What Landlords, Tenants, Borrowers, and Lenders Need to Know About The Massachusetts Eviction and Foreclosure Moratorium Act
On April 20, 2020, Massachusetts Governor Charlie Baker signed H.4647 (the “Massachusetts Eviction and Foreclosure Moratorium Act” or the “Act”) into law. The Massachusetts Eviction and Foreclosure Moratorium Act is the joint conference committee’s compromise between Massachusetts House of Representative’s H.4615 and the Massachusetts Senate’s S.2631 and establishes a temporary moratorium on all but “emergency” evictions and foreclosures in response to Governor Baker’s Executive Order Number 591 issued on March 10, 2020. You can read more about H.4615 and S.2631 here.
The Massachusetts Eviction and Foreclosure Moratorium Act
Timeline and Definitions
The Act’s moratorium extends for 120 days after April 20, 2020, the date the Governor signed the Bill, or forty-five (45) days after the emergency order is terminated, whichever is sooner. The Governor may extend the moratorium, but each extension may be no longer than ninety (90) days and the moratorium may not extend later than forty-five (45) days after the emergency order is terminated.
The Act limits the moratorium to “non-essential evictions” of residential and certain small business tenants. The moratorium prohibits evictions of residential tenants and tenants in a “small business premises unit” due to (i) failure to pay rent, (ii) foreclosure, or (iii) causes that are not “emergency causes of action,” defined as any eviction that involves allegations of criminal activity or lease violations that are detrimental to the health and safety of other residents, health care workers, emergency personnel, anyone who is lawfully on the property, or the general public.
A “small business premises unit” is property occupied by a tenant for commercial purposes, whether the tenant is a for-profit or not-for-profit entity. However, tenants (or the party that controls, is controlled by, or is in common control with the tenant entity) that (i) operate in multiple states, (ii) operate in multiple countries, (iii) are publicly traded, or (iv) have 150 or more full-time equivalent employees are expressly excluded from the definition of “small business premises unit.” It’s important to note that the Act’s moratorium does not include evictions of tenants in a small business premises unit due to (i) the expiration of the lease term or (ii) a tenant’s default under the terms of its lease or tenancy that occurred before the Governor’s emergency declaration.
Rent and Evictions
During the moratorium, for non-essential evictions, landlords and owners may not terminate a residential tenancy, or send a residential tenant a notice to quit or any other notice requesting or demanding that the tenant vacate the premises.
The Act prevents landlords from imposing late fees on tenants in residential and small business premises units, provided that tenants deliver notice and documentation to their landlords that the direct or indirect financial impact of the COVID-19 outbreak prevented them from paying rent on time. Tenants must submit such notice and documentation within thirty (30) days after the missed rent payment. The Act does not describe the notice or type of documentation that a tenant must provide, but it does direct the Massachusetts Department of Housing and Community Development to develop forms and recommendations. During the moratorium, landlords of tenants in residential and small business premises units may not notify consumer reporting agencies about tenant’s failure to pay rent.
The Act’s moratorium also applies to non-essential evictions of residential and small business premises units in all Massachusetts courts with jurisdiction over summary process actions under M.G.L. chapter 239. Except for emergency evictions, courts may not (i) accept a writ, summons, or complaint, (ii) enter a judgment, default judgment, or execution for possession, (iii) issue an execution for possession, (iv) deny a tenant’s request for a stay of execution or continuance of a summary process case, or (v) schedule any court event, including a summary process trial. All deadlines and time periods related to any non-essential eviction of a residential or small business premises unit summary process action (e.g. date to answer a complaint, appeal a judgment, etc.) are tolled during the moratorium. Indeed, no sheriff, constable or any other person may enforce a non-essential eviction of a residential or small business premises unit during the moratorium.
The Act also allows landlords to use last month’s rent payments from their tenant with certain restrictions. Landlords may use last month’s rent for expenses, including but not limited to mortgage payments, utilities, repairs and required upkeep of the premises. However, landlords (i) may not deduct a tenant’s missed rent payments from the last month’s rent, (ii) remain obligated to use the last month’s rent as rent for the last month of tenancy, and (iii) must pay the tenant all interest the last month’s rent would have accrued, under M.G.L. chapter 186 §15B, had the landlord not used the funds before the last month of the tenancy. If a landlord uses the last month’s rent for expenses, a landlord must send their tenant written notice that last month’s rent was used before the last month of tenancy and that the landlord is still obligated to (i) pay all interest required under M.G.L. chapter 186 §15B and (ii) use last month’s rent as rent for the last month of tenancy. Notably, the Act’s last month’s rent provision applies to all landlords and is not limited to landlords of residential or small business premises units.
Importantly, the Act explicitly states that no tenant is relieved of its obligation to pay rent, and no landlord is prevented from ultimately recovering rent.
Mortgage Payments and Foreclosures
The Act’s moratorium also prevents lenders, creditors, and mortgagors of residential property from (i) publishing a foreclosure sale, (ii) exercising a power of sale or right of entry, (iii) initiating any foreclosure procedures, or (iv) filing a complaint to determine a mortgagor’s military status. Residential borrowers who submit a request to their lender during the moratorium stating that they experienced “financial impact from COVID-19” will be granted a reprieve from all fees, penalties, and interest beyond their scheduled and contractual payments for up to 180 days. The Act does not cover borrowers or lenders of any commercial property. Lenders may not report negative mortgage payment information to a consumer reporting agency. The Act’s moratorium also allows for mortgage counseling by video conference, rather than in person, during the moratorium.
As with rent payments and collections, the Act explicitly states that no borrower is relieved of its obligation to pay its mortgage, and no creditor or mortgagee is restricted from ultimately recovering mortgage payments.