Expansive New Massachusetts Law Upends Process for Residential Evictions and Foreclosures in Wake of COVID-19, Effectively Alters Terms of Mortgages

Locke Lord LLP

Massachusetts has passed an expansive law aimed at protecting tenants and homeowners during ‎the COVID-19 emergency – “An Act Providing For A Moratorium On Evictions And ‎Foreclosures During The COVID-19 Emergency” (“Act”).  The law will remain in effect for 120 ‎days, or 45 days after the Commonwealth’s emergency declaration ends, whichever comes first.  ‎The Act provides a mechanism to extend the moratorium for an additional 90 days if necessary, ‎subject to the caveat appearing at the end of this paper. ‎

Evictions – Generally Stayed

The Act stays all non-essential residential and certain small business evictions.  This includes non-‎payment of rent evictions, no fault evictions, and post-foreclosure evictions.  Essential evictions ‎involve criminal activity or lease violations that impact the health and safety of other residents, ‎health care workers, emergency personnel or the general public.‎

Pursuant to the Act, a landlord may not terminate a tenancy or send any notice to quit or vacate ‎the premises during the pendency of the moratorium.  Courts are prohibited from accepting any ‎new eviction summons and complaint, entering judgment or default judgment for possession, ‎issuing executions for possession, denying a request to stay an execution, denying any request to ‎stay an eviction case and scheduling any court hearings.‎

All court deadlines are tolled during the moratorium period, including deadlines to appeal a ‎judgment. ‎

In addition, a landlord may not impose any late fees for non-payment of rent or report the ‎account late to any credit reporting agencies if a tenant provides notice and documentation that ‎their inability to make timely payments results from COVID-19’s financial impacts.‎

This moratorium does not, however, waive rental obligations.  Tenants will need to make their ‎full rental payments after the moratorium expires to avoid eviction at that time.  ‎

Foreclosures – Moratorium on Process ‎

The foreclosure moratorium applies to owner-occupied buildings that are four units or less.  ‎Mortgagees, or anyone having the power of sale under Mass. Gen. Laws ch. 244, § 14, may not:‎

  • Cause a notice of a foreclosure sale to be published;‎
  • Exercise the power of sale;‎
  • Exercise a right of entry;‎
  • Initiate a judicial or non-judicial foreclosure process; or
  • File a complaint to determine the military status of a mortgagor under the ‎Servicemembers Civil Relief Act.‎

Foreclosures – Forced Loan Forbearance, Deferment of Principal and Interest to End of ‎Loan Term

 The Act also requires a creditor or mortgagee to grant a loan forbearance if requested by a ‎mortgagor due to the financial impact of COVID-19.  The forbearance shall not last more than ‎‎180 days, and the mortgagee cannot charge to the account any additional fees, penalties or ‎interest beyond that which would normally accrue if the loan had been timely.  At the end of the ‎forbearance period, the amount subject to the forbearance will be added to the end of the loan ‎term unless the parties come to another arrangement. ‎

Impact

The Act creates obvious practical concerns relating to the foreclosure and eviction process ‎generally and to the continued litigation of pre-foreclosure mortgage cases, including what ‎litigation actions the Act considers part of the foreclosure process and thus subject to the ‎moratorium.  Title insurance companies appear to be taking a very expansive view of what ‎litigation actions are part of the foreclosure process.  Best practices require mortgagees moving ‎forward in pre-foreclosure litigation during the moratorium to consult with their counsel and title ‎insurance companies to ensure that any actions do not negatively impact post-foreclosure title ‎insurability. ‎

Caveat

This QuickStudy is intended solely to summarize key provisions of the Act.  It is not intended ‎to, and does not, analyze the constitutionality or enforceability of the Act’s provisions, whether ‎under the United States Constitution or that of the Commonwealth.  Certain provisions may be ‎susceptible to challenge on constitutional grounds.‎

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