Legal Exaction: Why Landlords Can Assert This Powerful Doctrine for COVID Moratorium Rent Claims
Understanding Exaction: A Doctrine for Government Overreach
When the government uses its regulatory power to extract money or property from a private citizen without just compensation, it commits what the law calls an exaction—a form of taking that violates the Fifth Amendment’s guarantee that “private property shall not be taken for public use without just compensation.” Increasingly, landlords asserting claims for losses from COVID-19 eviction moratoria are raising exaction theories alongside traditional physical taking claims, arguing that the government essentially demanded a “taking” of their rental income and property rights to serve a public purpose (pandemic relief) without paying for it. This article explains why exaction doctrine applies to COVID moratorium cases and how landlords can leverage this powerful legal theory.
What is an Exaction? The Doctrine Explained
An exaction is a government demand that a private party surrender money, property, or property rights as a condition of receiving a government benefit or avoiding government punishment. The classic exaction case involves a land developer who must pay a fee or dedicate land to the city to obtain a building permit. But exactions are not limited to land development—they encompass any governmental demand that forces property owners to bear a cost that should be borne by the public as a whole.^1^3^5
The Supreme Court has explained that exactions violate the Fifth Amendment when they constitute an unconstitutional condition—a demand by government that forces someone to surrender a fundamental constitutional right. As the Court stated in Koontz v. St. Johns River Water Management District (2013):^2
“The unconstitutional conditions doctrine vindicates the Constitution’s enumerated rights by preventing the government from coercing people into giving them up.”^2
The unconstitutional conditions doctrine rests on a critical principle: the government may not require a person to give up a constitutional right as a condition to receiving a discretionary government benefit or avoiding government punishment. In other words, the government cannot say: “You can have your permit (or avoid our regulations) only if you agree to waive your constitutional right to just compensation for property takings.”^1
The Exaction Test: Nollan/Dolan and Beyond
Courts apply a specific test to determine whether a government demand constitutes an unconstitutional exaction under the Takings Clause.:^7^3
Step One: The Essential Nexus Test (Nollan v. California Coastal Commission)
There must be an “essential nexus” between the condition imposed and the legitimate purpose of the underlying permit or regulation. If there is no connection between what the government demands and what it is permitting or regulating, the condition is “an out-and-out plan of extortion.”^8^4
Step Two: Rough Proportionality Test (Dolan v. City of Tigard)
The condition imposed must be roughly proportional in scope to the impact of the permitted activity. The exaction cannot be so excessive that it effectively confiscates value unrelated to the problem being addressed.^3^8
Step Three: The Unconstitutional Conditions Doctrine (Modern Application)
Courts now recognize that the government may not burden a constitutional right through an exaction, even if the exaction passes the Nollan/Dolan nexus and proportionality tests. As the Supreme Court held in Koontz:^5^1
“Extortionate demands for property in the land-use permitting context run afoul of the Takings Clause not because they take property but because they impermissibly burden the right not to have property taken without just compensation.”^1
Critically, the Takings Clause remedy for an unconstitutional exaction is just compensation—the property owner must be paid for what was taken or demanded.^2
Why COVID Moratoria Constitute Illegal Exactions
Landlords asserting exaction claims for COVID moratorium losses argue that the government’s imposition of the moratorium constituted a demand—backed by the force of law and criminal penalties—that landlords surrender their rental income and their fundamental right to exclude non-paying tenants to further a public purpose: preventing homelessness and public health risks during the pandemic.^10^12
The Exaction Framework Applied to Eviction Moratoria:
1. Essential Nexus (Does the exaction relate to the government’s purpose?)
Yes. The government’s stated purpose was pandemic relief—specifically, preventing tenant homelessness and disease transmission. By forcing landlords to house non-paying tenants indefinitely, the government furthered that purpose. Unlike a developer forced to pay for unrelated infrastructure, here the nexus is clear: no evictions = fewer people becoming homeless = fewer disease vectors and housing stability.^11^10
2. Rough Proportionality (Is the exaction proportional to the problem?)
This is where exaction claims become powerful. Courts have recognized that rough proportionality requires measuring the value extracted against the benefit received. For example:^4^3
- If a developer is required to dedicate 5% of a parcel for a public road to accommodate the impact of a new 100-unit development, the 5% must be roughly proportional to the traffic impact created by the development.^6
- By contrast, if the government had forced the developer to dedicate 50% of the parcel—far exceeding any proportional impact—the exaction would violate the Takings Clause.^3
For eviction moratoria, the proportionality problem is stark:
| Problem Being Addressed | Value Extracted from Landlords |
|---|---|
| Tenant housing security during pandemic emergency | Billions of dollars in unpaid rent, lost rental income, reduced property values for potentially indefinite duration |
| Public health risk | Forced provision of housing for non-paying tenants with no end date, no compensation, and no statutory cap |
In GHP Management v. City of Los Angeles, the GHP plaintiffs alleged approximately $20 million in unpaid rent as of the time they sued in August 2021—just 16 months into the moratorium. This value far exceeded any reasonable estimate of the “public benefit” attributable to any single property owner’s forced contribution. Yet the government extracted this value from individual landlords while distributing the “public benefit” (pandemic relief) broadly across the entire population.^12^11
3. The Unconstitutional Conditions Doctrine (Does the exaction burden a constitutional right?)
This is the most powerful argument. The COVID moratorium forced landlords to surrender fundamental constitutional rights:
- The right to exclude non-paying tenants from their property—the “most fundamental element of property ownership”^13^12
- The right to control the use of their property—landlords could not occupy the property, convert it to other uses, or prevent accumulation of unpaid rent^10^12
- The right to enforce lease terms—landlords could not evict for nonpayment, breach of occupancy terms, or property damage^11^10
- The Fifth Amendment right to just compensation itself—by refusing to provide compensation for these takings, the government forced landlords to waive their constitutional right to be paid when property is taken^12^10
Under the unconstitutional conditions doctrine, no exaction—no matter how well-justified the public purpose or how proportional the burden—may coerce surrender of these fundamental rights. The government cannot say: “Accept indefinite non-payment and loss of control over your property, and you’ll contribute to pandemic relief.” That is precisely the kind of coercive demand the doctrine forbids.^5^2
The Two-Part Exaction Claim: Why Landlords Need Both Theories
Smart landlords (and their attorneys) are asserting exaction claims in two complementary forms:
Exaction as a Physical Taking
The first exaction theory emphasizes that the moratorium constituted a physical invasion and taking of the landlord’s property for public use without compensation. This fits squarely within the Loretto/Cedar Point framework: the government authorized tenants to physically occupy landlord property indefinitely, in violation of lease terms and the landlord’s eviction rights. This occupancy was effected at the government’s command and for a public purpose (pandemic relief). Therefore, it is a physical taking requiring just compensation.^13^11
The advantage of framing exaction as a physical taking is simplicity: physical takings require compensation as a matter of law, without regard to whether the public purpose is important or the burden proportional.^10
Exaction as an Unconstitutional Condition (Alternative/Backup Theory)
The second exaction theory emphasizes that the moratorium impermissibly coerced landlords to surrender constitutional rights—the right to exclude, the right to control their property, and the Fifth Amendment right to just compensation itself. Under this framing, even if a court were to find that the moratorium was “merely” a regulation (not a physical taking), it would still constitute an unconstitutional exaction because the government forced the surrender of fundamental rights without compensation.^11^13
As Rebecca Shaffer’s complaint states:
“In the alternative to Count I, if the Court finds that the Eviction Moratorium was not a taking as the CDC exceeded its authority, the CDC Eviction Moratorium constituted an illegal exaction.”^13
This dual-theory approach ensures that landlords have a winning argument under virtually any court interpretation.
Real-World Application: The Shaffer and GHP Management Cases
Rebecca Shaffer’s Complaint (Filed January 2025)
Ms. Shaffer, a Pennsylvania landlord who owned a single-family home rented to a non-paying tenant, asserts both a physical taking claim and an exaction claim:
- Physical Taking (Count I): The CDC moratorium prevented her from evicting the tenant, thereby taking her right to exclude and her rental income, requiring just compensation.^13
- Illegal Exaction (Count II): “In the alternative, if the Court finds that the Eviction Moratorium was not a taking as the CDC exceeded its authority, the CDC Eviction Moratorium constituted an illegal exaction. As a direct result of the CDC’s Eviction Moratorium, the federal government has exacted Ms. Shaffer’s private property, enriched the federal government at her expense, had a direct and substantial impact on Ms. Shaffer and the exaction occurred as a direct result of the government action.”^13
By pleading the exaction theory in the alternative, Shaffer ensures that even if the court rejects her physical taking theory, she retains a valid claim for compensation.^13
GHP Management v. City of Los Angeles (Federal and State Court Litigation)
The GHP Management plaintiffs assert exaction claims in both the federal and state courts. In their Supreme Court petition seeking certiorari, amici curiae supporting GHP noted:
“By August 2021, when Petitioners sued the City seeking just compensation for that physical taking, back rents owed by their unremovable tenants had ballooned to over $20 million. The moratorium concluded in 2024. Relying on a mobile home rent control case from this Court, Yee v. City of Escondido, the Ninth Circuit affirmed dismissal of Petitioners’ complaint because they voluntarily opened their properties to tenants in the first instance and thus could never state a physical takings claim against the City’s law, drastic as it was.”^12
Yet the amici argue that even under Yee, the exaction doctrine applies because the government violated the unconstitutional conditions principle—it effectively forced the surrender of fundamental constitutional rights (the right to exclude non-paying tenants) to achieve a public purpose (pandemic relief) without compensation.^14
Why Exaction Doctrine is Powerful: The Supreme Court’s Recent Validation
In Sheetz v. County of El Dorado (April 2024), the Supreme Court unanimously affirmed that the Takings Clause prevents both legislatures and administrative agencies from imposing unconstitutional exactions—demanding that property owners surrender property rights to advance public purposes without just compensation.^6
“The Takings Clause … prohibits legislatures and agencies alike from imposing unconstitutional conditions on land-use permits.”^3
This recent decision strengthens the exaction argument for COVID moratorium cases because:
- Exactions include demands backed by regulatory authority, not just land-use permits^6
- Legislative exactions (like the moratorium) receive the same scrutiny as administrative exactions—there is no “legislative exemption”^3
- Proportionality matters—courts will examine whether the value extracted from landlords was proportional to the public benefit created^6
The Exaction Doctrine’s Historical Pedigree
The unconstitutional conditions doctrine protecting against exactions has deep constitutional roots. As the Supreme Court noted in Koontz:
“The unconstitutional conditions doctrine protects private property owners from being forced to surrender their Fifth Amendment right to just compensation to obtain a building permit.”^15
The doctrine applies whenever government attempts to coerce surrender of a constitutional right by conditioning a benefit—whether a permit, continued operation of a business, or simply the privilege of not being prohibited by regulation from using one’s own property.^5^2
Strategic Advantages of Exaction Claims in COVID Cases
Landlords benefit from exaction theories in several ways:
1. Bypasses the “Yee” Problem
As discussed above, some courts (notably the Ninth Circuit) have used Yee v. City of Escondido to dismiss landlord takings claims by arguing that because tenants were “invited” onto the property through a lease, the landlord cannot later complain about government regulation of the landlord-tenant relationship.^14^11
But exaction doctrine sidesteps Yee entirely. Even if the landlord voluntarily invited tenants, the exaction doctrine still applies because the government forced surrender of constitutional rights. The fact that the invasion began consensually does not prevent it from becoming coercive when government demands unconditional continuation.^14^1^5
2. Applies Regardless of Public Purpose
Unlike takings claims (which sometimes succeed or fail based on whether the taking was for a legitimate public purpose), exaction claims focus on coercion and proportionality. A legitimate public purpose (pandemic relief) does not justify forcing private parties to bear the entire cost.^1^5
3. Provides Alternative Path to Compensation
If a court rejects a landlord’s physical taking theory, the exaction claim remains viable as an independent basis for liability. Rebecca Shaffer’s dual-count approach is strategically sound for this reason.^12
4. Invokes the Recent Sheetz Decision
The Supreme Court’s April 2024 decision in Sheetz v. County of El Dorado provides fresh judicial authority that the Takings Clause applies to legislatively mandated exactions. Landlords can cite Sheetz for the proposition that the CDC’s moratorium (or a state’s moratorium) constitutes an exaction subject to heightened constitutional scrutiny.^3
Why the Armstrong Principle Underlies Exaction Claims
The foundational principle behind exaction doctrine is captured in Armstrong v. United States (1960):
“The Takings Clause is designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.”^16
This principle is powerful in COVID moratorium cases because the burden of pandemic relief fell disproportionately on landlords. While the government distributed rental assistance broadly to tenants, the burden of non-payment fell entirely on individual landlords. This violates the Armstrong principle—government cannot shift the entire cost of a public program onto a narrow class of private parties.^10^12
Exaction Challenges and How to Overcome Them
Challenge 1: “This is just a regulation, not an exaction”
Response: Even if framed as a regulation, the constitutional conditions doctrine applies. The government cannot condition continued rental operations (or the right to exclude from one’s property) on waiving the Fifth Amendment right to compensation.^2^1
Challenge 2: “The government provided rental assistance”
Response: Rental assistance was inadequate and did not reach all landlords. Moreover, the adequacy of alternative compensation is irrelevant to exaction doctrine—the government cannot coerce surrender of constitutional rights even if it provides partial compensation elsewhere. The landlord is entitled to just compensation for what was taken from them directly.^11^12
Challenge 3: “Proportionality is satisfied because the moratorium lasted only a few years”
Response: Duration is irrelevant to proportionality analysis. Rather, proportionality asks whether the value extracted from individual landlords was roughly proportional to any identifiable public benefit created by their specific compliance. Since billions of dollars were extracted from landlords while pandemic relief benefits were distributed broadly to tenants and the public, proportionality fails.^6
Conclusion: Exaction Doctrine as Landlords’ Most Powerful Tool
As landlords continue pursuing compensation for COVID moratorium losses, exaction doctrine provides a powerful and increasingly well-supported legal theory. By focusing on government coercion, unconstitutional conditions, and the principle that public burdens should be borne by the public (not shifted onto private parties), landlords can argue that eviction moratoria constituted illegal exactions requiring just compensation.
Recent Supreme Court authority (Sheetz) supports this theory. Strategically, asserting exaction claims alongside physical taking claims provides multiple pathways to recover damages. And most importantly, exaction doctrine rests on enduring constitutional principles—Armstrong, the unconstitutional conditions doctrine, and the Fifth Amendment’s core guarantee of just compensation—that transcend debates about Yee’s proper scope or whether moratoria are “merely” regulatory.
The exaction doctrine may ultimately prove to be landlords’ most viable path to compensation when courts initially reject traditional physical taking theories. For this reason, experienced landlord counsel should consistently plead exaction counts as alternatives to all takings claims in COVID moratorium litigation.
This article is for informational purposes only and does not constitute legal advice. Property owners considering takings or exaction claims should consult with qualified counsel.
