviction moratoria has reinforced the Takings Clause principles. Most significantly:

In Darby Development Company, Inc. v. United States (August 2024), the Federal Circuit held that the CDC eviction moratorium constituted a compensable taking of landlords’ property. The court recognized that:^2

• Preventing eviction of non-paying tenants took fundamental property rights from landlords
• The government cannot avoid takings liability by framing the action as “regulation”
• Fair market value for the taking includes lost rental income that would have been collected^2

In the Superior Court of Los Angeles County (April 2022), the court examining similar state and local moratoria held that eviction bans constitute physical takings requiring compensation. The court reasoned:^1

• The eviction ban stripped landlords of their fundamental right to exclude non-paying occupants
• Even temporary invasions of property can be physical takings (duration doesn’t eliminate Takings Clause protection)^1
• Government good intentions do not eliminate the constitutional requirement for just compensation^1

“Just Compensation” in Practice: What Landlords Should Recover

If a court determines that a taking has occurred, landlords are entitled to recover:

1. Lost Rental Income: The rent that would have been collected during the taking period, calculated at the fair market rental rate for comparable properties and timeframe^2
2. Pre-Judgment and Post-Judgment Interest: Interest accrues from the date of the taking until judgment is rendered, and continues to accrue after judgment until payment^2
3. Attorneys’ Fees and Costs: Under the Uniform Relocation Assistance and Real Property Acquisition Policies Act (42 U.S.C. § 4654), courts award reasonable attorneys’ fees and expert costs when a property owner prevails in a takings claim against the government^2
4. Property Value Diminution (in some cases): If the taking permanently reduced property value beyond lost rental income, that diminution is also recoverable^2

The calculation is meant to make the property owner whole—to place them in the economic position they would have occupied had the taking never occurred.^1

Why “Just Compensation” Matters: The Incentive Effect

Beyond fairness, the “just compensation” requirement serves a critical constitutional function: it deters government overreach and forces governments to consider costs when making policy decisions affecting property owners.^3^2

If governments could take property without compensation, they would have unlimited incentive to do so whenever politically convenient. By requiring compensation, the Takings Clause forces governments to:

1. Internalize costs of government programs by paying for property taken
2. Consider fiscal consequences when regulating property rights
3. Seek alternative means that don’t require conscripting private property
4. Compensate affected citizens if they determine the taking is necessary^1

As courts have recognized, the payment requirement “incentivizes the government to negotiate fairly, minimize delays, and avoid frivolous takings actions.”^1

Conclusion: A Constitutional Guarantee Still in Force

The Fifth Amendment’s Takings Clause remains a foundational constitutional protection, even in emergencies. The clause guarantees that:

1. Property rights are protected against uncompensated government taking
2. Just compensation must be paid whenever property is taken for public use
3. The requirement applies regardless of public purpose or government good intentions
4. No single class of citizens bears the entire cost of government programs benefiting society broadly^3^2

COVID-19 eviction moratoria tested these principles severely. Courts are now reasserting them, recognizing that even during public health crises, the Constitution’s protections cannot be set aside. If the government takes landlords’ property to achieve pandemic relief, the government must compensate landlords—fairly, fully, and promptly.

The Takings Clause is not a second-class constitutional right. Property owners deserve the protection it promises: that their property will not be taken without just compensation, and that fairness and constitutional principles will guide even government actions in times of emergency.

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This article is for informational purposes only and does not constitute legal advice. Property owners with questions about potential takings should consult qualified legal counsel. ^4