Chapter 65 of the Acts of 2020 (i.e., An Act Providing for a Moratorium on Evictions and Foreclosures during the COVID-19 Emergency) (“Act”) was extended by Governor Baker. Our office drafted an Article on the Act as it relates to the Moratorium’s impact on residential evictions (“Moratorium”). This update will focus on the commercial landlord and its rights while the Moratorium is in effect.
How Does the Moratorium Impact Commercial Landlords?
The Moratorium prohibits any non-essential eviction of a “small business premises unit.” This can be broken down into two separate categories, to wit: what is a small business premises unit; and, what is a non-essential v. essential eviction.
Section 1 of the Act defines small business premises unit to be:
- Any premise occupied by a tenant for commercial purposes, whether for-profit or non-for profit.
- However, it does not include a premise which is occupied by a commercial tenant, controlled by a commercial tenant, or is in common control with a commercial tenant that:
- (i) operates multi-state;
- (ii) operates multi-nationally;
- (iii) is publicly traded; or
- (iv) has not less than 150 full-time equivalent employees
What Remedies Do I Have if My Commercial Tenant is NOT a Small Business Premises Unit?
A commercial tenant which meets any of the criteria listed as (i) through (iv) above, is not protected by the Moratorium and a landlord can proceed accordingly against the tenant in a summary process action for any cause of action (e.g., nonpayment of rent, causing damage to the leased premises, etc.).
What Remedies Do I Have if My Commercial Tenant is a Small Business Premises Unit?
If the commercial tenant does not meet any of the above criteria (i.e., is a small local company which does not operate in any other state), then the landlord may only proceed under an “essential” eviction action.
An essential eviction action is cause-based which includes allegations of lease violations or criminal activity that may impact the health or safety of other residents, health care workers, emergency personnel, persons lawfully on the premises, or the general public. A commercial landlord is not allowed to commence a summary process action against a small business premises unit for any other reason (e.g., nonpayment of rent).
A commercial landlord is, however, allowed to serve a notice (even a notice to quit for nonpayment) upon any commercial tenant, including a small business premises unit. While the commercial landlord cannot commence a summary process eviction action against a small business premises unit for non-essential evictions like nonpayment of rent, the service of a notice to quit / notice of default may incentivize the nonpaying tenant to come current with its arrears.
When Does the Moratorium Expire?
The Moratorium is currently in effect and the Governor has the ability to extend the Moratorium for periods of not more than 90 days. However, the Moratorium cannot be extended for more than 45 days after the COVID-19 state of emergency has been lifted.
Are Commercial Landlords and Tenants Impacted by the Federal Moratorium on Evictions?
On September 4, 2020, a federal moratorium on residential evictions became effective by order of The Centers for Disease Control and Prevention (“Federal Moratorium”). This Federal Moratorium only applies to residential evictions and is effective until December 31, 2020. The Federal Moratorium has no impact on commercial landlords and tenants within the Commonwealth.
Are Courts Hearing Summary Process Actions?
The Courts have been hearing certain summary process matters via zoom or telephone conference in limited instances. It has proven to be difficult to have the Courts schedule matters for hearing. It is imperative the Court be made well aware that the summary process action relates to a commercial tenant who is not protected by Act (i.e., not a small business premises unit or is an essential eviction). While there is no affidavit or court form to demonstrate the commercial tenant is exempt from the Act, it has been recommended by many Courts to draft and include an Affidavit when filing with Court which cites to the Act and sets forth the reasons why the Summary Process action is exempt from the Act. Many Courts take pause when scheduling an eviction action during this time, even when the commercial tenant is exempt from the Act. Our office has had success in filing emergency motions to schedule a trial date if the commercial tenant is not qualified for protection under the Act.
If the commercial tenant is protected under the Act, no Court may accept a writ or summons and complaint for filing. Courts are also prohibited from scheduling any event including a Summary Process trial and Motion to Issue Execution. In addition, no Court can enter judgment, default judgment, or issue an execution for possession.
If you are in possession of an execution for possession, the expiration of the execution will be extended as sheriffs and constables are unable to levy upon an execution for possession for commercial tenants protected by the Act.
COVID-19 has had drastic ramifications on our legal system and has impacted how landlords can approach commercial evictions. During this trying time, our office is here to assist you in your needs and available to provide diligent, conscientious, and zealous legal services.
Goldman & Pease is a full-service real estate and civil litigation firm which, for over thirty-five years, regularly advises and represents residential and commercial property owners, condominium boards, property managers, lending institutions, developers, and contractors on best practices and liability reduction measures.