Although governmental and public attention has focused largely on residential evictions during the current public health crisis, there have been legal developments affecting evictions from commercial properties, as well. Below is a brief explanation of recent executive orders, legislation, and other efforts by local, state, and federal governments affecting the eviction of commercial tenants in New Hampshire and Massachusetts.
On March 17, 2020, Governor Chris Sununu issued Emergency Order #4 Pursuant to Executive Order 2020-04, which prohibited all eviction proceedings for both commercial and residential properties during the COVID-19 state of emergency. Executive Order 2020-04 made the state of emergency effective on March 13, 2020. By statute, a state of emergency may only last 21 days, but the governor is able to extend that with subsequent executive orders, which Governor Sununu did on April 3, 2020 in Executive Order 2020-05. As a result of that order, the state of emergency will expire on May 4, 2020, unless extended again.
Emergency Order #24 Pursuant to Executive Order 2020-04, also issued on April 3, 2020, provided two exceptions to this prohibition against commercial and residential evictions:
- Eviction proceedings initiated for violations of a lease or violations of law which result in substantial damage to the premises.
- Eviction proceedings initiated against a tenant who has abandoned the leased premises.
Although most eviction actions are prohibited, Emergency Orders #4 clearly states that tenants are expected to continue paying rent and complying with the other terms of their leases. Similarly, Emergency Order #24 encourages tenants “to work with their landlords to pay all rent that they can afford, and to utilize the expanded unemployment benefits provided by the State and Federal Government, where applicable, for this purpose.” However, because of the eviction ban, landlords have limited recourse during the state of emergency to force a tenant to pay rent.
The eviction of commercial tenants will commence again after the state of emergency has ended, but it is not clear when after the state of emergency ends those proceedings will begin. There may be further prohibitions on landlords for a period beyond the expiration of the state of emergency, which could provide time to commercial tenants whose rent is in arears to make their landlords whole before any eviction actions may commence. We anticipate that subsequent emergency orders or legislation will provide more guidance as the expiration of the state of emergency nears.
On March 10, 2020, Governor Charlie Baker declared a state of emergency in Massachusetts in Executive Order No. 591. On April 20, 2020, Governor Baker signed Bill H. 4676 into law, which prohibits courts from engaging in the following actions in “non-essential evictions” involving the tenants of “small business premises units”:
- accepting for filing a writ, summons or complaint;
- entering a judgment or default judgment for a plaintiff for possession of a small business premises unit;
- issuing an execution for possession of a small business premises unit;
- 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; and
- scheduling a court event, including a summary process trial.
The prohibition will continue until August 18, 2020 (i.e., 120 days after the effective date of the legislation) or 45 days after the COVID-19 state of emergency has been lifted, whichever is sooner. The Governor may postpone that expiration date in increments of up to 90 days, although no later than 45 days after the state of emergency has ended. The act also states that tenants are still obligated to pay rent and that the act is not intended to restrict a landlord’s ability to recover rent.
“Small business premises units” are defined as 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.”
“Non-essential evictions” include evictions for non-payment of rent, for no fault or no cause, or for a 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. The eviction of a commercial tenant from a small business premises unit due to the expiration of its lease or due to a default under its lease that occurred before the COVID-19 state of emergency is permitted, although the availability of court resources will be limited during the state of emergency.
Some municipalities have also attempted to stop or discourage evictions within their jurisdictions. For example, Somerville’s mayor and Board of Health have announced an Emergency Order Establishing a Moratorium on Eviction Enforcement, which does not prevent owners from filing eviction cases or obtaining court orders to seize possession of residential and commercial leaseholds, but does prohibit the physical removal of persons and belongings.
The federal government passed the Coronavirus Aid, Relief, and Economic Security Act or the ”CARES Act” on March 27, 2020, but it did not address commercial evictions. Rather, the CARES Act established a moratorium only on the eviction of residential tenants of properties that have a federally backed mortgage loan or federally backed multifamily mortgage loan, in addition to those participating in other federal housing programs. It is possible that there could be future federal legislation that addresses this issue.
In New Hampshire, all commercial evictions have been prohibited during the COVID-19 state of emergency, except in limited situations. However, that prohibition does not relieve tenants of their obligation to pay rent, and tenants are encouraged to pay their landlord all the rent they can afford.
In Massachusetts, commercial tenants are obligated to pay rent, but courts are prohibited from engaging in most eviction actions against the tenants of small business premises units in non-essential evictions. The prohibition will continue until the sooner of August 18, 2020 or 45 days after the COVID-19 state of emergency has been lifted, subject to extensions instituted by Governor Baker.
Before taking any action against a tenant, commercial landlords should (a) review the relevant lease carefully to confirm the rights of each party, (b) be aware of the emergency orders and legislation currently in place, and (c) check with counsel about subsequent governmental measures. That last point will be particularly important as the emergency and prohibitions end because the required timeline to evict a commercial tenant may be temporarily altered, despite previous orders and the language of the lease. Additionally, landlords should keep careful records of their correspondence (both hard copy and electronic) with tenants to show their efforts to accommodate the tenants’ economic circumstances due to the COVID-19 pandemic. Making those efforts may help avoid eviction. In a worst case scenario, after the emergency landlords that are able to show their efforts to assist tenants will have better luck in eviction actions than landlords that cannot.