Rackemann Alert: Moratorium on Evictions and Foreclosures in Massachusetts During the COVID-19 Emergency
On April 20, 2020, Massachusetts Governor Charlie Baker signed into law Bill H.4647 titled “An Act Providing For A Moratorium On Evictions And Foreclosures During the COVID-19 Emergency.” This emergency legislation institutes moratoriums on non-essential evictions of residents and small businesses and foreclosures of residential property in the Commonwealth.
What Is Prohibited?
Non-Essential Evictions. These are defined as evictions: (i) for non-payment of rent; (ii) resulting from a foreclosure; (iii) for no fault or no cause; or (iv) for cause that does not involve or include allegations of: (a) criminal activity that may impact the health or safety of other residents, health care workers, emergency personnel, persons lawfully on the subject property or the general public; or (b) lease violations that may impact the health or safety of other residents, health care workers, emergency personnel, persons lawfully on the subject property or the general public.
Who Is Protected:
Residential Tenants; and
Small business tenants occupying property for commercial purposes (including not-for-profit), except that a tenant is expressly excluded and is not protected under the moratorium if the tenant or a party that controls, is controlled by or is in common control with the tenant: (i) operates multi-state; (ii) operates multi-nationally; (iii) is publicly traded; or (iv) has not less than 150 full-time equivalent employees.
Default Notices: Residential Landlords cannot terminate a residential tenancy or send any notice to such effect, including Notices to Quit requesting that a tenant vacate the residential dwelling.
Last Month’s Rent: Residential Landlords can apply last month’s rent held in escrow after notice to the residential tenants to pay for expenses, including mortgage payments, utilities, repairs and other necessary maintenance. Landlord shall continue to pay statutory interest on last month’s rent even if used.
Late Fees: Neither Residential or Commercial Landlords can charge late fees if, no later than 30 days after its due date, a tenant provides notice and documentation that the non-payment of rent is due to a financial impact from COVID-19.
Judicial Action: Courts may not (i) accept for filing a writ, summons or complaint for possession of a residential or commercial unit; (ii) issue a judgment or default judgment in favor of a Landlord for possession of a residential or commercial unit; (iii) issue an execution for possession; (iv) deny upon a stay of execution for possession upon request by Tenant or a continuance of a summary process upon request by any party; (v) schedule a court event, including a summary process trial.
All deadlines for any non-essential evictions that were filed in Court prior to the declaration of the emergency will be tolled for the duration of the legislation.
What Is Not Suspended or Prohibited:
Rent Payment Obligations: While non-essential evictions as defined above are prohibited, tenants are not relieved from the obligation to pay rent as required in the leases.
Landlord’s Ability To Recover Rent: The law does not prohibit landlords from ultimately recovering rent as required in the leases.
Pre-COVID-19 Commercial Lease Expiration or Defaults: the law does not prohibit commercial evictions due to the expiration of a lease or tenancy or due to lease defaults that occurred prior to the declaration of the COVID-19 emergency.
Residential Property Mortgage Foreclosures:
Who Is Protected:
Borrowers of mortgage loans for owner-occupied one-to-four family residential properties.
What Is Prohibited:
Lenders, creditors, and mortgagees are prohibited from (i) publishing a foreclosure sale, (ii) exercising a power of sale or right of entry, (iii) initiating any foreclosure process, or (iv) filing a complaint to determine a mortgagor’s military status under the federal Servicemembers Civil Relief Act.
Lenders, creditors, and mortgagees are prohibited from reporting negative mortgage payment information to a consumer reporting agency.
What Is Permitted:
Forbearance: Borrowers who submit an affidavit stating that they experienced “financial impact from COVID-19” can request from their lender a forbearance or reprieve from all fees, penalties, and interest beyond their scheduled and contractual payments for up to 180 days.
Minimum Relief Period: No minimum timeframe is established for the forbearance request as long as it does not exceed 180 days.
Interest Waiver: Lenders cannot charge interest or levy penalties during the granted forbearance period.
Mortgage Counseling: The law allows for counseling to take place remotely by video conference, rather than in person, during the moratorium.
Who Is Not Covered:
The law does not cover borrowers or lenders of any commercial property.
Duration of the Moratorium Act:
The prohibitions extend for either 120 days from April 20, 2020, the date Governor Baker signed this new law, or 45 days after the COVID-19 emergency declaration has been lifted, whichever is sooner.
The Governor may grant 90-day extensions of the moratorium so long as those extensions do not extend beyond 45 days after the COVID-19 emergency declaration has been lifted.
This Rackemann Alert was prepared by Angel Kozeli Mozina. Rackemann stands ready to assist you during this time. If you have questions concerning the moratorium on evictions and foreclosures during the COVID-19 emergency described above, please contact your Rackemann attorney.