On April 20, 2020, in response to the COVID-19 state of emergency declaration dated as of March 10, 2020 (the “Emergency Declaration”), Massachusetts Governor Charlie Baker signed an “Act Providing for a Moratorium on Evictions and Foreclosures During the COVID-19 Emergency” (the “Act”). The Act implements a suspension of (i) “non-essential evictions” of residential and certain small business tenants and (ii) foreclosures of owner-occupied residential property.
With respect to residential tenants, a “Non-Essential Eviction” is defined in the Act as an eviction by reason of (i) the non-payment of rent, (ii) the result of a foreclosure, (iii) “for no fault” or “no cause,” or (iv) “for cause” if such cause does not include either criminal activity or lease violations that may impact the health or safety of other residents or other people lawfully on the relevant premises. In the case of a Non-Essential Eviction, landlords may not terminate a tenancy or send notice to tenants demanding that the tenant vacate the leased premises. If the tenant provides the landlord notice, within thirty days of a missed rent payment, that the non-payment of rent was due to the financial impact of COVID-19, then the landlord may not impose late fees for such non-payment of rent and may not report such tenant’s non-payment to a consumer reporting agency. Additionally, Massachusetts courts are ordered not to accept eviction complaints or issue judgments or executions for possession of a residential dwelling place. To help mitigate the financial strain that these restrictions may impose on landlords, the Act states that landlords who have received rent in advance for the last month of a tenancy may access and utilize such funds to pay for mortgage payments, utilities, and repairs. However, should a landlord choose to access and utilize such funds, the landlord must notify the tenant of such action and inform the tenant that the landlord is still obligated to apply said rent to its intended application as the rent due for the last month of the tenancy.
With respect to commercial tenants, the suspension of Non-Essential Evictions extends only to leases that meet the qualifications of a “Small Business Premises Unit,” meaning that the commercial tenant in question must not (i) operate multi-state; (ii) operate multi-nationally; (iii) be publically traded; or (iv) have more than 150 full-time employees. In connection with tenancies of Small Business Premises Units, the definition of Non-Essential Eviction excludes (i) evictions on account of the expiration of the term of a lease or (ii) evictions by reason of a default which occurred prior to the Emergency Declaration. As with residential Non-Essential Evictions, subject to the aforementioned exclusions, landlords of a Small Business Premises Units may not evict their tenants or impose late fees for non-payment if such tenant has provided timely notice of financial impact due to COVID-19. The aforementioned restrictions placed on courts pertaining to eviction actions apply as well.
Regarding foreclosure, banks and other parties that hold mortgages on owner-occupied residential property should be aware that the Act has suspended the exercise of the statutory power of sale, judicial foreclosure acts, and the right of entry. In the event that a borrower of a mortgage loan in connection with an owner-occupied residential property notifies their mortgage holder that they have experienced a financial impact from COVID-19, then the holder of such mortgage is obligated to grant a forbearance to the borrower for not more than 180 days and shall not furnish negative mortgage payment information to a consumer reporting agency in relation to such forbearance.
The aforementioned suspensions shall expire the earlier of 120 days following the effective date of the Act or 45 days after the COVID-19 emergency declaration has been lifted, provided that the Governor may postpone the expiration date of the Act by increments of up to 90 days (however, such postponement shall not survive later than 45 days after the emergency declaration has been lifted). If you are a landlord of residential or commercial property or other interested party, do not hesitate to contact us at Adler Pollock & Sheehan for legal assistance.
