What Commercial Landlords Need to Know About Massachusetts Moratorium on Evictions and Foreclosures
On April 20, Massachusetts enacted a moratorium on evictions and foreclosures during the COVID-19 emergency (House, No. 4647).
While the Act addresses residential tenants and residential foreclosures as well as commercial tenants, this brief synopsis is limited to the impact of the Act on commercial tenants and their landlords.
Massachusetts courts are essentially prohibited from entertaining any non-essential eviction action with respect to a small business premises unit. This moratorium expires “120 days after the effective date of this act or 45 days after the COVID-19 emergency declaration has been lifted, whichever is sooner,” subject to extension by the Governor.
A “non-essential eviction” is “an eviction: (i) for non-payment of rent; (ii) resulting from a foreclosure; (iii) for no fault or no cause; or (iv) for cause that does not involve or include allegations of: (a) criminal activity that may impact the health or safety of other residents, health care workers, emergency personnel, persons lawfully on the subject property or the general public; or (b) lease violations that may impact the health or safety of other residents, health care workers, emergency personnel, persons lawfully on the subject property or the general public; provided, however, that a non-essential eviction shall not include an eviction for a small business premises unit on account of the expiration of the term of a lease or tenancy or a default by the tenant of a small business premises unit under the terms of its lease or tenancy that occurred before the declaration of the COVID-19 emergency.”
A “small business premises unit” is “a premises occupied by a tenant for commercial purposes, whether for-profit or not-for-profit; provided, however, that a small business premises unit shall not include a premises occupied by a tenant if the tenant or a party that controls, is controlled by or is in common control with the tenant: (i) operates multi-state; (ii) operates multi-nationally; (iii) is publicly traded; or (iv) has not less than 150 full-time equivalent employees.”
The Act tolls deadlines and time periods for action by a party to a non-essential eviction for a small business premises unit.
Landlords are prohibited from imposing late fees on the non-payment of rent by small business premises units if, within 30 days after such non-payment, the tenant provides the landlord evidence that such non-payment is the result of economic hardship from COVID-19.
The Act does not excuse tenants from paying rent or prevent landlords from trying to recover rent.
Also, the Act does not apply to tenants who fall outside the definition of “small business premises units” (i.e., larger tenants).
If you have any questions regarding the Act or how COVID-19 is impacting your commercial property, please contact Kathryn Graber or another member of Verrill's Real Estate Group.