Tenant Eviction Moratorium Enacted by Massachusetts Will Apply to Certain Commercial Leases

On April 20th Governor Charlie Baker signed into law legislation that will place a moratorium on “non-essential” residential and certain commercial evictions in the Commonwealth for at least four (4) months.

The moratorium will continue for 120 days, or 45 days after Governor Baker lifts the state of emergency declared on March 10, whichever is sooner, and will only apply where a default occurred after the March 10 emergency declaration and was substantially related to the COVID-19 pandemic and amounts to a “non-essential eviction.”

The bill defines “non-essential evictions” 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: (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.

Furthermore, the bill will not apply to businesses that: (i) operate in multiple states; (ii) operate in multiple nations; (iii) are publicly traded; or (iv) have not less than 150 full-time equivalent employees.

Governor Baker may postpone the expiration of the moratorium in increments of not more than 90 days; provided that the Governor shall not postpone such expiration to later than 45 days after the COVID-19 emergency declaration has been lifted.

A copy of the legislation can be found here: https://malegislature.gov/Bills/191/H4647

The legislation imposes a temporary ban on landlords issuing a notice to quit, which landlords use to notify a tenant that they are in violation of their lease (typically because rent is past due) and they have a certain number of days to either cure the violation (i.e., pay the rent owed) or vacate the leased premises. If the lease itself does not stipulate the number of days the tenant has to cure any rent default, Massachusetts imposes a 14-day notice period. Any late fees charged to non-paying tenants are also prohibited under the bill. Moreover, landlords are prohibited from reporting any default to a consumer reporting agency if within 30 days of a missed payment a tenant provides notice and documentation stating that nonpayment was due to the financial impact of COVID-19.

Importantly, the bill does not absolve any tenant from its obligation to pay rent. Furthermore, landlords will be able to apply any rent payments made in advance for a certain month of tenancy (e.g., last month’s rent) to pay for expenses including mortgage payments, utilities, and repairs, but in no event may it be used for any unpaid rent that is past due. If a landlord does in fact use such advance rent payments for the intended month, it must notify the tenant in writing that that (i) such funds were used in accordance with the Act, (ii) the landlord remains obligated to credit the tenant for paying the last month’s rent, and (iii) the tenant is entitled to be credited for the same amount of interest that would have accrued on the last month’s rent had the landlord not used such funds prior to the last month of the tenancy. This procedure does not apply to any security deposit that a landlord may be holding.

The bill also bars Massachusetts courts from both: (i) accepting any writ, summons, or complaint to commence a summary process proceeding; and/or (ii) issuing any executions. Under Massachusetts law, following any notice to quit period, a commercial landlord may serve a “summary process” summons and complaint on the tenant, and schedule a hearing, usually within another 14 days. If the landlord is successful, the court will issue an execution, allowing a local sheriff or constable to enforce the eviction and remove the tenant from the premises.

Any evictions process that is currently ongoing is effectively frozen, and will have its deadlines, whether for: (i) curing; (ii) answering/serving a complaint; (iii) appealing a judgment; or (iv) levying an execution for possession or money judgment, tolled until the emergency is over.

Lastly, the legislation also pauses ongoing foreclosures, however we will cover that portion in a subsequent article.

As always, we at Tamkin & Hochberg are available to walk any commercial landlords or tenants through the intricacies of the new law and provide any insights to help your business navigate this turbulent time.