In response to the on-going COVID-19 pandemic, on April 20, 2020, Massachusetts Governor Baker signed into law House Bill No. 4647 which officially became Chapter 65 of the Acts of 2020, and which provides for a moratorium on evictions and foreclosures in the Commonwealth of Massachusetts.
The moratorium goes into effect immediately and will remain in place for the duration of the COVID-19 state of emergency, which was declared by Governor Baker on March 10, 2020, or as follows: 120 days after the effective date of the Bill or 45 days after the state of emergency for Massachusetts is lifted, whichever is sooner. However, if the 120 days are reached before the state of emergency is lifted, then the Governor may postpone the expiration of the moratorium up to the point of 45 after the state of emergency is lifted. As such, there is no defined end to the moratorium at present. The purpose of the Bill is to prohibit residential and small business evictions and prevent foreclosures, as discussed in greater detail below.
Foreclosures:
The Bill prohibits a creditor, a mortgagee, or a person having estate in the land mortgaged from exercising the authority to foreclose on residential property unless the residential property is vacant or abandoned. The steps necessary to proceed with the foreclosure, such as publication of the notice of sale in the newspaper, are prohibited.
The mortgagee on residential property must grant a forbearance of up to 180 days if the borrower submits to the mortgagee for such a request and affirms that the borrower experienced a financial impact from COVID-19. Fees, penalties, and interest shall not be added to the loan. Instead, any payment subject to the forbearance shall be added to the end of the term of the loan, unless otherwise agreed between the mortgagee and mortgagor/borrower. The mortgagee cannot report negative information to a consumer reporting agency regarding the payments subject to the forbearance.
Evictions:
The Bill defines the term “non-essential eviction” and then goes to prohibit those forms of “non-essential evictions”. A partial list of those items defined as “non-essential evictions” include: non-payment of rent eviction; post-foreclosure eviction; eviction for no-cause (example, termination and resulting eviction of a tenancy at will); and for cause evictions unless the basis for the “for cause” eviction involves criminal activity that may impact the health and safety of others or other lease violation which may impact the health and safety of others.
Small businesses are afforded some, but not all of these protections. Small businesses can be evicted if the default of the lease occurred before the March 10, 2020 state of emergency or the terms of the lease with the small business has expired. The Bill defines what is not a small business. Therefore, the following are not included as part of the definition of small business and do not receive the protections of this Bill: not a small business if the business operates multi-state; operates multi-nationally; is publicly traded; or has 150 or more full-time equivalent employees.
Unless the eviction is permitted as provided in the Bill, the following actions by landlords for residential units are prohibited: 1) terminating a tenancy; 2) sending any notice including a notice to quit; and 3) otherwise demanding that the tenant vacate the residential unit.
The Courts are also prohibited from taking certain actions as stated in the Bill. Unless the eviction is permitted within the terms of the Bill, the Courts are not to accept any eviction summons or complaint, enter judgment for the landlord/plaintiff for possession of a residential or small business unit, issue an execution for possession of a residential or small business unit, deny a stay of execution or request for a continuance, or schedule a court event.
For the duration of the Bill, a landlord cannot 1) impose a late fee for non-payment of rent on the applicable residential or small business unit, or 2) report payment data to a consumer reporting agency, provided that within those 30 days the tenant provides notice and documentation to the landlord that the non-payment was due to financial impact of COVID-19. The form and standards of this proof have not yet been developed.
Keep in mind that the rent owed is not waived, it is still due and owing, but the collection of same cannot be enforced for the duration of the Bill. The landlord is permitted in those circumstances where the landlord collected a last month’s rent to use the last month’s rent early to pay for expenses, which may include, but shall not be limited to, mortgage payments, utilities, repairs and required upkeep; provided, however, that a landlord shall not deduct from said last month’s rent in advance any amount to account for the tenant’s nonpayment of rent. Should a landlord use the last month’s rent as provided by the Bill, the landlord must notify the tenant in writing that such funds were used in that manner. The landlord must continue to maintain the credit for the last month’s rent payments and the tenant is still entitled to the full interest on that amount in accordance with §15B of c. 186.
Takeaways
The bottom line is that, effective immediately, there is a prohibition on most residential foreclosures and evictions for at least a period of up to 120 days in the Commonwealth of Massachusetts.
Erik Shaughnessy, Esq.