Restrictions on Eviction under the CARES Act

     Congress passed the Coronavirus Aid, Relief, and Economic Security Act’’CARES Act last week and most of the news has been about the payroll protection program and the checks that the government will be sending out to many Americans in the coming weeks.

     Section 4023 of the Act relate to forbearance of loan payments for multi family homes and a moratorium on certain evictions.  Here is what you need to know:

• If you have a federally backed multi-family mortgage loan and are experiencing a financial hardship because of COVID-19, you can request a forbearance for up to three 30 day periods on your mortgage and should reach out to your lender for relief.  To do so, you had to have been current with your mortgage as of February 1, 2020.  However, these sections apply only to properties designed for 5 or more dwelling units

• If you receive a forbearance on your mortgage, during the time of the forbearance you cannot evict a tenant for non-payment of rent or other charges, nor can you charge any late fees, penalties or other charges.

• You also cannot send a notice to quit to that tenant, for any reason until at least 30 days after the forbearance expires.

     Section 4024 of the Act creates a 120 day moratorium on evictions on "covered dwellings" beginning March 27 and running through approximately July 27.  During this time period a landlord who has a federally backed mortgage for any residence - regardless of the number of units in the building -- cannot evict tenants for non-payment of rent or other charges.  Late fees are not permitted.  Notices to quit cannot be sent until at least 30 days after the 120 day moratorium. 

     Nearly 2/3 of mortgages are federally backed, so you should check with your lender and find out if you might qualify for forbearance.

     Finally, remember that forbearance does not mean forgiveness.  You are still responsible for the payments, but you have a break from paying.

How to Evict Someone Who Pays no Rent

   When you read this title, it may make no sense -- who would rent to someone and not charge them rent?  Our office has run into this situation in a number of ways most of them involve family relationships or romantic relationships which have turned sour.  The individual usually has resided at the premises for some time.  They are unfortunate in almost every circumstance and most of the time, our office gets called after the owner of the home has tried, unsuccessfully, to get the other person to leave voluntarily.

     Under these circumstances, there are are only a few options to consider.  First, you could claim that the unwanted person is living at the premises as a gratuitous tenant. If you are staying somewhere and are not providing any consideration for your occupancy, then you are not a tenant and you are not entitled to a notice to quit.  Rather, if your host asks you in writing to leave and you refuse, your host can go to Court and immediately start a summary process action (an eviction action) and seek an order to remove you from the premises.

     So what is consideration?  Most often it is money.  But, keep in mind that consideration does not necessarily have to be in the form of rent.  If your guest is helping the household by paying for utilities, or food, those contributions could be considered consideration.  Those actions could be consideration which would make your guest a tenant.  Once someone is a tenant, they are entitled to either three months or one month notice before starting eviction proceedings, depending on how often the consideration is paid.

        Another option is to argue that your guest is a licensee.  A licensee is a “person who is privileged to enter or remain on land only by virtue of the possessor’s consent.”  Restatement of Torts, Second § 330.  The key to this argument is that the owner of the Property retains legal possession, custody and care of the whole house and of every room.  In other words, this argument works best when a guest is using one particular room in the home, but does not have exclusive access to it.  For example, if someone comes and stays in your guest room, but you enter the room regularly to empty the trash, change the sheets, vacuum or even to get things out of the closet, then your guest does not have exclusive access to the room.  Further, the guest must not be making any financial or other contribution to the operation of the home.  As with a gratuitous tenant, a licensee is not entitled to a formal notice to quit, but rather just a letter asking him or her to leave. 

     Trying to evict without notice comes with risks.  If your guest is not a gratuitous tenant or a licensee, but is a tenant and you have not sent a proper notice to quit, then you will lose your eviction case and have to start all over by providing notice.  You should tread carefully and understand the risks of not providing a formal notice to quit.

     The most conservative, but most time consuming process is to send a formal notice to quit.  If your guest is providing some sort of consideration, like paying the utility bills every month, then you can provide a 30 day notice to quit.  However, if the consideration is not paid as regularly or if you want to argue gratuitous tenancy or licensee and don't want to concede that there is consideration, then you should serve a 3 month notice to quit.  Why you may ask?  The statute provides that you can serve a notice to quit in the interval in which rent is paid or 3 months.

     Whenever you are an owner and need someone to move out, its always best to consult with a lawyer who can help you figure out the proper process and ask you other questions about your possible risk for counterclaims before you start any proceedings.

Security Deposits and Eviction

Yesterday, the Supreme Judicial Court handed down a ruling in the landlord tenant realm that every landlord and tenant needs to understand.  It ruled that a violation of the security deposit law not only can be a basis for counterclaim as to damages, but is a defense to a landlord's claim for possession.

What does this mean?  It means that if a landlord is attempting to evict a tenant and the tenant claims that the landlord failed to properly handle the security deposit, if the tenant wins on that claim, the tenant can defeat the landlord's claim to evict the tenant and the tenant gets to stay in the unit.

How will this play out in an eviction case?  Let's say the Landlord brings a summary process action to evict the tenant for non-payment of rent.  The tenant counterclaims on a number of claims, including that the landlord did not handle the security deposit properly.  Trial is held and the tenant succeeds in his claim that the security deposit was mishandled and is awarded damages.  The amount awarded for the mishandled security deposit is offset against the outstanding rent.  IF the tenant's damages exceed the landlord's damages, then the tenant keeps possession.  IF the landlord's damages exceed the tenant's damages, the tenant must be given seven days to pay the amount owed to the landlord and if the tenant pays, then the tenant keeps possession.  The same rules apply for a no fault eviction.

Before starting a summary process action, we always ask our landlord clients whether a security deposit was taken and if so, how it was handled.  Landlords must be vigilant in documenting, maintaining and handling security deposits and be prepared to return the deposit in the event that it was not handled properly to avoid tenants succeeding on these types of claims.

Tenants must keep track of the paperwork that they were provided upon move in, and should keep a copy of the check they wrote for the security deposit. If there is any question as to how the security deposit was handled, a security deposit counterclaim should be raised.  If a tenant is withholding rent due to conditions, it is more important than ever to escrow those funds, even though that is not required by law.  A tenant only has 7 days to pay the money into court, including weekends and holidays.  This time frame, ultimately, might be fairly short and the tenant should not have to scramble for the funds.

The Most Common Question - Landlords

Recently, a dear friend of mine asked me what the most common substantive legal question is that I am asked as a lawyer? Since I practice in several different areas, I'd have to answer that question, by category of practice area.

In the landlord/tenant realm, the most common question I am asked by landlords is "How do I evict that tenant?  The actual process of evicting a tenant is set out in Chapter 186.  In short, you have to deliver a Notice to Quit, give the tenant a certain amount of notice -- generally either 14 or 30 days -- depending on the reason -- and then, if the tenant does not move out, you commence a summary process action.  However, in that relatively simple scheme lie many pitfalls for landlords.  A tenant may assert counterclaims against the landlord, even if the tenant is behind on the rent.  The timing of each of the steps is particular and documents must be filed with the Court on certain days.  A misstep can result in dismissal of your summary process and then you have to start all over again.

Before commencing the process to evict a tenant, I ask my landlord clients a series of questions to make an initial assessment as to how easy or difficult it will be to evict the tenant.  For example, if the landlord took a security deposit, but failed to handle it properly, the tenant can counterclaim and may receive three times the security deposit, plus attorney's fees.  If the tenant was withholding rent because of problems with conditions at the unit, that issue needs to be explored.  If the landlord was aware of bad conditions at the unit and did not correct them, the Court could find the landlord in breach of the warranty of habitability or the covenant of quiet enjoyment.  If the landlord started to evict the tenant after the landlord was aware of the tenant's complaints, then the landlord may have engaged in retaliatory behavior which also subjects the landlord to damages.

Ultimately, if you end up owing the tenant more money than what the tenant owes you, not only do you have to pay the tenant, but the tenant keeps possession of the apartment.  Before taking any steps to evict a tenant, every landlord should seek professional advice.

Curing a Defective Notice to Quit

     I was in Court this morning, representing a tenant on a motion to dismiss.  Our claim was that the landlord's Notice to Quit was defective in several ways, thereby necessitating dismissal of the summary process.  One error was that the tenant's name was incorrect.  Landlord's counsel conceded that the name was incorrect, but asked to cure the defect, rather than a dismissal.  Fortunately for my client, but unfortunately for landlords is the only way to cure a defective Notice to Quit is to start all over again.  The summary process was dismissed.

     What is to be learned from this?  First, if you are the landlord, make sure you have your i's dotted and t's crossed when you serve a notice to quit.  In this case, at least in my opinion, there were numerous problems with the Notice to Quit and the summary process.  But really, you only need the judge to agree with the tenant on one of the defects and the case will be dismissed.  Second, if a legitimate defect is brought to your attention by the tenant, then dismiss the case.  We waited in Court for more than two hours to be heard today because of the Court's schedule.  During that time, clients missed work and attorneys accrued time.  Third, if you are a tenant and are served with a Notice to Quit, take a good look at it.  Is it procedurally correct?  Was it served properly?  Some types of leases, particularly Section 8 leases require that the landlord give additional notices.  If those prerequisites were not followed, it the Notice may be invalid.