Massachusetts eviction attorney

Non-payment Evictions Put On Hold Until Tenant RAFT Applications Are Denied/Approved

Ignoring strong opposition from property owners, the Legislature and Gov. Healey have re-enacted a Covid-19 era tenant protection law (Chapter 257 of the Acts of 2020) which puts an indefinite hold on any non-payment eviction where the tenant has applied for rental assistance (RAFT) until such time as the application is approved or denied. This was part of the FY24 budget signed by Gov. Healey in early August, and fell under the radar of many folks in the rental property community.

As the saying goes, justice delayed is justice denied. The net effect of this reenacted policy will be delay, delay, delay for all landlords filing non-payment of rent eviction cases, on top of the already hefty delay caused by the pandemic backlog of cases. When this law was originally put in place in 2020, landlords saw their time in court triple, according to Housing Court statistics. We can expect that to remain the same, or even worse.

Even more problematic, the limit for RAFT assistance in any 12 month period has been reduced to $7,000 — barely enough to cover a few months rent in the Greater Boston area. Most housing providers do not start evictions until tenants are behind several months, so by the time they get to court, arrearages are typically in the many thousands, and often well over the $7,000 cap. Furthermore, understaffed state agencies handling RAFT applications can be hit or miss. During the pandemic, tens of thousands of rental assistance applications “timed out” without explanation. Tenants will be able to further drag out the eviction process, resulting in many landlords being forced to negotiate huge unpaid rent concessions just to gain back possession of their units. I see this in court on a daily basis.

The “new” Chapter 257 law provides as follows:

In an action for summary process for nonpayment of rent, a court having jurisdiction over said action for summary process shall:

(i) grant a continuance for a period as the court may deem just and reasonable if, either at the time the answer is timely filed or on the date the trial is scheduled to commence: (1) the tenancy is being terminated solely for non-payment of rent for a residential dwelling unit; (2) the non-payment of rent was due to a financial hardship; and (3) the defendant demonstrates, to the satisfaction of the court, a pending application for emergency rental assistance; provided, however, the court may consider any meritorious counterclaim brought in said action for summary process;

(ii) issue a stay of execution on a judgment for possession if the requirements in clauses (1) to (3), inclusive, of paragraph (i) are met; and

(iii) not enter a judgment or issue an execution before the application for emergency rental assistance has been approved or denied.

The “new” Chapter 257 only applies to non-payment cases; it does not apply to no-fault, for cause, or post foreclosure cases. The law also contains some language which would allow a landlord to challenge whether the nonpayment of rent is actually due to a legitimate financial hardship. This would most likely require some type of evidentiary hearing. I will keep you informed as to any further developments with the new Chapter 257.

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In my 25 years of law practice, I’ve seen a lot of crazy stuff, but this recent eviction case may top my list of “Professional Tenants.” With 14+ evictions, a slew of larceny charges on their record, and thousands in past rent owed in judgments, a husband and wife team from Shrewsbury have perfected an alleged pattern of fraud on local landlords. In my client’s case, they provided him with a bogus credit report and then proceeded to bounce a $13,500 deposit check for a 4 bedroom rental house in Shrewsbury. They failed to make good on the bad check, and squatted in the house for five months without paying a dime in rent, forcing the owner to evict them in Worcester Housing Court. After an 11th hour attempt to delay the move out where the husband lied in front of the judge, we completed a forced move out of the 3,000 sf home. The moving company president said this was the 4th time he has evicted this couple. With the lost rent and mandatory moving and storage fees, my client now faces a $30,000 loss. Before this, court records indicate the couple allegedly engaged in a similar pattern with other local landlords, jumping from one property to another, leaving a trail of unpaid judgments, attorney fees, and moving/storage bills.

So here in tenant-friendly Massachusetts we have these type of cases which essentially go undeterred, while tenant advocates and local politicians try to impose “just cause” legislation making it even harder to evict tenants. These are not isolated instances. Take a look at the Housing Court dockets and you’ll see hundreds if not thousands of massive (and worthless) judgments for unpaid rent.

The only saving grace in my case is that we were able to have criminal charges for larceny by check brought against the husband who passed the bad check. And the eviction *only* took three months start to finish, which is light speed these days. If you are a Worcester area rental property owner, please watch out for these people!

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Suffolk Sheriff Deputies Enforcing Eviction Order

Recent Case Shows Fundamental Flaws Remain In The Housing Court Eviction System

I recently concluded an eviction with a forced moved out in Dorchester, MA, which epitomizes everything that is wrong with the system here in Massachusetts. For the privacy of the parties, I will not divulge the names or docket number of the case.

I represented the property owner, a young woman who grew up low income in Worcester and put herself through college, then law school, and is now working at a law firm. She bought a condo unit in Dorchester, but then had to relocate for work, so she rented it out to four people, including the defendant-tenant. The tenant, a young male, had a very hard time getting along with the other housemates so the three other tenants moved out, leaving this tenant there alone. Initially my client said that if he found new roommates, he could stay, but it was apparent that he was not going to do that, so we issued a notice to quit back in January 2021. He also stopped paying any rent.

When he failed to move out, we filed the eviction in Eastern (Boston) Housing Court in March 2021. The tenant was savvy and knew how to work the system. He took advantage of free legal services attorneys at every juncture in the case. We had two mediation sessions, where initially he appeared willing to enter into a move out agreement only to pull the rug out at the very last minute. We even dangled a cash-for-keys deal, which he rejected.

The tenant then tried to claim a jury trial after the deadline to do so, so we had a motion hearing on that issue, which thankfully Judge Kelleher denied that motion, but this also delayed the case. There was a snowstorm cancellation on the original trial date thrown in as well. We finally received a firm bench trial date in March 2022 — a full year after the case was filed. The tenant also refused to apply for RAFT aid (and we did not want to pursue that because we would be required to dismiss the case). Believe me, I tried to push the case forward as fast as I could, but with the pandemic case backlog it is very difficult.

My client came in from California for the trial which took all of 20 minutes, and went in our favor on all issues. Meanwhile, the tenant had still not paid a penny in rent, and the rent balance had ballooned to over $40,000 by that point. Judgement for possession entered for the landlord, and an execution for possession (move out order) issued in April 2022.

Due to the pandemic caused backlog of cases, the Suffolk Sheriff’s Office is extremely backed up in scheduling eviction move-out’s. We did not receive a firm date for our move out until June 1. We tried to negotiate a voluntary move out with the tenant but he would not budge. After all, he was living rent free himself in a 4 bedroom condo unit — why would he move out?

On June 1, a team of Suffolk Sheriff deputies, movers and a locksmith (all paid for by the landlord) conducted the move out. The tenant was completely non-cooperative and refused to open the door. A supervising lieutenant and Boston police officers were called as back up because you never know what could happen in this day and age. After about a 90 minute stand off, the deputies breached the door and gained entry. Not surprisingly, the unit was absolutely trashed, rugs destroyed, bottles of liquor everywhere, walls damaged, etc. Huge thanks to the Suffolk Sheriff deputies who were unbelievably professional and a pleasure to deal with.

After 16 months since the notice to quit was issued, here are my client’s losses: Lost rent ($55,000), attorneys’ fees ($10,000 range), court costs and eviction move out costs ($6000 range), clean up restoration costs ($5000+ range).

It’s these type of cases which should be highlighted when state legislators push the Right to Counsel and Just Cause Eviction bills. Massachusetts remains one of the worst states for landlords in the country. That much is undisputed.

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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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Just a quick note about yet another recent case demonstrating the backwards nature of Massachusetts landlord-tenant law. In CMJ Management Company v. Wilkerson, the Appeals Court ruled that a tenant could be evicted from Section 8 housing because her grandson shot and injured a neighbor child with a BB gun. Sort of reminds me of the movie the Christmas Story — you’ll shoot your eye out kid!

But — hold on — the court ruled the tenant would not be evicted because the housing court judge made a legal error by striking the tenant’s jury trial because she (not being represented by a lawyer) did not file a pre-trial memorandum. The net result is that the landlord is back to the starting line — the case goes back to the Boston Housing Court for a retrial, some 3 years after the eviction case was originally filed. Only in Massachusetts!

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Landlords Cry Foul Over Ruling

In a ruling which reaffirms Massachusetts’ place as one of the most landlord-unfriendly jurisdictions in the country, the Supreme Judicial Court ruled yesterday that a landlord’s minor security deposit law violation over failing to pay $3.26 in interest can be a complete defense to an eviction case even where the tenant owed thousands in rent. After this ruling, tenants will have another powerful tool to avoid eviction in both no-fault and non-payment cases. A change in this ruling would only come about through legislative action — which is usually a non-starter on Beacon Hill.

Rich’s Legal Advice: I have long advocated to my landlord clients that they NOT take security deposits. This ruling should be the nail in the coffin on that issue.

Garth Meikle v. Patricia Nurse

The Massachusetts Security Deposit Law provides a three month penalty, including payment of the tenant’s legal fees, against landlords who don’t follow its strict requirements. One of the requirements of the Security Deposit Law is that annually the landlord must pay the tenant any accrued interest on the deposit. That’s what got landlord Garth Meikle in trouble with his tenant who was three months behind in rent. Meikle brought a no-fault eviction case in the Housing Court, but the tenant raised the counterclaim and defense that she did not receive interest on the security deposit. Ruling that the landlord’s minor violation of the security deposit was not a complete defense to the eviction, the Housing Court Judge Marylou Muirhead allowed the eviction to proceed, ordering the tenant to pay the past due rent, but deducting the security deposit plus the $3.26 in unpaid interest. However, the tenant, represented by Harvard Legal Aid Bureau, appealed her case all the way up to the Supreme Judicial Court.

Statutory Interpretation

The issue on appeal was the distinction between a counterclaim and a defense for a security deposit violation. Everyone agrees that the tenant can raise a security deposit violation as a counterclaim (entitling the tenant to up to triple damages), but the question was whether such a violation could be a complete defense to an eviction, preventing the landlord from regaining possession of the rental unit. Landlords and yours truly argued that a security deposit is a separate financial matter between the landlord and tenant which has nothing to do about whether the tenant owes rent or the condition of the property.

Justice Geraldine Hines, writing for SJC, disagreed and found that a security deposit violation was within the list of defenses to an eviction. Despite quite unclear and murky statutory language, the justice was persuaded that the Legislature’s historical tightening of penalties and sanctions against landlords was indicative of the legislative intent to include a deposit violation among the list of available defenses to eviction.

So we’ll have to thank the SJC and the Legislature for sticking it to Massachusetts landlords once again. With tenant activist groups pushing “Just Cause Eviction” i.e, rent control and the Legislature’s continual failure to enact any sensible landlord-tenant reform, no wonder Massachusetts has a well-deserved reputation as one of the most tenant-friendly states in the union.

I’ve embedded the opinion below.

Garth Meikle v. Patricia Nurse by Richard Vetstein

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Copyright Josh Reynolds 2010

Landlord Sued for Wrongful Death After Assailant Shoots Four Guests At House Party, Killing One

A landlord’s worst nightmare is someone getting hurt, or worse, shot and killed on their rental property, and then getting sued for wrongful death. This was the situation facing a property owner in Dorchester in the recent case of Belizaire v. Furr, (Appeals Court 13-P-1908 Sept. 11, 2015). Fortunately for the landlord, the Court ultimately concluded that she was not legally responsible for the shooting because there was no reason to predict it would happen. Had the facts been different in this case, the landlord would not have been so luck to escape liability. After discussing this important case, I’ll talk about some ways that landlords can manage their risk.

Shooting at House Party, 5-7 Edson Street, Dorchester

The landlord owned a two-family in Dorchester which she rented out to several individuals. The landlord was fairly lax with written lease agreements, with some of the tenants having leases, but others not. On the night in question, the landlord’s son and one of the occupants (who were friends) hosted a party with a DJ, alcohol and dancing. Carl Belizaire attended the party as a guest. Late at night, an unknown assailant shot up the room, killing Belizaire and injuring three other guest. The assailant was never found or charged. There was no prior history of violence at the property.

Landlord Sued For Wrongful Death

Belizaire’s estate sued the landlord for wrongful death, alleging that she failed to keep the property safe. The Court first analyzed whether there was a tenancy or lease in place, because that would minimize the landlord’s liability and control over injuries occurring on rental property. The landlord’s failure to secure leases with the tenants at the property, particularly the tenant who threw the party, resulted in the court concluding that there was insufficient evidence to rule that there was a valid tenancy in place to shield the landlord from liability.

The Court, however, ultimately ruled that the landlord was not liable for the shooting because there was no evidence of prior shootings or similar violent incidents on the property. Although there was evidence of prior drug activity at the property, the court found this insufficient to support a finding of liability. There was no evidence of other large parties with uninvited guests similar to the one in question taking place on the property. Nor was there any evidence that the landlord was affiliated in any way with, or knowledgeable about, the assailant or any dispute that the assailant may have had with the victim. The evidence submitted suggests that the victim’s death was tied to events beyond the party at the rental property. As a general rule, a landowner does not owe a duty to take affirmative steps to protect against dangerous or unlawful acts of third persons. In certain exceptional circumstances, landlords may be liable for ignoring criminal activities that occur on their premises and were known or should have been known to them. That was not the case here.

Managing The Risks Of Property Ownership: Use Strong Leases and Set Up LLC’s to Hold Title

Many of my landlord clients often worry about liability issues at their rental property. They often ask me whether they can get sued over someone getting hurt on their rental property and what they can do to minimize their risk.

The landlord in this case made some catastrophic mistakes which, had the facts been different, could have resulted in a multi-million dollar liability. The first mistake she made was not securing written leases for all tenants and occupants at the rental property. The form lease that I have drafted contains a unique indemnification clause which would have help shield the landlord for liability for injuries caused by the tenants. The second major mistake made by the landlord was holding title to the rental property in her individual name, thereby exposing her personal assets to a lien or judgment. Although not always appropriate for every landlord, it’s a prudent idea to hold rental property in a limited liability company which would shield the landlord’s personal assets from liability. There is expense to set up the LLC and there is a $500 annual fee, but in my opinion, it’s well worth it relative to the risk of getting sued for wrongful death.

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100316_photo_vetstein-2.pngIf you are a rental property owner and would like advice concerning your leases or would like to discuss setting up an LLC, please contact me at [email protected] or 508-620-5352. I would be happy to help you in any way.

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gill08900Court Halts Eviction For Distressed Homeowner, Validity of Foreclosure In Question (Wells Fargo v. Cook, Mass. Appeals Court May 19, 2015)

In response to the foreclosure crisis, HUD enacted regulations requiring lenders to provide distressed borrowers with a meaningful opportunity to settle their FHA-insured mortgages and obtain a loan modification during a face-to-face interview. In an effort to accommodate the hundreds of Wells Fargo clients facing foreclosure in Massachusetts, the San Francisco based lender held a mass “homeowner’s workshop” at Gillette Stadium in August 2008.

Three months behind on their Mattapan mortgage, Nancy Cook and her daughter showed up to the stadium with a little over $10,000 in cash, in anticipation of signing a repayment plan. After waiting in a long line, Cook received a ticket and sat down with a bank representative. Despite HUD guidelines requiring that loan representative have actual authority to settle accounts and enter repayment plans, the Wells Fargo representative said that he was unable to accept any payments at the event. The counseling session lasted only 15 minutes, but the reprepresentative promised that Ms. Cook would receive a loan modification package in the mail.

Ms. Cook did receive a Special Forbearance Agreement in the mail, which she accepted, and made the first three payments under the agreement. When she went to make the fourth payment, Wells Fargo rejected it, claiming that Cook owed it $2000 more than the scheduled payment. Wells Fargo then issued a default notice, accelerated Cook’s debt, and foreclosed her home.

Several years after completing the foreclosure sale, Wells Fargo brought an eviction case against Cook and her daughter, who at this time were represented by lawyers from Harvard University Legal Aid. (The reason for the long delay is unclear). Boston Housing Court judge Marylou Muirhead ruled against Cook, clearing the way for her eviction.

On appeal, Appeals Court Justice Scott Kafker halted Cook’s eviction, ruling that the Housing Court judge should reconsider whether the Gillette Stadium mass counseling event complied with HUD guidelines. Justice Kafker noted that a reoccurring theme of the HUD rules is to provide personalized consideration for each homeowner. That apparently was not done, said the justice, or at least there is a dispute as to whether the mass Gillette Stadium event could satisfy that guideline.

Of particularly interest to the real estate conveyancing community, the Court held that if the lower court ultimately rules that the counseling session was insufficient, the lender could be found in noncompliance with the mortgage terms and foreclosure power of sale, and its foreclosure could be deemed defective and invalid. A court holding to this effect could potentially invalidate completed foreclosures of FHA insured mortgages over whether the lenders complied with the face-to-face meeting requirements of the HUD guidelines. Ensuring a lender’s compliance with HUD rules is not typically part of a title examiner’s scope of examination. Lenders would need to provide an affidavit certifying that all pre-foreclosure counseling requirements were complied with. Accordingly, this is yet another reason why obtaining an owner’s title insurance policy is a prudent choice for all buyers of foreclosed properties.

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917BdkbVovL._UX250_Elizabeth Gerhman, a writer for the Boston Globe Magazine and owner of two rental units, is fed up with how the Massachusetts legal system favors tenants over landlords.

In her article Think It’s Tough to Rent? Try Being a Landlord, she describes that

“In just five years as a rental, the other [unit] — which has hardwood floors, granite countertops, and a $1,200 dishwasher — has been a nightmare, with tenants who bounced checks, didn’t pay their rent, and threatened to call the building inspector over, among other things, a loose toilet seat, a missing outlet cover, and, I’m not kidding, a bedroom that is allegedly 0.389 of an inch too small. The tenant who detailed these horrific, slum-like conditions also threatened to take me to court over some food that had spoiled when the refrigerator broke — which is what prompted the intimidation tactics in the first place.”

As landlord groups have been arguing for years, one of the major problems with the current system is that Massachusetts has no rent escrow law. Under the present system, a tenant can withhold months of rent for any cosmetic or minor problem with the unit until the eviction case is resolved, leaving the landlord unable to pay their mortgage. We call that the “free rent trick.” As Ms. Gerhman correctly points out, “with an average judgment of about three months’ rent, this can be a real hardship for house-poor landlords. And once a landlord does evict a tenant who owes back rent, he or she must pay to move the tenant’s belongings out of the apartment in addition to three months’ storage costs.” As I was quoted in the article, many landlords opt for “cash for keys” deals to avoid huge losses during an eviction.

A rent escrow law would require any tenant who withholds rent to simply pay it into an escrow account until the unsafe conditions or code violations are repaired and the eviction case is resolved. After repairs are done, either the landlord and tenant agree on how the escrowed rent should be divided, or a judge orders a fair settlement. The “free rent trick” would be gone and landlords less likely to get left holding the money bag.

Sounds fair? Tell that to your state legislators who have been sitting on rent escrow bills for over a decade.

New rent escrow bills return to the Legislature this session as House Bill 1654 sponsored by Rep. Chris Walsh and House Bill 1112 sponsored by Rep. Brad Jones. Both bills are expected to get hearings at the State House this spring. I will keep you posted.

Personally, I think a fair legislative compromise would be for landlord groups to support the Housing Court Expansion bill under the condition that a Rent Escrow Bill is passed along with it. That would be a win-win for both sides.

In the meantime, please email and call your local state rep and senator and tell him or her you are in favor of these bills. If you have any tenant horror stories, make sure you include those as well. Also, consider joining your local chapter of the Massachusetts Rental Housing Association or Masslandlords.net. Both organizations will be coordinating legislative efforts on the rent escrow bill and other landlord legislation. Lastly, please share this article and the Globe Magazine article on your Facebook pages, Twitter feeds and email blasts!

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80140012Legislation Set To Expand Housing Court Statewide

About 30% of people in Massachusetts do not have access to the state’s Housing Court — one of Massachusetts’ specialized courts handling landlord-tenant disputes, evictions and sanitary code enforcement. The unserved areas include the largest county in the state, Middlesex County and most of Norfolk County, with high density rental towns including Cambridge, Framingham, Brookline, Waltham, Dedham, Malden and Somerville. Also unserved by a Housing Court is all of Cape Cod and the Islands and Chelsea.

Under a plan touted by Supreme Judicial Court Justice Ralph Gants, the Housing Court would be expanded to cover the entire state by July 1, 2015. “We believe that all residents of the Commonwealth, regardless of where they live, should have the opportunity to have their housing case heard by a Housing Court, and benefit from its specialized expertise in residential housing matters,” Gants said in a statement.

As an eviction and landlord-tenant attorney who practices quite a bit in both Middlesex County and in the Housing Court, I can say positively that this is a great idea. In Framingham District Court, for example, the Thursday eviction session can be standing room only with landlords and tenants often spilling outside into the hallway. The busy court is already swamped with criminal matters, and getting a trial date in an eviction case can take upwards of several months — certainly not “just, speedy and inexpensive” as mandated by the Uniform Summary Process Rules.

The Housing Court would be able to take the burden off the local, overworked district courts. With a few more full time judges and already with one of the lowest cost-per-case ratios of any court, they should be able to handle the increase in cases. The “X-factor” will be the overall cost, of course.

The Legislature is set to take up the proposal in early 2015. I’ll keep tabs on any developments.

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eviction-notAvoid Being Dead On Arrival In Eviction Court

The first step in evicting any Massachusetts tenant is issuing a notice to quit which is a legal document formally notifying the tenant that his tenancy is being terminated for a particular reason and giving him the date upon which he must move out. There are very specific rules as to how the notice must be drafted, what it must say, and how it must be delivered. Any mistakes in providing a proper notice to quit can torpedo your eviction case before you even see a judge. Needless, to say I recommend hiring an experienced Massachusetts eviction attorney to handle drafting and serving the notice to quit. Here are all the various rules and considerations for sending out a notice to quit.

A.      Non-payment of Rent

One of the most common reasons for starting an eviction is for non-payment of rent. Whether the tenant has a written lease or is a tenant at will the landlord must send the tenant a 14 day “notice to quit” before starting the eviction process. The notice to quit will typically provide as follows:

Dear Mr. Tenant: This office represents your landlord, Mr. Landlord. You are hereby notified that your tenancy is terminated and to quit and deliver up and move out of the premises you now rent namely: 123 Main Street, Anytown, MA and all appurtenant uses thereto 14 days after your receipt of this notice. The reason for this notice is that you have failed to pay the rent due as follows: Total Owed: $7,200.00.

1. Service of the Notice

Many landlords believe that a notice to quit should be served by certified/registered mail. This is a very bad practice because the tenant can always avoid the mailman. In court, the landlord has the burden of proving that the tenant received the notice. The best practice is to have the notice to quit served by a constable or sheriff to ensure proof of delivery. Under the court rules, service by a constable or sheriff is “good service” whether the tenant is served in hand or the notice is left at the premises.

2.  Tenants At Will

If a landlord is sending a 14 day notice to quit for nonpayment to a tenant at will (as opposed to a tenant with a written lease for a set term), the notice must also include the following language:

 “If you have not received a notice to quit for nonpayment of rent within the last twelve months, you have a right to prevent termination of your tenancy by paying or tendering to your landlord, your landlord’s attorney or the person to whom you customarily pay your rent the full amount of rent due within ten days after your receipt of this notice.”

3. Calculating Notice Date

The next trap for the unwary is calculating the notice date. You cannot start the eviction until 14 days have elapsed since the tenant is served with the 14 day notice to quit. So you need to know exactly when the tenant was served so you can properly calculate the date upon which you can start summary process. If you start the eviction too early, the case will get dismissed.

4. Cure Rights

Landlords should also be aware that under tenant-friendly Massachusetts law, a tenant at will can cure and reinstate his tenancy by paying the outstanding rent (plus court costs if claimed) up to the Monday answer date in the eviction case — and most judges won’t evict any tenant who shows up to court fully paid up.

Sometimes, landlords make the mistake of accepting rent from a delinquent tenant without endorsing the check the proper way in order to avoid reinstating the tenants. If you receive a rental payment after a notice to quit is issued, you must endorse the check as follows:

“Accepted for use and occupancy only and not for rent”

Your notice to quit should also have the following non-waiver language:

If your tender of rent or payments does not comply with the requirements noted above or otherwise cure or excuse the breach as provided by law, any funds paid by you after the date of this notice shall be accepted for use and occupancy only and not for rent, shall not waive this notice or any subsequent eviction proceedings, nor shall it create or reinstate any tenancy.

B.      Termination of Tenancy At Will

Sometimes landlords just want to move on from a problematic tenant at will, raise their rent or change the lease terms. In these situations, landlords must serve a notice terminating tenancy at will. This is sometimes called a 30 day notice, but this is actually inaccurate because almost always more than 30 days notice is required to be given. It’s really a rental period notice.

Generally, at least a full rental period of notice must be given to a tenant at will, but the termination date must be at the end of the following rental period, or 30 days whichever is longer. For example, if you are terminating a tenancy at will on June 10, the notice must provide that the tenant must vacate by the following July 31. Terminating a tenancy at will in February will also be problematic.

In practice, judges will often give tenants in no-fault evictions a bit more leeway in terms of vacating the premises.

C.  Non-Renewal of Lease/Offer of New Tenancy

Most landlords get tripped up in the situation where a written lease self-extends but the landlords wants to raise the rent, change the lease terms or move on from the tenant. In this situation, a notice terminating tenancy must be issued to formally terminate the tenancy, coupled with an offer of a new lease/tenancy. If the tenant does not accept the offer of a new lease/tenancy, the tenancy will end on the date provided in the notice. If the landlord wants the tenant to move out, he doesn’t need an offer of a new tenancy obviously.

D.      For Cause Situations

“For cause” evictions encompass a wide range of bad behavior by tenants in violation of lease provisions or the law. It could be illegal activity, drug use, excessive noise, uncleanliness, harassment of other residents, non-approved “roommates” and the like. Like all other evictions, the landlord must issue a notice to quit to the tenant stating the specifics of the offenses. If the tenant has a standard form lease, the notice to quit will typically be a 7 day notice. For tenants without a written lease, it’s a gray area, but I would use a 30 day notice. For drugs and other illegal activity, Massachusetts also has a special expedited eviction process where you can go to court right away without any prior notice to quit, but the tenant is entitled to notice of the court proceeding and an opportunity to contest it and cross-examine witnesses.

Sending a proper notice to quit is merely the first step in the eviction process, but a very important one as it can get your case dismissed before a judge hears the merits of the case. There are so many other procedural traps for the unwary which follow during an eviction case. Again, if you are considering evicting a tenant, do not attempt to do it yourself.

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100316_photo_vetstein-2.pngIf you need assistance drafting and serving a notice to quit and evicting a tenant, please contact Attorney Richard Vetstein via email at [email protected] or telephone at 508-620-5352.

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Decision Could Have Wide Impact Upon Marijuana Use By Tenants

The law on marijuana and rental housing remains clouded to say the least. And that’s no pun. This week on April 8th, the Supreme Judicial Court will consider the first of probably many cases dealing with marijuana use in rental housing. In this particular case, Boston Housing Authority v. Figgs (SJC 11532), the high court will assess whether a state housing authority may evict a subsidized tenant and terminate her federal housing benefits for the alleged possession of less than one ounce of marijuana — which is no longer a criminal offense in Massachusetts, but still a crime under federal law. With the decriminalization of small amounts of marijuana, the rollout of the medical marijuana dispensaries and the conflict with federal drug laws, this case may have wide-ranging impacts upon the relationships of landlords, tenants, housing authorities and even condominium owners and trustees over the use of marijuana, both recreationally and medicinally.

Oral arguments are available via live stream here. Legal briefs and filings in the case can be found here. A final opinion and ruling is expected this summer.

This case should also put the new Medical Marijuana Law into re-focus. Landlords have been increasingly anxious about how to manage and regulate tenants’ use of medical and recreational marijuana, if at all. The law not only grants qualified patients the right to obtain medical marijuana but it also allows patients the right to grow a two-month supply of marijuana at home if they cannot get to a marijuana dispensary because they are too sick or too broke. There is a bill in the Legislature granting landlords the right to prohibit medical marijuana on rental property without fear of being sued for disability discrimination.

I’ll be monitoring this new and dynamic area of the law. It will surely be a hot topic in the next couple of years.

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100316_photo_vetstein (2)-1Richard D. Vetstein, Esq. is an experience Massachusetts landlord tenant and real estate attorney. If you are concerned or have questions about the new Medical Marijuana Law, please contact him at[email protected].

 

 

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eviction-notBill Would Curb Tenant Abuses of Eviction Process | State House Hearing Set For Feb. 25

For the last decade, Massachusetts landlords have been lobbying for a tenant rent escrow bill which would prevent tenants from using the infamous “free rent trick” in evictions. This may finally be the year that the Legislature passes this much needed reform to curb tenant abuses of the eviction process. Two bills, H.B. 1131 and H.B. 1110, have made their way to public hearing at the State House for a February 25th hearing before the Joint Committee on Housing. Landlords are urged to come and testify before the committee and otherwise support the bill by contacting their local representatives and senators.

The bills are designed to reform tenant abuses of the rent withholding law, including the infamous “free rent trick.” The free rent trick works like this:  Tenant stops paying rent for various reasons, such as economic hardship or by design. After receiving a 14 day notice to quit for non-payment of rent, the tenant will immediately call the board of health to get the owner cited for minor or cosmetic code violations such as a hole in a window screen. Under current Massachusetts law, any code violation cited, however minor, allows the tenant to withhold rent until the eviction case is resolved. What usually happens is that the tenant skips out of town or agrees to a move out but never pays the months of accrued unpaid rent, leaving the landlord stuck with thousands of lost income to pay their mortgage and expenses.

Unlike most other states, there is no requirement in Massachusetts that the tenant post the withheld rent into some form of escrow account. There have been many instances where tenants have intentionally inflicted property damage to claim code violations or just made them up altogether.

A mandatory rent escrow law would require any tenant who exercises their right of rent withholding to pay the withheld rent into an escrow account until the unsafe conditions or code violations are repaired. After repairs are done, either the landlord and tenant agree on how the escrowed rent should be divided, or a judge orders a fair settlement. In most cases, the owner will get back most of the withheld escrowed rent. But the most important impact of a mandatory rent escrow law is that those nonpaying tenants who do not escrow can be promptly evicted for nonpayment of rent. Although nonpayment evictions will still take on average three months to resolve, much-longer-delayed evictions and the free rent trick will be stopped.

The bills will most benefit small landlords and owners-occupants of multi-family residences who rent out apartments. These property owners are typically on strict budgets, and any lost rent and attorneys’  fees will prevent them from paying their mortgages, real estate taxes and property expenses, potentially leading to default and foreclosure.

For more information on how you can support these bills, please contact the Massachusetts Rental Housing Association and the Massachusetts Small Property Owner’s Association.

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100316_photo_vetstein (2)-1Richard D. Vetstein, Esq. is a vocal advocate for Massachusetts landlord rights and can be reached at [email protected] or 508-620-5352.

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Foreclosure2-300x225.jpgHousing Courts Will Likely Face Increased Caseload

Giving an early Christmas present to distressed homeowners, the Supreme Judicial Court today ruled that a foreclosed upon homeowner may challenge a bank’s title and foreclosure sale irregularities through counterclaims in a post-foreclosure eviction in the Housing Court — rather than being forced to file a separate equity lawsuit in the Superior Court. The case is Bank of America v. Rosa, SJC-11330 (Dec. 18, 2013).

The high court also held that the Housing Court has jurisdiction to hear other counterclaims against foreclosing lenders, including fair housing, consumer protection (Chapter 93A), and HAMP related claims.

The likely impact of this ruling will be that the already busy Housing Court will now be “Ground Zero” for foreclosure related litigation. Foreclosed property owners will have more weapons to delay and prevent being evicted after foreclosures.

Overall, while the ruling seeks to protect the rights of foreclosed property owners, it has the potential to delay the housing recovery in Massachusetts. The longer folks who don’t pay their mortgages are allowed to live rent free in their foreclosed houses, the more the housing market suffers. There are plenty of creditworthy buyers and investors willing and able to buy up and rehab these foreclosed properties. Letting them sit and blight neighborhoods doesn’t help anyone in the long run. Just my opinion…

The ruling is embedded below. (Click for link).

Bank of America v. Rosa

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Common Eviction Defenses Ruled Unavailable To Squatters Who Lived Rent/Mortgage Free For 3 Years

In a April 10, 2012 ruling, the Massachusetts Appeals Court just made it easier for foreclosing banks to evict squatters of foreclosed properties. This is one of the few pro-bank Massachusetts decisions coming out of the foreclosure crisis, and should help speed up the disposition and sale of foreclosure and REO properties which, in turn, should help the housing market.

The case is Deutsche Bank v. Gabriel, and can be downloaded here. The defendants were all members of a single family living  at 195-197 Callender Street in Dorchester for over 28 years. In 2009, the property went into foreclosure, and Deutsche Bank acquired title by foreclosure deed. As has become common in neighborhoods throughout Boston, the foreclosed upon family refused to leave, and Deutsche Bank brought eviction proceedings against them.

The family fought the eviction tooth-and-nail, and asserted the very common statutory defense based on poor property conditions. This defense, if successful, can prevent a landlord from recovering possession. Aside from irony that the family had been living at the premises for 28 years and was therefore the clear cause of any bad property conditions, the Appeals Court held that the family were squatters (and not tenants) with no legal entitlement to raise this defense. Barring another appeal, the court cleared the way for the eviction, some 6 years after the foreclosure and presumably with the tenants living rent and mortgage free the entire time.

With the housing market turning around, this decision is some long-awaited good news for those dealing with REO and foreclosed properties. Squatting tenants will be easier to evict and properties should be back on the market faster. Bad news for those fighting foreclosure, but good news for the real estate market.

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Richard D. Vetstein, Esq. is an experienced Massachusetts real estate and eviction attorney. For more information, please contact him at 508-620-5352 or [email protected].

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Avoid The Professional Tenant Like The Plague

Using best practices to screen and select good tenants is the most important thing a Massachusetts landlord can do to avoid costly non-payment and eviction problems down the road, as I have posted about on this Blog. As the saying goes, an ounce of prevention is worth a pound of cure.

In my 14 years of practice, I have come across a sub-set of tenants which are extremely dangerous to Massachusetts landlords. They should be avoided like the Plague. I like to call them Professional Tenants.

Let me give you the profile of a typical Professional Tenant. (This is a generalization based on my personal experience, but it’s fairly accurate).

  • History of eviction history and/or delinquency with prior landlords
  • Surprising (and dangerous) knowledge of Massachusetts landlord-tenant law
  • Background in real estate, engineering, contracting
  • Marginal to bad credit: prior history of nonpayment collections, judgments or bankruptcies
  • Gaps in rental history
  • Non-existent or incomplete prior landlord references

The Professional Tenant’s Scheme

Shortly after moving in, they will start to complain about small issues with the rental property. Some will complain to the local board of health to have the landlord cited for code violations. (The state Sanitary Code can trip up even the most conscientious landlord.) Then the Professional Tenant will stop paying rent, claiming they are “withholding rent” due to bad property conditions. Of course, these tenants completely ignore the smart practice that any withheld rent be placed in an escrow account. Then the Professional Tenant will assert the landlord violated the last month rent and security deposit law, and ask for their deposit back, trying to set up the landlord for a triple damage claim.

In the meantime, months go by and the Professional Tenant has failed to pay any rent and the minor code violations, if any, are repaired. The landlord is forced to start eviction proceedings, only to be met with a slew of counterclaims and defenses from the Professional Tenant. The Professional Tenant then sends the landlord a myriad of document requests and interrogatories which automatically delays the eviction hearing by 2 weeks. If the Professional Tenant is really savvy, they will demand a jury trial, which in most small District Courts can delay the eviction by weeks and typically months. Meanwhile, the entire time, the Professional Tenant has still not paid any rent.

Months and thousands of dollars in attorneys’ fees later, the landlord finally gets his day in court. And the Professional Tenant doesn’t show up, leaving the landlord with a worthless judgment for thousands in unpaid rent and a trashed apartment.

Screen and Screen Again

The sad thing is that because Massachusetts landlord-tenant law is so tenant friendly, there is not much a landlord can do to avoid this situation, other than not rent to the Professional Tenant in the first place! Once a landlord has signed a lease with a Professional Tenant, they are stuck until the tenant violates the lease. My advice to landlords is to make screening the most important thing you do as a landlord, and do the following:

  • Invest in good credit history checks.
  • Follow up with landlord references
  • Check employment info
  • Check prior bankruptcies
  • If someone seems fishy, they probably are

If you find yourself stuck with a Professional Tenant, give me a call. There are certain things an experienced eviction attorney can do to prevent or minimize these shenanigans. At least you will be fighting back against what I perceive as scam artists.

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Richard D. Vetstein, Esq. is an experienced Massachusetts landlord tenant and eviction attorney. Please contact him with any questions.

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Massachusetts Summary Process Evictions: An Unlevel Playing Field For Landlords

How do you evict a tenant in Massachusetts? In Massachusetts, evictions are called “summary process.” According to the rules governing eviction cases, summary process is supposed to be “just, speedy, and inexpensive.” In practice, however, summary process can be anything but that. In fact, as I always inform my landlord clients, Massachusetts is one of the most tenant friendly states in the country, and an eviction can be costly, frustrating and unfair to landlords. In some cases, it can take many months to evict a tenant.

Further, Massachusetts eviction practice is loaded with traps for the unwary and procedural complexities for landlords. Landlords who represent themselves do so at their own peril and will often arrive at court with their cases dismissed for not following these requirements. It’s not a do-it-yourself situation.

Grounds For Eviction

A.      Non-payment

There are several common grounds for evicting a tenant. The most common is for non-payment of rent. In these cases, the landlord must send the tenant a statutory 14 day “notice to quit” before starting the eviction process. The 14 day notice to quit must be drafted carefully, and the best practice is to have it served by a constable or sheriff to ensure proof of delivery. The landlord must prove in court that the tenant received the notice, and service by constable or sheriff will automatically qualify as “good service.” Certified mail is not good enough as tenants can avoid pickup. Having an experienced eviction attorney draft the notice to quit can prevent have your case being “dead on arrival.”

B.      No-Fault

Another common ground for eviction is for termination of a 30 day tenancy at will, otherwise known as a no-fault eviction. Again, a 30 day notice to quit must be served on the tenant before commencing an eviction. Landlords often trip up on this type of notice with short months. In practice, judges will often give tenants in no-fault evictions a bit more leeway in terms of vacating the premises.

C.      For cause

“For cause” evictions encompass the range of bad behavior by tenants in violation of lease provisions. It could be illegal activity, drug use, excessive noise, uncleanliness, harassment of other residents, non-approved “roommates” and the like. Like all other evictions, the landlord must issue a notice to quit to the tenant stating the specifics of the offenses. “For cause” evictions are the most involved of all evictions as the landlord must offer proof by way of live testimony of the tenant’s violations of the lease. Getting police officers to show up for an eviction hearing can be challenging. For drugs and other illegal activity, Massachusetts also has a special expedited eviction process.

Read our post on the Massachusetts Notice To Quit: Don’t Be Dead On Arrival At Eviction Court

Going to Court

Starting an eviction requires the preparation and service of a Summary Process Summons and Complaint. You can choose to file your case in the local District Court or the Housing Court which is specialized to hear evictions. The Housing Court fees are less expensive, but can be busier. Some Housing Court judges have the reputation of being tenant or landlord friendly as well. Some would probably be happier retired and playing golf. It’s a tough job these days.

The summary process summons and complaint form is complicated to the layperson. It must be first served by a constable or sheriff on the tenant. Then, no less than 7 days after, it must be filed with the court by the “entry date,” which is always a Monday. The hearings are almost always on Thursday morning. Again, it’s best to have an experienced Massachusetts eviction attorney handle the legal paperwork.

Tenant Defenses and Counterclaims

Through the use of discovery requests, defenses and counterclaims, tenants in Massachusetts have ample legal means to delay and beat evictions. All tenants have a right to file “discovery” – formal requests for information and documents – from the landlord, which will automatically delay the hearing for two weeks. The tenant also may assert defenses and counterclaims against the landlord. These can range from improper notice or service, state Sanitary Code violations, no heat/hot water, failure to make repairs, retaliation, discrimination, and violations of the security deposit law—which carries triple damages and attorneys’ fees. (See my prior post on security deposits). Regardless of the merits of such claims, these defenses and counterclaims make the eviction process more complicated, time-consuming, and expensive.

Read my post on the Massachusetts State Sanitary Code — Everything A Landlord Wanted To Know But Was Afraid To Ask

Agreements for Judgment and Mediation

Eviction sessions are very busy. In some courts, there are over 100 cases stacked up on any one day and only one judge to hear them all. Accordingly, the courts will encourage parties to work out their differences on their own through mediation which is an informal sit-down between the parties to discuss ways to resolve the case. Some courts have housing specialists who can preside over the mediation session. Mediation is always non-binding so if no agreement can be reached you can proceed to a trial.

In the Housing Court, there are trained housing specialists who facilitate the mediation process. There are many advantages for landlords to mediation, and I almost always recommend giving it a try. The end result of a mediation is for the parties to sign an agreement for judgment. In a non-payment case, you can structure a payment plan and/or voluntary move-out. For a “cause” eviction, you can provide for a “last chance” agreement or move-out. The major benefit for landlords is that an agreement for judgment becomes a binding court order and the judge is supposed to enforce it upon proof of a violation. It also shows the judge that the landlord has been reasonable and accommodating. Experienced Massachusetts eviction attorneys will also make the tenants waive their rights to appeal and right to delay the case any further so as to avoid last minute requests for more time to vacate.

On the other hand, sometimes the situation is untenable and you have to go before the judge. Some judges hold a basic hearing, giving both sides the opportunity to speak. Some judges, particularly in the Housing Court, are more formal and require an actual trial with live witnesses and exhibits. I’ve had hearings last one minute and jury trials in eviction cases go on for days. But I’m always prepared to put on a case on for trial, as I always have my client present in court or on standby.

Appeals

Tenants in eviction cases do have a fairly robust right of appeal which can greatly delay resolution of the case. (A good reason in and of itself to do an agreement for judgment waiving appeal rights). However, in certain cases, the landlord can ask the court to impose an appeal bond so the tenant must pay rent into court to proceed with the appeal. Most tenants do not have the financial ability to do that, so that will terminate the appeal.

If you have any questions or need assistance with a Massachusetts summary process eviction, please contact me via email at [email protected] or by phone at 508-620-5352.

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Richard D. Vetstein, Esq. is an experienced Massachusetts summary process & eviction attorney who has handled over 2,000 eviction cases all across Massachusetts. For help with a landlord tenant matter, please email him at [email protected] or call him at 508-620-5352.

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FNMA v. Nunez: Tenant Foreclosure Act Applied Retroactively

On September 6, 2011, in Federal National Mortgage Association v. Nunez (embedded below), the Supreme Judicial Court considered for the first time the 13-month-old “Tenant Protections In Foreclosed Properties” Act which protects tenants living in foreclosed properties from eviction in certain circumstances. The issue was whether the Act applied retroactively, and the court answered “yes,” applying it “to protect all residential tenants on foreclosed properties who, on or after August 7, 2010, had yet to vacate or be removed from the premises by an eviction, even where the owner purchased the property before the act’s effective date, and initiated a summary process action before that date.”

Summary Of Act

The Act, passed in August 2010 and now codified in a new Mass. General Laws Chapter 186A, bans institutional lenders (not private parties) who own foreclosed properties from evicting residential tenants without “just cause.” What this means in plain English is that foreclosing lenders such as Fannie Mae cannot evict tenants of foreclosed properties unless they stop paying rent or commit serious lease violations such as illegal activity on the premises.

Loophole: Private Purchasers

There is a huge loophole in the Act however. It does not apply to private individuals who purchase properties at foreclosure. They are free to evict tenants for any reason. But, they must provide tenants with at least 90 day notice to move, and the tenant retains the right to ask for more time to leave in any eviction legal proceeding.

Impact: Slow Down In Sales of Foreclosed Properties

The impact of this ruling will be to expand the number of tenants who will be protected from eviction when their apartments fall into foreclosure. It will also slow down the pace of selling off REO and foreclosed properties to individual owners and investors who will now inherit tenants with expanded occupancy rights in foreclosed properties.

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Richard D. Vetstein, Esq. is an experienced real estate litigation attorney who’s handled over 500 eviction cases in the District and Housing Courts. Please contact him if you are dealing with a Massachusetts landlord-tenant dispute.

 

 

FNMA v. Nunez

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Battle Over Invalid Foreclosures May Shift To Evictions In Housing Courts

In the closely watched case of Bank of New York v. Bailey (embedded below), the Massachusetts Supreme Judicial Court ruled on August 4, 2011 that the Housing Court may hear a homeowner’s challenge that a foreclosing lender failed to conduct a foreclosure sale in accordance with state law and under the now seminal U.S. Bank v. Ibanez decision. Previous to this decision, foreclosing lenders and their attorneys were quite successful in evicting homeowners even where there were defects in the foreclosures.

A Subprime Eviction

KC Bailey obtained a mortgage in 2005, which appears to have been of the sub-prime vintage (America’s Wholesale Lender), on his home in Mattapan. Merely two years later, he defaulted, and the lender commenced foreclosure proceedings. Bailey claimed that the lender never provided him with any notice of the foreclosure, and he first learned about it when an eviction notice was duct taped to his fence. The lender started an eviction in the Boston Housing Court. Bailey defended on the basis of the alleged defective notice. The Housing Court judge ruled in favor of the lender, and the case went up to the SJC.

Ruling: Housing Court May Hear Foreclosure Challenge

The SJC first ruled, in a case of first impression, that the Housing Court had jurisdiction to consider whether the lender had properly completed the foreclosure sale and provided adequate notice to Bailey. The court noted that such a challenged was “long-standing.” Next, the Court ruled that all foreclosing lenders seeking eviction must show that it has completed the foreclosure sale in full compliance with state law. This is a change in prior practice as lenders would typically submit the foreclosure deed as evidence of good title and ownership without additional investigation.

Impact: More Difficult To Evict, But More Opportunity For Loan Mods

This decision is going to make it more difficult and expensive to evict foreclosed homeowners and get these properties off lenders’ books. On the positive side, it may give homeowners more leverage to negotiate loan modifications to enable them to stay in their homes and recover from financial distress. Evictions based on faulty foreclosures will be nearly impossible to complete and could potentially drag on for months if not years.

This decision will also have a substantial impact on the already over-burdened Housing Court system. If you have ever been to the Thursday summary process session at Boston or Worcester Housing Court, it’s akin to a refugee camp, with hundreds of cases lined up and families facing homelessness. It’s very sad. I’m sure the judges will push lenders and homeowners dealing with faulty foreclosures to resolve their differences out of court, or tell them to wait in back of the line for trial assignment.

Bank of New York v. Bailey

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