On April 20, 2020, Massachusetts Governor Charlie Baker signed into law Chapter 65 of the Acts of 2020, entitled "An Act providing for a moratorium on evictions and foreclosures during the COVID-19 Emergency." The Act imposes a moratorium on "non-essential evictions" on both residential and small business tenants in response to the COVID-19 pandemic. Highlights of the Act include:
- Relief for Residential and Small Business Tenants
The Act applies to both residential and small business tenants. To be considered a "small business tenant," the tenant must operate for a commercial purpose (whether for profit or not for profit) and neither the tenant nor any parties controlling, controlled by or in common control with the tenant may (i) operate in multiple states or multi-nationally, (ii) be publicly traded, or (iii) have more than 150 full time equivalent employees. The Act does not apply to commercial tenants that do not meet the definition of a small business tenant.
- Activities Prohibited
During the moratorium, a court may not, for a "non-essential eviction," (i) accept the filing of a summons or complaint, (ii) enter a judgment for possession for a plaintiff, (iii) issue an execution for possession, (iv) deny a request for a stay of execution or a continuance, or (v) schedule a court event, including a summary process trial. For any non-essential evictions commenced prior to the moratorium, the Act tolls all time periods and deadlines until the expiration of the moratorium.
The Act also prohibits landlords of residential tenants (but not small business tenants) from terminating a tenancy or sending a notice terminating a tenancy in connection with a non-essential eviction.
In addition, landlords of both residential and small business tenants may not charge late fees or send reports to credit rating agencies if the tenant notifies and provides evidence to the landlord within 30 days of the date the rent is due that non-payment was due to the financial impact of COVID-19.
The Act does, however, authorize a residential landlord holding a "last month's rent" payment, upon notice to the tenant, to use those funds to pay for expenses such as mortgage payments, utilities, repairs and upkeep.
- "Non-essential evictions"
A "non-essential eviction" is defined as an eviction (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 criminal activity or lease violations that may impact health or safety of other residents, health care workers, emergency personnel, persons lawfully on the property or the public. In the small business context, a non-essential eviction does not include an eviction where the term of the lease or tenancy has expired or a default by the tenant, occurred prior to March 10, 2020.
- Length of Moratorium
The moratorium remains in effect until the earlier to occur of (i) August 18, 2020 (which date is extendable by the Governor in 90-day increments) or (ii) 45 days after the COVID-19 state of emergency in the Commonwealth is lifted.
- Continuing Obligation to Pay Rent:
The Act explicitly states that nothing in the Act shall be construed to relieve a tenant from the obligation to pay rent or to restrict a landlord's ability to recover rent.
In addition to providing eviction relief, the Act establishes a moratorium on residential foreclosure actions until the earlier to occur of (i) August 18, 2020 (which date is extendable by the Governor in 90-day increments) or (ii) 45 days after the COVID-19 state of emergency in the Commonwealth is lifted. It further directs financial institutions to grant forbearance on residential mortgages for a period not to exceed 180 days upon the mortgagor's request and affirmation of financial impact from COVID-19.
The changes imposed by the Act may have widespread effects on both landlords and tenants during the period of the moratorium. In these unprecedented times, Brown Rudnick attorneys are available to discuss how this new law may affect your business.
The views expressed herein are solely the views of the authors and do not represent the views of Brown Rudnick LLP, those parties represented by the authors, or those parties represented by Brown Rudnick LLP. Specific legal advice depends on the facts of each situation and may vary from situation to situation. Information contained in this article is not intended to constitute legal advice by the authors or the lawyers at Brown Rudnick LLP, and it does not establish a lawyer-client relationship.