Although governmental and public attention has focused largely on residential evictions during the current public health crisis, there have also been developments affecting evictions from commercial properties. 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 extension, the state of emergency will expire on May 4, 2020, unless extended again.
Emergency Order #24 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 Order #4 states that tenants are expected to continue paying rent and to comply 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 be permitted when the state of emergency ends. At present it remains uncertain as to when such evictions may begin following the emergency. Further restrictions on landlords beyond the expiration of the state of emergency may provide time for commercial tenants behind in their rent to pay the arrearage before 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 by Executive Order No. 591. There have been a number of updates, emergency orders, and official guidance documents issued pursuant to that order since then, but none have addressed the eviction of commercial tenants. Chief Justice Timothy Sullivan issued an order on March 13, 2020, postponing all residential evictions in the Massachusetts Housing Court until at least April 21, 2020, but no similar order has postponed commercial evictions in other Massachusetts courts.
Although the Massachusetts legislature is working on a bill that would postpone evictions until after the state of emergency in the Commonwealth, it may not apply to commercial tenants. Senate bill S.2621, which the Massachusetts Senate passed on April 1, 2020, would prohibit judges from evicting residential tenants for either 90 days from the date the bill becomes law, or at the termination of the COVID-19 emergency, whichever occurs sooner. In contrast, Bill H.4615, would prohibit the eviction of commercial and residential tenants until at least 30 days after the termination of the COVID-19 state of emergency. The House and Senate will have to negotiate a final bill before Governor Baker can sign it into law. Further action is expected soon.
In the meantime, some municipalities have attempted to stop or discourage evictions within their jurisdiction. 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 for 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. While that Act does not address commercial evictions, it establishes a moratorium on the eviction of residential tenants of properties with a federally backed mortgage loan, federally backed multifamily mortgage loan, or who participate in other federal housing programs. It is possible that there could be future federal legislation addressing this issue.
In New Hampshire, all commercial evictions have been prohibited during the COVID-19 state of emergency, except in limited situations. 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, there is no similar statewide prohibition against evictions of commercial tenants, however, landlords and tenants should determine whether local municipal governments have taken steps to postpone commercial evictions. It is possible that the Massachusetts Legislature will pass a bill soon postponing the eviction of commercial tenants until the COVID-19 state of emergency in Massachusetts is over.
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. Consultation with counsel will be particularly important when the emergency ends, as 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 both hard copy and electronic correspondence with tenants in order to show their efforts to accommodate the tenants' economic circumstances due to the COVID-19 pandemic..
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.