Details on Moratorium on Evictions and Foreclosures

The Massachusetts legislature has passed an emergency act that institutes a moratorium on non-essential evictions and foreclosures of residential units and small businesses during the governor’s COVID-19 emergency declaration. The act is expected to be signed into law by Governor Baker immediately and will extend for 120 days from the date of signing, or 45 days after the emergency declaration is lifted, whichever comes sooner.

If the current state of emergency is extended beyond the current May 4 deadline, the Governor has the option to extend the moratorium on evictions and foreclosures for more than 45 days after the emergency declaration is lifted.

The emergency act does not relieve a tenant from the obligation to pay rent or restrict a landlord’s ability to recover rent. However, no late fees may be applied to rent payments that were due during the period covered by the act. For the purposes of the act, “small business” is defined as one with less than 150 employees, operates only in Massachusetts, and is not publicly traded.

The act also allows a landlord who has received rent in advance for the last month of tenancy to access those funds in order to pay for expenses including mortgage payments, utilities, repairs, and required upkeep. The landlord is required to notify the lessee in writing and cannot recoup any funds used from the lessee.

Mortgage holders must grant a forbearance of a mortgage loan of up to 180 days if requested by the mortgagor affirming that the mortgagor has experienced a financial impact due to the COVID-19 crisis. The payments under the forbearance will be added to the end of the term of the loan (unless another agreement is made between the mortgagor and mortgagee). No fees, penalties or interest may be applied to the mortgage payments that have been shifted.

This moratorium provides welcome relief to residents and small businesses whose cash flow has been negatively impacted by the economic disruption caused by the pandemic. However, it also provides some protections for landlords who will also be affected by the temporary interruption of rental income.

For more information on this and other financial impacts of the COVID-19 pandemic, please contact Gray, Gray & Gray at (781) 407-0300.

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