One acted swiftly and thoughtfully, the other acted slowly and clumsily. That is the difference between New Hampshire and Massachusetts when developing eviction and foreclosure bans. Both are now in effect, giving at least a measure of protection for some people in both states, but improvements can be made to protect more people now to better stabilize the economy. Here is breakdown:
THE NEW HAMPSHIRE EXECUTIVE ORDER:
Governor Sununu acted fast. On March 17, 2020, he issued Executive Order 2020-04, effective immediately, that essentially banned all evictions and foreclosures in the state pending the State of Emergency which had been recently declared by separate executive order days earlier. The Order was remarkably broad and swift, and its provisions provide a much-needed breathing space for people and businesses to gain their footing as the economy incurs the shock from the Covid19 pandemic.
Specifically, the Order states that:
“No owner of non-restricted property or restricted property, . . . may initiate eviction proceedings under RSA 540 during the State of Emergency declared in Executive Order 2020-04 and no eviction order shall be issued or enforced during the State of Emergency declared in Executive Order 2020-04.” The Order went on to suspend the initiation of eviction proceedings or the issuance of an eviction orders for duration of the State of Emergency.
The Order also prohibited “all judicial and non-judicial foreclosure actions under RSA 479 or any other applicable law, rule or regulation” during the State of Emergency.
Of course, the Order clarified that nothing in it should be construed as relieving an individual of their obligations to pay rent, make mortgage payments, or any other obligation which an individual may have under a tenancy or mortgage. The full text of the Order can be found at the following link:
THE MASSACHUSETTS STATUTE:
In contrast to the swiftness taken by their neighbors to the north, the Massachusetts legislature debated for a month before it passed a very limited “Act providing for a moratorium on evictions and foreclosures during the COVID-19 Emergency” which became effective immediately upon Governor Baker’s execution of the Bill on April 20, 2020. While the Act does provide some important relief to some tenants, it was oddly delayed and is curiously narrow in scope.
Specifically, the Act protects residential tenants only from notices of termination of tenancies, notices to quit and any action to pursue eviction during the period the state of emergency. The Act also protects both residential and small business tenants from eviction proceedings in court during the state of emergency. There are no protections for other businesses.
Importantly, while the Act does not provide for the forgiveness of any rent obligation during the Covid19 emergency, it does ban late charges for unpaid rent during the period. The Executive Office of Housing and Economic Development shall implement emergency regulations to effectuate the new law.
The language of the Act, 8 pages in all compared to the one-page Order issued by the New Hampshire Governor, limits the scope of its breadth in important ways. It provides the greatest amount of protection to residential tenants, some protection for small business tenants, and no protection for any other tenants.
As for residential tenants only, the Act bans, with respect to all “non-essential” evictions, landlords from (i) terminating a tenancy; or (ii) sending any notice, including a notice to quit, requesting or demanding that a tenant of a residential dwelling unit vacate the premises.
As for residential dwelling unit or a small business premises unit tenants, the Act also prohibits the courts in the Commonwealth from (i) accepting for filing a writ, summons or complaint; (ii) entering a judgment or default judgment for a plaintiff for possession of a residential dwelling unit or small business premises unit; (iii) issuing an execution for possession of a residential dwelling unit or small business premises unit; (iv) denying, upon the request of a defendant, a stay of execution, or upon the request by a party, a continuance of a summary process case; or (v) scheduling a court event, including a summary process trial.
So, what is a “small business premises unit”? Under the Act, it is defined as, “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.”
And, what is a “non-essential eviction”? It is defined under the Act as, “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 . . . .”
Notably, “a non-essential eviction” under the Act “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.”
The Act accordingly leaves out many chain stores and other businesses from its protection. This may seem very politic but it fails to protect a large number of businesses, which includes their employees and the communities where they live and work. The myth that “big companies” have more money simply because of volume lacks substance, as many “large” companies operate at thin margins, and it has resulted in a failure on the part of Massachusetts to protect a substantial number of people.
The Act also protects residential mortgagors, but not business mortgagors, from foreclosure during the current state of emergency. Mortgage lenders “shall not, for the purposes of foreclosure of a residential property . . . that is not vacant or abandoned: (i) cause notice of a foreclosure sale to be published . . . ; (ii) exercise a power of sale; (iii) exercise a right of entry; (iv) initiate a judicial or non-judicial foreclosure process; or (v) file a complaint to determine the military status of a mortgagor under the federal Servicemembers Civil Relief Act . . . .”
In addition, “a creditor or mortgagee shall grant a forbearance to a mortgagor of a mortgage loan for a residential property . . . if the mortgagor submits a request to the mortgagor’s servicer affirming that the mortgagor has experienced a financial impact from COVID-19. The forbearance shall be for not more than 180 days.” No fees or additional interest shall accrue during the period of forbearance.
Of course, just as tenants are not relieved of the obligation to pay rent, neither are mortgagor/borrowers relieved from paying off their mortgage debt obligations. In any event, the protections from the Act terminate 120 days from its passage or just 45 days from the lifting of the state of emergency, whichever is sooner. That said, those deadlines can be extended by the legislature when the time comes.
Again, while these protections for residential borrowers are welcome, large landlords (including those who provide residential units and those who supply business space) who have mortgaged property receive no protection. Thus, much of the destabilizing effects of the pandemic have not been addressed at all. The Massachusetts law can be found here:
SO, WHAT TO DO NEXT?
Know the law, learn your rights, and seek advice from counsel. You may now have important defenses against those who may demand immediate payment or return of premises or collateral. At the very least, you may have a stronger basis to negotiate a solution to your situation given the additional protections available.
On a policy level, New Hampshire clearly acted more swiftly, as appropriate in these days of pandemic emergency, and with a more thoughtful scope and approach, which seems ironic given the month of deliberating in the Massachusetts legislature. While eviction bans and imposed forbearance are not sustainable for the long run, the point now is to provide everyone breathing space so as to manage the current public health and economic crisis. Noone should be allowed to take their pound of flesh with impunity during a time when, as Benjamin Franklin put it, “We all must hang together or else, most assuredly, we all will hang separately.”