Massachusetts eviction moratorium

Rental Property Owners File Emergency Petition with Massachusetts Supreme Judicial Court Asserting COVID-19 Eviction Moratorium Act Is Unconstitutional

Attorney Richard D. Vetstein and his colleague, Jordana Roubicek Greenman, Esq., have filed an Emergency Petition with the Supreme Judicial Court on behalf of two local rental property owners challenging the constitutionality of the recently passed, Act Providing For a Moratorium On Evictions and Foreclosures During the COVID-19 Emergency and the its regulations. A copy of the Petition can be viewed below.

One of the plaintiffs is a elderly woman on a fixed income whose tenant owes her over $6,000 in back rent and told her “The Governor says I don’t have to pay my rent anymore.” She risks bankruptcy and foreclosure if something isn’t done. The other plaintiff has a non-payment eviction in progress in Worcester Housing Court, and is owed several months of rent with no likelihood of any payment while the Act suspends his case.

As outlined in the Petition, the Eviction Moratorium Act imposes an unprecedented and indefinite shutdown of virtually every future and pending eviction case in the state, as well as prohibiting landlords from even issuing notices to quit.  The Petitioners, two local rental property owners saddled with non-paying tenants whom they cannot evict, claim irreparable harm on behalf of themselves and all other similarly situated rental property owners across the state.  The Petitioners assert the Act is an unconstitutional infringement on their constitutional right to access the courts and right to petition. They also claim the Act is an unconstitutional interference by the Legislature on the core functions of the courts.  Further, the Act operates as a “taking” without just compensation because it forces rental property owners to house non-paying tenants without any recourse.  Lastly, the Petitioners argue the Act violates the U.S. Constitution’s Contracts Clause as it unconstitutionally impairs their lease agreements.

 The operation of the Act obligates rental property owners to pay their own mortgages, real estate taxes, insurance, and water/sewer used by non-paying tenants, and to maintain their properties and comply with the state sanitary code, while being effectively deprived of the revenue required to do those things.  Given the unpredictable nature of the COVID-19 pandemic, this one-sided obligation and burden will continue indefinitely and quite possibly into 2021.  Many small rental property owners, especially those on fixed income, rely on rents to afford to live in their own homes.

The Supreme Judicial Court is expected to take up the case next week, and will hopefully schedule it for hearing. I will provide you with updates of course.

We are also still seeking donations to the cause. To contribute please click our secure Paypal link: https://paypal.me/pools/c/8orbLzpxbY.

Matorin v Chief Justice, SJ… by Richard Vetstein on Scribd

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New Mandatory Forms and Regulations Released in Wake of Eviction Moratorium ActOn April 20, 2020, Gov. Baker signed into law An Act Providing for a Moratorium on Evictions and Foreclosures During the COVID-19 Emergency (the “Act”), which puts in place a moratorium on “non-essential evictions” of residential and small business tenants during the COVID-19 state of emergency. The Executive Office of Housing and Economic Development (EOHED) has released follow up regulations to ensure compliance with the Act. Several mandatory notices and forms have also been released which will be discussed and linked to below. The Regulations expire 120 days after the effective date of the Act, or 45 days after the state of emergency has been lifted, whichever is sooner, unless further extended by the secretary of EOHED. A link to the new regulations is here: 400 Code of Mass. Regulations 5.0: COVID-19 Emergency Regulations

New Required Form: “Notice of Rent Arrearage”

Under the Moratorium and the new regulations, landlords are prohibited from issuing a notice to quit for non-payment of rent, may not impose late fees for non-payment, or notify a credit reporting agency of the non-payment of rent if the tenant provides a notice and documentation of a financial impact from COVID-19. Instead, the new regulations allow landlords to send a new type of notice for a late or missing rent payment, called a “Notice of Rent Arrearage” which must contain the following special language:

“THIS IS NOT A NOTICE TO QUIT.  YOU ARE NOT BEING EVICTED, AND YOU DO NOT HAVE TO LEAVE YOUR HOME. An emergency law temporarily protects tenants from eviction during the COVID-19 emergency. The purpose of this notice is to make sure you understand the amount of rent you owe to your landlord.”

“For information about resources that may help you pay your rent, you can contact your regional Housing Consumer Education Center. For a list of agencies, see https://www.masshousinginfo.org/regional-agencies.  Additional information about resources for tenants is available at https://www.mhp.net/news/2020/resources-for-tenants-during-covid-19-pandemic.”

“You will not be subject to late fees or a negative report to a credit bureau if you certify to your landlord in writing within 30 days from the missed payment that your non-payment of rent is due to a financial impact from COVID-19. If possible, you should use the approved form at: https://www.mass.gov/lists/moratorium-on-evictions-and-foreclosures-forms-and-other-resources. If you cannot access the form on this website, you can ask your landlord to provide the form to you. You may also send a letter or email so long as it contains a detailed explanation of your household loss in income or increase in expenses due to COVID-19.”

The notice may also include other information that will promote the prompt and non-judicial resolution of such matters, such as the total balance due, the months remaining and the total of lease payments expected to be made on a lease for a term of years, information on how to contact the landlord to work out a revised payment arrangement, and a reminder that after the state of emergency ends the tenant may face eviction if rent remains unpaid. The notice should also also have language informing the tenant of the importance of having it translated to their native language.

My friends over at MassLandlords have created a sample Notice of Missed Payment form if you desire to download it.

Late Fees and Credit Reporting; Notice of Tenant Financial Hardship

Under the Moratorium Act, tenants are allowed to provide notice and documentation of a Covid-19 related financial hardship to their landlords, in order to avoid negative credit reporting. EOHED has issued forms so residential and commercial tenants can provide notice and documentation of a COVID-19 related financial hardship. Those forms can be found here (click on link):

Notice and Certification of Financial Hardship From Residential Tenant Related to COVID-19

Form of Notice -COVID-19 Hardship – Small Business Tenant 

Documentation of Financial Hardship – Small Business Tenant 

Under the new regulations, a tenant who misses multiple rent payments due to a financial impact from COVID-19 is required to provide a separate notice to the landlord for each such missed payment. The use of an alternative written form of notice by a residential tenant shall be deemed effective and timely if it includes a statement that the tenant has experienced a financial impact from COVID-19, and states in reasonable detail the cause of such financial impact.

Landlord Use of Last Month’s Rent Deposit

Under the Moratorium, a landlord who has a last month’s rent deposit may use it to pay for mortgage payments, utility costs, maintenance costs and other operating expenses incurred by the landlord for the leased premises. The last month’s deposit, however, must be accounted for and paid back if necessary, with accrued interest, at the end of the lease or tenancy. This is one of the reasons why I do not recommend that landlords utilize this remedy. If the landlord uses a last month’s deposit it must provide the following form to the tenant:

Notice to Tenant – Use of Advance Rent Payment 

Conclusion

We will keep you updated with further development on the Eviction Moratorium and any further regulations or guidance issued by the state.

I still believe that the Act is unconstitutional on several grounds, and myself along with several other lawyers are getting ready to file a legal challenge to the Act. If you are interested in donating or participating in the case, please contact me at [email protected]. We have set up a secure Paypal funding link for any donations here:  https://paypal.me/pools/c/8orbLzpxbY.

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Unprecedented, Sweeping Prohibition on Residential and Commercial Evictions Enacted Without Corresponding Mortgage and Tax Relief to Property Owners

Updated (5/31/20): Legal Challenge Against Eviction Moratorium Filed In SJC

In an unprecedented, sweeping, and likely unconstitutional move, the Massachusetts Legislature has passed, and Governor Charlie Baker has just signed into law An Act Providing For a Moratorium On Evictions and Foreclosures During the COVID-19 Emergency (House Bill 4647), a statewide moratorium on the vast majority all evictions and foreclosures in Massachusetts during the COVID-19 Emergency — and possibly well beyond. The new law is in effect until 45 days after the Coronavirus (COVID-19) Emergency is lifted by Gov. Baker, or four (4) months, whichever is earliest, however, Gov. Baker is permitted to extend the law for 90 day increments.

Sweeping Eviction (Summary Process) Emergency Coronavirus (COVID-19) Relief

The Eviction Moratorium covers 90% of all evictions (summary process), including non-payment and no-fault evictions, both residential and commercial. The only exception is if a tenant is engaged in criminal activity or a lease violation which impacts the health and safety of other residents or first responders. Under the Act, Housing and District Courts will not even accept new eviction filings. Eviction cases which are already pending in court are effectively suspended until the law expires. (Under previous Housing Court orders, all evictions have been stayed until May 4). Eviction move-out orders are also suspended. All court deadlines and statutes of limitations are suspended.

Further, Landlords are prohibited from issuing notices to quit or terminating a lease. Late fees for unpaid rent are also banned. Landlords are also barred from reporting delinquencies to credit reporting agencies if the tenant provides documentation of financial hardship related to the COVID-19 crisis. Throwing a bone to landlords, the Act allows them to use last month deposits to pay for mortgage and property expenses, but they must account for the deposit at the end of the tenancy. (I don’t see any benefit there at all). The Act does not suspend the obligation to pay one’s rent.

Small Business Impacts

As stated above, the eviction moratorium also applies to certain “small business” commercial spaces. Small businesses are defined as any in-state for-profit and non-profit business with less than 150 full-time equivalent employees. It does not apply to chains or businesses operating multi-state, multi-nationally, or publicly traded companies. Commercial landlords may, however, issue payment default notices and notices to quit.

Foreclosure Relief

Under the Act, all residential property foreclosure proceedings are prohibited and suspended. The Act appears not to give foreclosure relief to investment or rental property owners, and that is one of the glaring inequities as discussed below. Lenders are banned from sending foreclosure notices, filing Land Court Servicemembers proceedings, conducting foreclosure auctions, or otherwise engaging in any foreclosure related action under state law. The Act also requires banks to grant up to 180 days of mortgage forbearance to homeowners who have been hurt by the coronavirus crisis. However, the forebearance will be added to the end of the term of the loan. The foreclosure relief part of the law expires 45 days after the Covid Emergency is lifted, or 4 months, whichever is sooner, but the Governor may issue 90 day extensions. The Act does not suspend the obligation to pay one’s mortgage.

Analysis: Potentially Devastating Impact to Small Property Owners, Potential Unconstitutionality of Law

Let me just say that I have compassion for everyone suffering through this pandemic. I have friends who are Covid-19 positive. My business is down, as are my colleagues and friends. I’m actually in favor of widespread financial relief for anyone who has been financially impacted by this crisis.

However, as I have pointed out from the very beginning of this debate on evictions, the flaw with this bill is that it does not provide for corresponding meaningful mortgage, foreclosure and real estate tax relief to rental property owners. It only goes one way. There’s no doubt that many tenants are in dire financial straights, but without providing similar relief to small landlords, they will be bearing the financial brunt of this crisis. And that’s simply unfair.

This Act will likely result in widespread suspension of rent payments by tenants because there is now no enforcement mechanisms for landlords and very little if any financial repercussions. Activists are already calling for rent strikes. As Gregory Vasil, CEO of the Greater Boston Real Estate Board, correctly stated to Bisnow, “the bottom line is, if you are an owner on the commercial or residential side, you likely won’t be getting rent until sometime in the third quarter or fourth quarter of 2020. If you end up in legal proceedings against a tenant, you very likely aren’t going to be getting rent until sometime in 2021.”

Aside from the financial considerations, there are also a number of constitutional and legal flaws with the law under the Massachusetts State Constitution, including violating the right to access courts, the Equal Protection Clause, usurping the exclusive role of the judiciary, violating the Takings Clause, and other major problems. We have not seen this type of sweeping restriction on property owner rights since the days of rent control. State legislators are essentially telling Housing Court judges how to do their job. Judges are already well-equipped to deal with this crisis, and have been doing so admirably. Shutting down the courthouse doors to only landlords and lenders while keeping it open to everyone else smacks of unfair and unequal treatment. I think this Act has a high chance of being struck down by the Supreme Judicial Court.

With the backing of MassLandlords, our statewide trade association, a group of talented attorneys including myself are exploring a legal challenge to the Act. If you are interested in donating or participating in the case, please contact me at [email protected]. We have set up a secure Paypal funding link for any donations here: https://paypal.me/pools/c/8orbLzpxbY.

The Act is embedded below (House Bill 4647).

Massachusetts Act Providing… by Richard Vetstein on Scribd

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COVID-19 Impacts: Eviction Moratorium Proposals, Tenant Payment Issues, Housing Court Delays, Stay at Home Order, and Move-In Delays

I’ve written two posts here and here about the Coronavirus (COVID-19) Global Pandemic, both focused primarily on impacts to real estate transactions and closings. Along with my colleague and fellow landlord-tenant attorney, Jordana Greenman, Esq., we want to now discuss the impact on rental housing, evictions and landlord-tenant relationships.

The number of reported cases are exploding and events are changing daily, even hourly. I first wrote about the Coronavirus (COVID-19) global pandemic on March 10, about two weeks ago. As of that writing (data as of March 9), there were 729 reported cases in the US, with 27 deaths. As of today March 27, Johns Hopkins is reporting that the United States has surpassed China with over 86,000 confirmed cases and over 1,300 deaths. With the well publicized testing delays, the real number of cases is likely far higher. Unfortunately, Massachusetts has not been spared, with over 2,400 reported cases, including over 140 Boston city hospital workers.

Gov. Baker has ordered the shutdown of all schools and day-cares through May 6, closed down restaurants and bars, and banned gatherings over 25 people. Last week, all Trial Courthouses were shut down for two full days. They have re-opened, but not to the public and with very limited availability for hearing cases (other than true emergencies). On Monday March 23, Gov. Baker issued a “stay at home” advisory, essentially closing down all “non-essential” businesses.

Of course, the big problem for the rental housing industry is the economy has gone into the tank. Experts predict that unemployment will rise to Great Depression levels. The stock market has lost some 30% of its value. When people have lost their jobs and lost their savings, they can’t pay the mortgage or the rent.

Legislation for Eviction Moratorium

In Boston, Mayor Marty Walsh has announced a voluntary eviction moratorium agreement with the city’s largest landlords including Trinity Financial, Winn Residential and the Community Builders, which manage hundreds of apartments in Boston. On Beacon Hill, legislators have filed a bill calling for a state-wide moratorium on evictions during the pendency of the COVID-19 State of Emergency. At the federal level, HUD has suspended all evictions for FHA insured single family residences. It’s unclear whether this also applies to HUD Section 8 rental subsidy participants. Lastly, Attorney General Maura Healy just implemented new regulations prohibiting consumer debt collection activities for a 90 day period, however, landlord-tenant payments are excluded from the regulation.

The problem with these legislative efforts, of course, is that there needs to be a corresponding moratorium on the payment of mortgages, real estate taxes and property expenses for rental property owners, otherwise small landlords will shoulder an enormous amount of the financial burden during this crisis. “If renters don’t have money to pay rent, landlords don’t have money, either,” Doug Quattrochi, executive director of the group MassLandlords told the Boston Globe recently. “That’s money that pays plumbers and electricians and mortgage bills. If they’re a senior on a fixed income, it might be how they buy food.”

Gov. Charlie Baker indicated during his last press conference that he was not at a point where he would impose such a moratorium. Thus, as of now, a moratorium on rental payments in Massachusetts is unlikely, but of course, that could change, and such change would disproportionately affect the small landlords.

Housing Court COVID-19 Response

Practically speaking however, there exists a de facto moratorium on evictions because the statewide Housing Court has deferred hearing eviction cases through April 21. Under two new Standing Orders, all Housing Courts are closed to the public through at least until April 6, 2020, and are hearing only emergency matters. All evictions (summary process) are impacted by the order, and are currently on hold until April 21, 2020. A party may seek to advance their case upon a showing of “good cause,” but my feeling is that those will be quite rare. “Emergency matters” include the following circumstances: applications for injunctive relief, temporary restraining orders where a complaint involves a lockout, condemnation, no heat, no water, and/or no utilities; conduct and or conditions endangering the health safety and welfare of residential occupants and others; stay of levy on an execution; or where access is required to address an emergency (e.g., burst water pipe, gas fumes, etc.).

We want to highlight the likely scenario that once this crisis (hopefully) ends, the Housing Court will be swamped with cases in Spring/Summer 2020. On average, the Boston Housing Court itself receives hundreds of new eviction cases weekly. The COVID-19 postponement is sure to result in a huge backlog of eviction cases for many months to come and even more crowding in the courthouses.

Legal Guidance: Advice to landlords dealing with tenants who cannot pay rent — You have to take a wait and see approach. Legally, you are still allowed to issue a 14 day notice to quit for non-payment of rent. You are also allowed to file an eviction complaint in the Housing Court. But you will likely not get in front of a judge until sometime in May, and possibly longer. So, it’s a good idea to go ahead and have an attorney send out the notice to quit and get the summary process complaint filed, and then you’ll have to wait in line and see what happens. We do not yet know the order in which cases will be scheduled or if those filed during this time will be given priority.

Stay At Home Order: Impact on Rental Agent Activities

Gov. Baker’s Stay at Home guidance/order appears to apply to real estate and rental agent activities. They are not specifically mentioned as one of the enumerated “essential” businesses, and their activities do involve much inter-personal contact in the ordinary course of business. Boston Mayor Marty Walsh has issued a formal letter advising rental agents not to hold showings of occupied rental units. He also issued guidance that any prospective tenants who are sick should not be allowed to view a unit in person, and added that open houses should not be used to market properties that are for rent or for sale. Anecdotally, I’m hearing that some (but not all) rental agencies are shutting down operations and many are simply working remotely.

Legal Guidance: showing rental properties live in person is a violation of the Stay At Home Order, and incongruent with the public health policy behind it. Rental agents should instead use virtual showing technology, FaceTime and Zoom to replicate in person showings. Moreover, holding in person showings could lead to someone getting infected with COVID-19, then a big lawsuit against the rental agent. We don’t want to see that either.

Move-in Delays

Many tenants are scheduled to move in the coming months and, while moving companies have been deemed “essential” under the Stay at Home Order, many people may feel safer staying in place than moving to an unknown locations. Landlords and tenants should be encouraged to work together in the event of delays.

We have created a COVID-19 Lease Rider addressing the issue of move-in delays during this crisis. While it may be tempting for a landlord to keep a prepaid first month’s rent, last month’s rent and security deposit in the event a tenant either cannot move or feels unsafe doing so, this may open landlords up to liability and legal claims are sure to ensue. We encourage the parties to work together and be flexible. 

For current occupancies, landlords should remind their tenants to keep the apartments clean and sanitary. Most importantly, during tenant turnovers, landlords should hire a sanitization company (e.g., Service Master) to clean and disinfect units prior to a new occupancy.

Conclusion

Our collective appreciation goes out to the many health care and public service employees working to help combat this epidemic. The Massachusetts’s official COVID-19 website contains the most up-to-date information. We are also available to consult regarding your current or pending landlord-tenant needs.

Feel free to email Rich at [email protected] or Jordana at [email protected].

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