Gov. Baker Signs Law Placing a Moratorium on Evictions and Foreclosures During the COVID-19 State of Emergency

April 21, 2020

On April 20, 2020, Governor Charlie Baker signed into law bill H. 4647, which places a moratorium on evictions for residential and small business tenants and a moratorium on residential foreclosures, for 120 days after the enactment of the law or 45 days after the State of Emergency declared by the Governor on March 10, 2020 due to the COVID-19 outbreak is lifted, whichever is sooner. The Governor may extend the moratorium for periods no longer than 90 days, but in no event longer than 45 days after the end of the State of Emergency.

The new law closely tracks an earlier version, bill H. 4615, which failed to clear both the House and the Senate earlier this month, with some key differences:

  • The new law prohibits a landlord of a residential property from terminating a tenancy or sending a notice to quit demanding that the residential tenant vacate the premises for purposes of an eviction. Unlike the earlier bill H. 4615, however, under the new law, these prohibitions do not apply to commercial properties. The new law also provides an exemption for “essential” evictions that involve allegations of criminal activity or allegations of lease violations that are detrimental to the health or safety of other residents or the public.
  • The new law prohibits courts in summary process actions for evictions for residential and small business properties from taking action adverse to the tenant, such as accepting a writ, summons or complaint, entering a judgment or default judgment, issuing an execution or denying a stay of execution, or scheduling court events. It also tolls all deadlines in such actions.
  • The new law prohibits a landlord of residential or small business properties from imposing a late fee for the non-payment of rent by a tenant, if the tenant provides documentation to the landlord within 30 days after the missed payment that the non-payment of rent was due to a financial impact from COVID-19.
    We note that while the new law prohibits the eviction of a small business tenant, it does not prohibit a landlord from sending a small business tenant a notice of default or terminating the tenancy of a small business tenant for the non-payment of rent. No eviction of the small business tenant can take place during the lifetime of the law, but as soon as the law expires, the landlord’s ability to exercise its contractual remedies should stand.
  • The new law places a moratorium on foreclosures of residential properties, which prohibits mortgagees and other creditors from (i) publishing a notice of a foreclosure sale, (ii) exercising a power of sale, (iii) exercising a right of entry, (iv) initiating a judicial or non-judicial foreclosure process, or (v) filing a complaint to determine the military status of a mortgagor under the Federal Servicemembers Civil Relief Act.
  • The new law includes two provisions that were not present in the earlier bill H. 4615:
    1. It contains a provision permitting a lessor who received rent in advance for the last month of the tenancy the access to and use of such funds early to pay for certain expenses, including mortgage payments, utilities, repairs and required upkeep.  However, the lessor must notify the tenant in writing that it utilized such funds before the last month of the tenancy, the lessor remains obligated to apply the rent in advance as rent for the last month of the tenancy, and the tenant is entitled to the same amount of interest that would have accrued in the absence of the lessor’s early use of the funds.
    2. The new law requires mortgagees to grant a forbearance, of up to 180 days, to a borrower for a residential mortgage loan, if the borrower affirms that he or she has experienced a financial impact from COVID-19. Fees, penalties, or interest beyond those scheduled as a part of on-time payments under the terms of the mortgage loan shall not accrue during the period of forbearance.
  • The new law does not apply to all commercial properties, as the earlier bill H. 4615 would have. Where the new law applies to commercial properties, its application is limited to “small business premises unit.” “Small business premises unit” does not include premises occupied by commercial tenants who operate multi-state or multi-nationally, are publicly traded, or have 150 or more full-time equivalent employees.
  • Nothing in the new law relieves a tenant from the obligation to pay rent or restricts a landlord’s ability to recover rent. Likewise, nothing in the new law relieves a borrower from their obligation to pay their mortgage or restricts a mortgagee or other creditor’s ability to recover mortgage payments.

Rubin and Rudman is committed to helping our clients through these extraordinary times. If you have any questions about this alert, please contact any of the following attorneys or your Rubin and Rudman legal professional.

Paul Baccari | | 617.330.7022

Susan Doren | | 617.330.7005

Michael Novaria | | 617.330.7088

Kara Loridas | | 617.330.7039