Coronavirus (COVID-19) Pandemic: Massachusetts Rental Housing Impact
COVID-19 Impacts: Eviction Moratorium Proposals, Tenant Payment Issues, Housing Court Delays, Stay at Home Order, and Move-In Delays
I’ve written two posts here and here about the Coronavirus (COVID-19) Global Pandemic, both focused primarily on impacts to real estate transactions and closings. Along with my colleague and fellow landlord-tenant attorney, Jordana Greenman, Esq., we want to now discuss the impact on rental housing, evictions and landlord-tenant relationships.
The number of reported cases are exploding and events are changing daily, even hourly. I first wrote about the Coronavirus (COVID-19) global pandemic on March 10, about two weeks ago. As of that writing (data as of March 9), there were 729 reported cases in the US, with 27 deaths. As of today March 27, Johns Hopkins is reporting that the United States has surpassed China with over 86,000 confirmed cases and over 1,300 deaths. With the well publicized testing delays, the real number of cases is likely far higher. Unfortunately, Massachusetts has not been spared, with over 2,400 reported cases, including over 140 Boston city hospital workers.
Gov. Baker has ordered the shutdown of all schools and day-cares through May 6, closed down restaurants and bars, and banned gatherings over 25 people. Last week, all Trial Courthouses were shut down for two full days. They have re-opened, but not to the public and with very limited availability for hearing cases (other than true emergencies). On Monday March 23, Gov. Baker issued a “stay at home” advisory, essentially closing down all “non-essential” businesses.
Of course, the big problem for the rental housing industry is the economy has gone into the tank. Experts predict that unemployment will rise to Great Depression levels. The stock market has lost some 30% of its value. When people have lost their jobs and lost their savings, they can’t pay the mortgage or the rent.
Legislation for Eviction Moratorium
In Boston, Mayor Marty Walsh has announced a voluntary eviction moratorium agreement with the city’s largest landlords including Trinity Financial, Winn Residential and the Community Builders, which manage hundreds of apartments in Boston. On Beacon Hill, legislators have filed a bill calling for a state-wide moratorium on evictions during the pendency of the COVID-19 State of Emergency. At the federal level, HUD has suspended all evictions for FHA insured single family residences. It’s unclear whether this also applies to HUD Section 8 rental subsidy participants. Lastly, Attorney General Maura Healy just implemented new regulations prohibiting consumer debt collection activities for a 90 day period, however, landlord-tenant payments are excluded from the regulation.
The problem with these legislative efforts, of course, is that there needs to be a corresponding moratorium on the payment of mortgages, real estate taxes and property expenses for rental property owners, otherwise small landlords will shoulder an enormous amount of the financial burden during this crisis. “If renters don’t have money to pay rent, landlords don’t have money, either,” Doug Quattrochi, executive director of the group MassLandlords told the Boston Globe recently. “That’s money that pays plumbers and electricians and mortgage bills. If they’re a senior on a fixed income, it might be how they buy food.”
Gov. Charlie Baker indicated during his last press conference that he was not at a point where he would impose such a moratorium. Thus, as of now, a moratorium on rental payments in Massachusetts is unlikely, but of course, that could change, and such change would disproportionately affect the small landlords.
Housing Court COVID-19 Response
Practically speaking however, there exists a de facto moratorium on evictions because the statewide Housing Court has deferred hearing eviction cases through April 21. Under two new Standing Orders, all Housing Courts are closed to the public through at least until April 6, 2020, and are hearing only emergency matters. All evictions (summary process) are impacted by the order, and are currently on hold until April 21, 2020. A party may seek to advance their case upon a showing of “good cause,” but my feeling is that those will be quite rare. “Emergency matters” include the following circumstances: applications for injunctive relief, temporary restraining orders where a complaint involves a lockout, condemnation, no heat, no water, and/or no utilities; conduct and or conditions endangering the health safety and welfare of residential occupants and others; stay of levy on an execution; or where access is required to address an emergency (e.g., burst water pipe, gas fumes, etc.).
We want to highlight the likely scenario that once this crisis (hopefully) ends, the Housing Court will be swamped with cases in Spring/Summer 2020. On average, the Boston Housing Court itself receives hundreds of new eviction cases weekly. The COVID-19 postponement is sure to result in a huge backlog of eviction cases for many months to come and even more crowding in the courthouses.
Legal Guidance: Advice to landlords dealing with tenants who cannot pay rent — You have to take a wait and see approach. Legally, you are still allowed to issue a 14 day notice to quit for non-payment of rent. You are also allowed to file an eviction complaint in the Housing Court. But you will likely not get in front of a judge until sometime in May, and possibly longer. So, it’s a good idea to go ahead and have an attorney send out the notice to quit and get the summary process complaint filed, and then you’ll have to wait in line and see what happens. We do not yet know the order in which cases will be scheduled or if those filed during this time will be given priority.
Stay At Home Order: Impact on Rental Agent Activities
Gov. Baker’s Stay at Home guidance/order appears to apply to real estate and rental agent activities. They are not specifically mentioned as one of the enumerated “essential” businesses, and their activities do involve much inter-personal contact in the ordinary course of business. Boston Mayor Marty Walsh has issued a formal letter advising rental agents not to hold showings of occupied rental units. He also issued guidance that any prospective tenants who are sick should not be allowed to view a unit in person, and added that open houses should not be used to market properties that are for rent or for sale. Anecdotally, I’m hearing that some (but not all) rental agencies are shutting down operations and many are simply working remotely.
Legal Guidance: showing rental properties live in person is a violation of the Stay At Home Order, and incongruent with the public health policy behind it. Rental agents should instead use virtual showing technology, FaceTime and Zoom to replicate in person showings. Moreover, holding in person showings could lead to someone getting infected with COVID-19, then a big lawsuit against the rental agent. We don’t want to see that either.
Move-in Delays
Many tenants are scheduled to move in the coming months and, while moving companies have been deemed “essential” under the Stay at Home Order, many people may feel safer staying in place than moving to an unknown locations. Landlords and tenants should be encouraged to work together in the event of delays.
We have created a COVID-19 Lease Rider addressing the issue of move-in delays during this crisis. While it may be tempting for a landlord to keep a prepaid first month’s rent, last month’s rent and security deposit in the event a tenant either cannot move or feels unsafe doing so, this may open landlords up to liability and legal claims are sure to ensue. We encourage the parties to work together and be flexible.
For current occupancies, landlords should remind their tenants to keep the apartments clean and sanitary. Most importantly, during tenant turnovers, landlords should hire a sanitization company (e.g., Service Master) to clean and disinfect units prior to a new occupancy.
Conclusion
Our collective appreciation goes out to the many health care and public service employees working to help combat this epidemic. The Massachusetts’s official COVID-19 website contains the most up-to-date information. We are also available to consult regarding your current or pending landlord-tenant needs.
Feel free to email Rich at rvetstein@vetsteinlawgroup.com or Jordana at jordana@jrglegal.com.