The Government Froze Landlords' Rent for a Year. The $1 Billion Payout Took Five Years and a Federal Lawsuit. Storage Never Had That Risk.

The news, with the numbers

The federal government froze residential evictions for nearly a year: September 2020 through July 2021, extended from the March 2020 CARES Act. Landlords couldn't evict non-paying tenants, and rent stopped. The lawsuit in Darby Development Company, Inc. v. United States puts the cost to owners at $57 billion, with more than 10 million delinquent renters in the first four months alone (Multifamily Dive, May 13 2026; Christian Science Monitor / AP, May 3 2026).

The courts were no help at first. The Court of Federal Claims dismissed the case in 2022. Then the Federal Circuit reversed in August 2024, ruling the government liable — the moratorium removed the right to exclude, one of the core sticks in the property bundle, a per se physical taking. It denied rehearing in June 2025. Today the parties are in settlement talks. Co-counsel for the landlords: “We have been operating under the assumption that it's going to be about a billion dollars.” More than 1,500 owners are in the case — about 1,800 and counting — and their claimed losses run from thousands of dollars to more than $14.5 million. The landlords hope for as much as $1.5 billion. A fraction of what the industry says it lost.

Here's the detail that should land, folks. The parties are still negotiating how long the moratorium “effectively” lasted — because after the order lifted, the courts were so jammed that some landlords couldn't get a hearing for six months. Even the remedy is a debate about the dates. And it all works on proof: the government is asking every landlord to submit actual rent rolls before the parties agree on a number. Trust, but verify — even the federal government does it.

What the freeze actually did

A National Rental Home Council survey, published weeks after the moratorium ended, found half of small landlords had tenants who missed rent — and a third sold or planned to sell their properties. The AP reporting puts faces on it: a Texas owner of 240 units lost over $1 million. A Las Vegas owner of 52 units lost over $250,000 and borrowed $60,000 from the SBA to keep the lights on — she's still paying it back. A Virginia company with 4,000 units lost more than $230,000 in unpaid rent. The class-C owners, whose tenants worked in restaurants and other shutdown businesses, got hit hardest.

The fair counter, stated straight: tenant advocates point to $46.5 billion in federal emergency rental assistance, and an April 2026 analysis in the Journal of Urban Affairs found the aid largely reached the renters who needed it most. That's the political economy of the vehicle. It doesn't change the landlord's position: the income stopped on the government's schedule, and the repayment, if it comes, arrives years later, on terms the government negotiates.

The mechanism, named

Here's the deal. A residential landlord's income is contingent. Contingent on tenants, on eviction courts, on rent-control statutes — and, as 2020 proved, on what the government does in a crisis. The freeze was a Fifth Amendment taking precisely because the government removed the owner's right to say “pay or leave.” The win didn't undo the loss. It started a five-year clock on getting paid.

Now the storage side, honestly. The CDC moratorium never applied to storage units. No federal order has ever suspended storage collections, and no storage owner has had to sue the federal government for a taking of their rent. Storage demand historically rises in downturns — the “1 in 10 households rents a unit” engine doesn't stop when the economy does. And the collection path is a lien and auction under state law, not an eviction court with a backlog. Nobody votes on storage rents. Nobody lives in a unit. There's no tenant-occupancy politics attached to the income stream.

The honest part. Storage isn't a magic shield. The two silent killers — property taxes and insurance — are real, and municipalities are starting to treat storage as a cash register: Woodstock, Illinois passed a 5% rental tax; Prince George's County, Maryland hit operators with a $5,000-a-year fee that's now being challenged in court. That's why the first call before any deal is to the county. But there's a difference between a tax bill you can underwrite and an income stream the government can suspend. Taxes show up in the pro forma. A freeze is a risk no pro forma can price — and on the residential side, the debt doesn't get a moratorium either: a New York City CMBS loan is reported to face an $80 million loss risk tied to rent regulation (CRE Daily via Yahoo Finance). Income stopped. Debt didn't. One vehicle carries that stack. The other doesn't.

What it means for the burned-out landlord

You're not broken, and residential isn't evil. Here's the thing: a third of small landlords sold or planned to sell after the moratorium. Maybe you were one of them. The same dollars that bought ten doors can buy a facility — month-to-month renters, no eviction court, no just-cause regime, no federal order that can stop the rent. Same investor, different vehicle. Run the numbers on the one where the income doesn't stop on someone else's schedule.

One more thing, and it's the why-now: the window for landlords to bring similar takings claims closed this month — and the settlement talks that could pay about $1 billion are live right now. That's the news hook. The mechanism is the point, and the point doesn't age. One vehicle's income is contingent on government, and the remedy is a lawsuit. The other's income is contingent on how well you run the asset. You get to pick which one you're in.

Run the numbers. Take your worst residential door from 2020: the months of frozen rent, the loan you're still paying off, the insurance renewal you couldn't pass through. Now run the same capital through a storage facility's T12 — expense ratio held to 35–40% of gross potential rent, tenant insurance mandatory, taxes verified with a call to the county. Run the numbers, then call the county, then run them again. The deal you don't do is the smartest deal of the year — and so is the vehicle you switch into.