POST-PANDEMIC HOUSING COURT RULES HAVE IMPROVED THE EVICTION PROCESS
Remember the Pandemic? Who doesn’t? They say pain has no memory, but the pain created by the pandemic was varied and widespread.
For rental property owners, the pains were primarily financial and they were exacerbated by state and federal moratoria that temporarily prohibited landlords from evicting tenants for non-payment of rent. The state moratorium was in effect for seven months, from March 2020 until October 17 of that year. But the federal moratorium, which kicked in for Massachusetts property owners when the state order expired, remained in effect until July 31, 2021.
Both the federal and state moratoria prevented courts from even considering eviction petitions for non-payment of rent during the pandemic.
The courthouse doors were essentially locked, leaving landlords with no leverage to collect back rent from tenants and no mechanism for evicting them. Analysts predicted at the time that landlords, unable to collect the rental income on which they depended, would themselves struggle to meet their financial obligations. Analysts also predicted that once the eviction restrictions were lifted, the courts would be inundated with eviction actions. Both predictions were correct.
The rental housing industry was hit hardest by the moratoria, but condominium associations also felt the impact, as some owners of investor units were unable to make their mortgage payments or pay their common area fees, leaving some community associations, in turn, short of the income they needed to pay operating expenses. The super lien, ensuring that associations would be able to eventually collect unpaid fees either from delinquent owners or their mortgage lenders, insulated them from much of the financial damage they might otherwise have suffered.
Limiting the Damage
Attorneys representing condo associations and rental property owners also found ways to limit the potential losses of landlords.
The federal and state moratoria barred evictions only for non-payment of rent. Landlords could still evict tenants for other material (”for cause”) lease violations – engaging in criminal activity on the property, for example, or conduct that jeopardized the health and safety of other residents or property management staff. Landlords could also choose not to renew an expiring lease or terminate a tenancy-at-will – the latter requiring only a full rental period’s notice of that intention. Because non-renewal of tenancies and/or termination of tenancies at will were paths to eviction not based on a tenant’s failure to pay rent, these actions were permissible under either moratorium, so this was the option we recommended to many clients. Evicting tenants whose rental agreements had expired still required a court order, and landlords seeking these orders during the pandemic faced a long wait created by crowded court dockets, so the process wasn’t speedy by any means. But this strategy at least unlocked the courthouse door, allowing some landlords to regain possession of their units before the moratoria expired.
Analysts who predicted that the temporary eviction bans would create serious problems for rental property owners also predicted accurately that the courts would be inundated when those bans expired.
The moratoria temporarily blocked evictions for nonpayment of rent, but they did not eliminate the obligation of tenants to pay the rent they owed. Landlords who had been unable to initiate evictions during the pandemic rushed to begin that process as soon as the eviction restrictions were lifted. Once the padlocks on the courthouse doors were removed, landlords rushed to get their eviction petitions before a judge.
The resulting backlog was eventually cleared with the help of some significant and generally welcome changes in Housing Court procedures that were introduced during the pandemic and preserved, with some modifications, after it ended.
Two Step Process
The major change created a two-tier eviction process.
The first tier is a meeting with a Housing Court specialist, which both the landlord and the tenant are required to attend. Failure of either to attend could result in a judgment against the defaulting party. This creates a strong incentive for tenants, who often failed to appear at summary process hearings, to attend them. The purpose of the Tier 1 meeting is to discuss possible resolutions in lieu of a trial, such as payment plans and vacate dates. These resolutions are often reduced to an ‘Agreement for Judgment’, which has the same effect as if the parties had litigated the matter at trial, but the landlord and tenant are able to control the terms of the court’s order. If no agreement is reached in the first phase, the process moves to the second tier, which is a summary process trial.
The two step eviction process has allowed the courts to process eviction cases more efficiently by filtering out matters that do not need to be brought before the judge.
As a result, the backlog and distant court dates have begun to fade. During the pandemic, landlords were waiting months for a mediation date; now the court will typically schedule the Housing Specialist Status Conference within weeks after a suit has been filed. The trial will typically be scheduled within two weeks of the mediation if it is unsuccessful.
Before landlords can initiate the eviction process in court, they must give tenants a ‘Notice to Quit.’ This notice informs tenants that their tenancy is being terminated and gives them a statutory time period to cure the problem (by paying back rent), move, or prepare to contest the eviction. In non-payment of rent cases, the required notice period is 14 days; in all other evictions it is typically a full rental period.
The Housing Court procedures also incorporate a provision from the Massachusetts moratorium rules requiring landlords to include in the notice to quit for non-payment of rent information about available rental assistance programs for which tenants may be eligible. Tenants who receive this assistance may be able to avoid eviction by paying their back rent, thus enabling landlords to collect the money they are owed. The primary Massachusetts assistance program, Rental Assistance for Families in Transition (RAFT), provides a maximum of $7,000 in a 12-month period for tenants who qualify. While the program provides emergency relief, the cap on funding also creates an incentive for tenants facing temporary problems to avoid future defaults.
Challenges for Landlords
The pandemic changed the Massachusetts eviction process largely for the better.
But it did not change key features of Massachusetts landlord-tenant laws: They are complicated, they are skewed broadly in favor of tenants, and they contain many potholes that can derail the efforts of landlords to protect their rights. The statute governing security deposits is one example. It lays out detailed procedures landlords who collect security deposits must follow, among them:
Deposits must be held in an interest-bearing account, separate from the landlord’s other funds.
Landlords must give tenants a receipt for the security deposit, noting the amount and the name and address of the financial institution in which the funds are deposited.
If Landlords hold the security for a period of 1 year or longer, the tenant is entitled to the annual interest earned.
Landlords must give tenants a statement describing the condition of the rental unit and noting any current damage. The tenant can submit a separate statement identifying other damages, which the landlord may accept or dispute. The statement of conditions and objections to it will become evidence in any dispute over the amount of the security deposit the landlord is required to return to the tenant when the tenancy ends.
If the landlord fails to comply with these and other key provisions of the security deposit law, the tenant may be entitled to three times the amount of the security deposit plus court costs and “reasonable” attorneys’ fees.
The Massachusetts security deposit law is one of dozens that create both legal and financial risks for landlords. Recognizing those risks is an essential first step to avoiding or at least mitigating them.
If you need advice on landlord-tenant matters, Dillon Brown is MEEB’s expert in this area of the law and he can be reached at dbrown@meeb.com.