04.22.2020 | Articles

Eviction and Foreclosure Moratorium During COVID-19 State of Emergency

By Richard E. Gentilli, Jonathan M. Hixon, James M. Liston

On April 20, 2020, Governor Baker signed into law a statewide moratorium on certain eviction and foreclosure actions providing individuals and small business owners significant protections during the COVID-19 state of emergency.

The Act takes effect immediately and expires 120 days from April 20, 2020, or 45 days after the Governor rescinds the COVID-19 emergency declaration, whichever occurs first. The Act does contain language that permits the Governor to postpone the expiration date in increments of 90 days if the COVID-19 crisis continues. The full bill can be found here, and below is an overview of the key provisions of the Act:

Eviction Moratorium and Tenant Protections

Residential tenants are given the broadest protections, as the Act prohibits landlords from terminating a tenancy or sending any notice, including Notices to Quit, requesting that a tenant vacate the premises.

The Act further prohibits courts in the Commonwealth from any of the following with respect to evictions involving residential dwellings and small business premises: (i) accepting a writ, summons or complaint for filing; (ii) entering judgment or default judgment for a landlord for possession of the premises; (iii) issuing an execution for possession; (iv) denying, upon the request of a residential dwelling or small business tenant, a stay of execution or a continuance of a summary process case; or (v) scheduling a court event, including a summary process trial. The Act tolls all deadlines in such cases. Small business premises are broadly defined, and include for profit and not for profit tenants, but exclude situations where the landlord and tenant share common ownership or the business is multi-state or publicly traded or has over 150 full-time employees.

Residential landlords are permitted by the Act to use last month rent for certain expenses such as mortgage payments, utilities, repairs and required upkeep, after notice to tenants, but the Act prohibits landlord from applying such amount to non-payments of rent. The Act further prohibits a landlord from charging a late fee in cases related to the nonpayment of rent if, not later than 30 days after the missed rent payment, the tenant provides notice and documentation to the landlord that the non-payment of rent was due to a financial impact from COVID-19.

Foreclosure Moratorium and Protections for Residential Property Owners

The Act provides residential property owners (excluding  circumstances where the residential property was taken as collateral for a commercial loan) protection from foreclosure proceedings, prohibiting mortgagees from taking the following action with respect to the foreclosure of a residential property: (i) causing notice of a foreclosure sale to be published; (ii) exercising a power of sale; (iii) exercising a right of entry; (iv) initiating judicial or non-judicial foreclosure processes; or (v) filing a complaint to determine a borrowers military status under the Servicemembers Civil Relief Act.

In addition to the foreclosure protections, the Act requires lenders to grant a forbearance to borrowers of mortgage loans for a residential property when that borrower submits a request that they have experienced a financial impact from COVID-19. The lender is prohibited from charging penalties or accruing any interest during the forbearance. While terms of the forbearance can be negotiated between the lender and borrower, the Act at most permits lenders to add payments subject to such forbearance to the end of the term loan. Finally, the Act prohibits lenders from furnishing negative information to a consumer reporting agency related to mortgage payments subject to forbearance under this Act.

Other Notable Provisions

While the Act provides significant protections to residential tenants, property owners and small business tenants, the Act makes it abundantly clear that it does not forgive any rent or mortgage obligations, which amounts remain payable to landlords and lenders, subject to the tolling and forbearance provisions of the Act.

Finally, the Act does contain specific exceptions to many of the protections, specifically omitting any foreclosure protection for small businesses, protection from evictions that relate to pre-COVID expiration or defaults for small businesses, and any protections for larger commercial businesses and tenants.

If you have questions about how this bill impacts your rights as a residential or commercial landlord, tenant or lender, please contact our workout and litigation partners:

Jonathan M. Hixon – jmh@bostonbusinesslaw.com

Richard E. Gentilli – reg@bostonbusinesslaw.com

James M. Liston – jml@bostonbusinesslaw.com

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