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Navigating the Moratorium on MA Residential Foreclosures & Evictions

April 19, 2020

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On April 20th, Governor Baker signed into law a residential mortgage foreclosure and eviction moratorium bill (H 4647) which grants temporary relief to homeowners from foreclosures, and to residential tenants from evictions. Residential property managers and landlords, and residential mortgage holders, must exercise caution to avoid running afoul of the new law. The relief afforded by the legislation expires on the earlier of 120 days after enactment of the legislation (August 18, 2020) or 45 days after the COVID-19 emergency declaration has been lifted, but the governor may postpone expiration of the moratorium to a limited extent.

Below are the key points of the legislation with regard to residential tenancies and mortgages.

  • What evictions does it apply to? The legislation only applies to “non-essential” evictions, i.e. (i) for non-payment of rent, (ii) resulting from a foreclosure, (iii) for no fault or cause, or (iv) for a cause that does not include allegations of criminal activity or lease violations that may impact health and safety.
  • Is a landlord’s right to terminate a tenancy impacted by the legislation? For the purposes of a non-essential eviction, a landlord or property owner may not terminate a tenancy or send any notice requesting that a residential tenant vacate the premises.
  • Are residential tenants still obligated to pay rent? The new law does not relieve a residential tenant from the legal obligation to pay rent, or restrict a landlord’s right to recover rent. The legislation does delay the residential landlord in its ability to pursue a summary process (eviction) case by precluding Massachusetts courts from accepting new summary process complaints, entering judgments or default judgments for possession to the landlord, issuing executions for possession, denying requests for a stay of execution, and scheduling all court events, with exceptions for emergency situations. This new law tolls all deadlines and time periods in pending summary process cases, and precludes the enforcement of an execution for possession.  
  • Can late fees be charged if rent is late due to COVID-19? The law precludes the imposition of late fees for the failure to pay rent, and reporting a tenant to a credit agency, if the tenant provides notice and documentation that the failure to pay rent was due to COVID-19 or the State of Emergency. Again, none of this applies to emergency situations involving health and safety.
  • What are the new rules regarding last month’s rent? The law allows a residential landlord who collected last month’s rent to utilize those funds to pay mortgage payments, utilities, repair, and required upkeep, but bars landlords from using last month’s rent to account for a tenant’s nonpayment of rent. The lessor must notify the tenant in writing that the lessor: (a) has used such moneys, (b) remains obligated to apply last month’s rent received in advance as rent for the last month of the tenancy, and (c) that the tenant is entitled to interest on those funds. While landlords were always required to pay interest on last month’s rent, to this point they were considered to be the landlord’s funds to be spent as the landlord pleased.
  • Can residential mortgage holders pursue foreclosure? In general, holders of mortgages on residential property, occupied or to be occupied as the borrower’s principal residence, which is not vacant or abandoned, may not pursue foreclosure.
  • Are lenders required to grant forbearance? Holders of mortgages on residential property as described above must grant up to 180 days forbearance if the mortgagor requests the same and affirms that the mortgagor has experienced a financial impact from COVID-19.  Payments are added to the end of the term of the loan unless otherwise agreed by the mortgagor and mortgagee.

Residential lenders, mortgage servicers and landlords must immediately adjust their collection practices to avoid violating the provisions of this new law.  Residential landlords will need to consider the potential impact of the inability to terminate residential leases on their own leasing strategy and ability to finance any debt on their properties.

About the Author: Alan Lipkind

With over three decades of experience, Alan Lipkind counsels and advocates for the firm’s clients when they are facing disputes related to real estate. He has obtained positive results for clients faced with a broad range of issues, including disputes over property boundaries, adverse possession, easements, landlord/tenant concerns, purchase and sale agreements, construction, and zoning. He is experienced in litigation, arbitration and mediation. He can be reached at alipkind@burnslev.com or 617.345.3547.