WAVE OF EVICTION SUITS NEARING OVERBURDENED HOUSING COURTS

Aug 18, 2020 | Covid-19, Real Estate

As COVID-19 continues to severely impact the nation’s economy, with unemployment numbers significantly increasing, and industries reeling, tenants and homeowners are feeling the squeeze. In Massachusetts, 654,000 residents either missed their July rent or mortgage payment or feared they wouldn’t pay August, according to the U.S. Census Bureau. There is also a domino effect where landlords that depend on monthly rent payment are unable to pay their mortgage or property taxes due to cash flow disruption. This means that real estate owners are about to be facing a turbulent time.

In April of this year, in response to the COVID-19 pandemic, Governor Charlie Baker issued an emergency order placing a moratorium on evictions in Massachusetts, which is currently in place until October 17, 2020. Congress placed a limited federal ban on evictions and foreclosures for buildings or homes with a mortgage that have some form of government backing which expired on July 24th. The Federal Housing Finance Agency allowed landlords to delay mortgage payments through forbearance requests for mortgages backed by Fannie Mae and Freddie Mac. The missed payment gets added onto the end of the loan with no penalty assessed. While receiving this assistance, landlords were prohibited from filing eviction suits or charging late fees. While these federal measures were a temporary moratorium protecting nearly 12 million people from eviction for four months to avoid a rental market crisis, states took on their own protections and moratoriums to keep many afloat. These moratoriums have now become the subject of lawsuits in many states, including Massachusetts.

Under the moratorium, tenants are still obligated to pay rent, but a landlord cannot send tenants any eviction notices for nonpayment, which include Notices to Quit, 14-day notice, 30-day notice, Notice to Vacate and any other types of notices requiring one to move out. During this time, landlords cannot file new eviction suits against tenant for non-payment of rent, no fault/no cause or most for-cause reasons. The moratorium also stalled cases pending when it went into effect – judgments cannot be entered by a court, nor can default judgments be issued. Courts cannot issue orders to evict. The only exception is evictions due to criminal activity or lease violations that could detrimentally impact the health and safety of residents.  Given the large backlogs that housing courts are facing, new eviction claims will not be processed for some time.

In two suits filed in Suffolk Superior court and another in federal court dealing with constitutional issues, property owners are challenging this moratorium as unconstitutional and requesting a preliminary injunction or an immediate stop to moratorium while the cases are pending. A decision should be issued soon by Judge Paul Wilson after a hearing took place on July 30th at Suffolk Superior Court. U.S. District Court Judge Mark Wolf will be hearing the federal matter on August 24th. The claim alleges that the moratorium removes their sole remedy as provided in their leases to evict tenants in breach of their agreements, violates landlords’ rights to access the courts and petition the judiciary, and constitutes an improper seizure of their property without just compensation as is required under the Fifth Amendment. The plaintiffs in each suit argue that the moratorium is contributing to the economic crisis by removing consequences for not paying rent and leaving landlords unable to cover maintenance, property-related expenses, insurance, mortgages and property taxes. The longer these stay in effect, the more likely landlords will face foreclosures, which can in turn cause problems for banks due to lack of liquidity. This will also affect the rental market as landlords will be disinclined to rent out while the moratorium continues.

An eviction crisis in the coming months seems inevitable and will flood the overly burdened housing courts. For tenants, we recommend immediately notifying landlords of any anticipated inability to pay rent and to pay as much as is possible. Landlords will likely be more willing to negotiate with the tenants who act in good faith and potentially work out a deal to avoid having to incur the expenses for eviction proceedings and find a new tenant amid a pandemic. Once the moratorium ends, tenants are still obligated to pay back any missed rent payments. It is also worthwhile to identify local rental-assistance programs there might be able to assist cash-stretched tenants with missed payments. There are strict rules for residential landlords in Massachusetts and it is important to ensure that all bases are covered and landlords comply with these laws to avoid having to pay up to triple damages, court costs and attorney fees if specific laws are violated. When moving forward with an eviction, landlords must be aware of strict security deposit laws, the concept of retaliatory eviction and possible violations of the tenant-oriented legal protection like the “covenant of quiet enjoyment”. An attorney can be helpful to tenants and landlords understand and navigate the complex eviction laws and we recommend landlords and tenants seek legal assistance if they become involved with eviction proceedings.

CMBG3 Law has experience with landlord-tenant disputes, and evictions. The concepts discussed above can be thoroughly explained by one of our attorneys. If you are a landlord or tenant and have any questions about evictions or the moratorium or would like more information, please contact Seta Accaoui.

Written By:

Seta Accaoui, Esq.

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