1. 1 The 2010 Post-Foreclosure “Just Cause” Eviction Law Massachusetts Law Reform Institute 99 Chauncy Street, Suite 500, Boston, MA 02111-1703 PHONE 617-357-0700 ▪ FAX 617-357-0777 ▪ www.mlri.orgwww.mlri.org Revised December, 2010

2. 2 Background On August 7, 2010, Governor Deval Patrick signed into law “An Act Relative to Mortgage Foreclosures”, Chapter 258 of the Acts of 2010.

3. 3 Background (cont.) Section 6 of Chapter 258, “Tenant Protections in Foreclosed Properties,” adds a new Chapter 186A to the General Laws. 1 The new Chapter 186A is often referred to as the “Post-Foreclosure Just Cause Eviction Law” or simply the “Just Cause Eviction Law.” The Just Cause Eviction Law went into effect immediately on August 7, 2010.

4. 4 Why do we need a just cause eviction law? The Just Cause Eviction Law recognizes that foreclosing banks have evicted thousands of renters in Massachusetts. The law also recognizes that foreclosure itself is not solely responsible for the displacement of families and the devastation of neighborhoods. Instead, the law concentrates on what happens after foreclosure and targets the banks’ choice to evict tenants.

5. 5 Preamble to the new law Whereas, The deferred operation of this act would tend to defeat its purpose, which is to protect forthwith the citizens and neighborhoods of the commonwealth, therefore it is hereby declared to be an emergency law, necessary for the immediate preservation of the public convenience.

6. 6 Overview The new law (M.G.L. c. 186A 1 ): Prohibits foreclosing banks and similar entities in the mortgage business (“foreclosing owners”) from evicting “bona fide” tenants unless there is “just cause” or a binding purchase and sale agreement. Requires foreclosing owners to give tenants written notice with contact information for the foreclosing owner and the person responsible for management and maintenance. Requires other notices before a foreclosing owner can evict.

7. 7 Who is a “bona fide” tenant? Can’t be the parent, child, or spouse of former owner/landlord. Must have entered into lease/tenancy through an “arms length” transaction with former owner/landlord. Moved in before the foreclosure. 2 Note: Persons with rental subsidies such as Section 8 will generally qualify as bona fide tenants. A lease is not required – tenants at will of former owner can be bona fide tenants.

8. What is a “foreclosing owner”? A “foreclosing owner” is an entity (not an individual) that holds title as a result of foreclosure and held the mortgage before foreclosure or is related to the entity that held the mortgage before foreclosure, or is in the mortgage business and holds title to the property within 3 years of the foreclosure deed. 3 Note: In these slides, the “foreclosing owner” may be referred to as the “bank” and the foreclosed property as “bank-owned.”

9. 9 Which tenants in foreclosed properties are protected by the new law? All tenants in bank-owned properties are entitled to contact information notices from the foreclosing owner. A foreclosing owner can’t evict bona fide tenants unless there is “just cause” or a binding purchase and sale agreement on the property. Tenants in properties purchased at foreclosure sale by private investors or individuals (not foreclosing owners) are not protected by this law.

10. 10 What notices must a foreclosing owner provide to tenants after foreclosure? A foreclosing owner must provide written contact information notices to all tenants in foreclosed properties with: Name, address, and telephone number of the foreclosing owner; Name, address, telephone number of the person responsible for repairs/management; Address where rent should be sent. 4

11. 11 When must the contact information notice be provided? Contact information notice must be provided within 30 days of the foreclosure.

12. 12 How must the contact information notice be delivered to tenants? Foreclosing owner must: Post notice in prominent location in the building; Mail to each unit (by first class mail); Slide under the door to each unit. (must do all three)

13. 13 A foreclosing owner can evict a bona fide tenant under only two circumstances: If there is “just cause” (nonpayment or various tenancy violations); If there is a binding purchase and sale agreement with a third party. 5 When can a “bona fide” tenant be evicted by a foreclosing owner?

14. 14 What is an “eviction” for which a foreclosing owner needs just cause? “Eviction” is defined VERY broadly as : An action without limitation... which is intended to actually or constructively evict a tenant or otherwise compel a tenant to vacate.... 6

15. 15 Examples of “eviction” under Chapter 186A Telling or leading tenants to believe that they must move out because of the foreclosure. Serving notice to quit or court complaint. Refusing to repair. Offering “cash for keys” without informing tenants of their rights under this law.

16. 16 What constitutes “just cause” to evict? There are six “just cause” reasons for eviction: Non-payment of rent (or use and occupancy); Material violation of an obligation of the tenancy; Refusal of written request to renew/extend lease with the foreclosing owner; Creating or allowing a nuisance in the unit, damaging the unit, or disturbing other occupants; Illegal activity in the unit; Refusal to allow the foreclosing owner reasonable access to inspect, repair or show unit to prospective purchaser. 7

17. 17 Non-payment as “just cause” to evict A foreclosing owner can evict for non-payment only if: 30 days have passed since the contact information notice was posted and delivered; It delivered to the tenant, at the same time as the contact information notice, a written notice of tenant’s right to a court hearing before eviction; It notified tenant in writing of the amount of rent (should generally be same as before foreclosure). 8

18. 18 Material violation of tenancy as “just cause” to evict A foreclosing owner can evict for a material violation of an obligation of the tenancy only if: 30 days have passed since the contact information notice was posted and delivered; It delivered to the tenant, at the same time as the contact information notice, a notice of tenant’s right to a court hearing before eviction; It delivered written notice of the alleged material violation; 30 days passed since the notice of the violation was received and tenant has not cured the violation (30 day right to cure).

19. 19 Refusing to extend or renew lease or tenancy agreement as “just cause” A foreclosing owner can evict for tenant’s refusal to extend/renew lease or tenancy agreement only if: 30 days have passed since the contact information notice was posted and delivered; Foreclosing owner delivered to the tenant, at the same time as the contact information notice, a written notice of tenant’s right to a court hearing before eviction; Tenant had lease or tenancy agreement with former owner that expired after August 9 th, 2010; Foreclosing owner requested in writing that tenant extend/renew lease or tenancy agreement.

20. 20 Other “just cause” reasons to evict Foreclosing owner can evict for the following reasons only if it delivered the contact information notice and, at the same time, a written notice of tenant’s right to a court hearing before eviction: Creating nuisance in unit, causing substantial damage, or disturbing other occupants; Illegal activity in the unit; Refusing reasonable access for repairs or to show unit.

21. 21 What if the foreclosing owner does not provide the required notices? Foreclosing owner cannot evict for “just cause” unless contact information and other required notices have been delivered. Foreclosing owner may be fined $5,000 per “eviction” that violates the new law, or be held liable for damages under other laws. 9 May be liable for damages for unfair and deceptive acts under the Mass. Consumer Protection Law and other laws.

22. 22 What if an investor or individual, not a bank, buys at foreclosure? Tenants in properties purchased by an individual or investor (not a “foreclosing owner”) are not protected by the new just cause eviction law. But most of these tenants are still protected by the federal “Protecting Tenants at Foreclosure Act of 2009.” This means that in most cases they can finish their leases or get at least 90 days’ notice before the new owner can start a summary process case. 10

23. 23 Does the new law apply if foreclosure was before August 7, 2010? On October 21, 2010, Judge Dina Fein, First Justice of the Western Division of the Housing Court Department, decided the summary process (eviction) case of Deutsche Bank (as Trustee) v. Mildred Matos. 11 Deutsche Bank had foreclosed on the former owner/ landlord before August 7, 2010, had served the tenant with a notice to quit before August 7, and had filed the summary process court case before August 7.

24. 24 Does the new law apply if foreclosure was before August 7, 2010? (cont.) Judge Fein dismissed the bank’s summary process case, holding:  Chapter 186A applies to “evictions” after August 7, 2010. There is no indication that the Legislature intended to exempt cases that were pending, or foreclosure was before August 7.  Since Deutsche Bank had no just cause to “evict” (here, continue with the summary process case), the case must be dismissed.

25. 25 Does the new law apply if foreclosure was before August 7, 2010? (cont.) Judge Fein wrote:... dismissal flows necessarily from the plain language of the Act's emergency preamble, which states an intention to protect ‘forthwith’ the citizens and neighborhoods of the Commonwealth, and from the plain language of Chapter 186A, which prohibits a foreclosing owner from taking ‘an action, without limitation,’ intended ‘actually or constructively’ to evict a bona fide tenant, except for ‘just cause.' This language could not be clearer; ‘an action, without limitation’ can only mean "any and all actions."

26. 26 What are the rights of Section 8 or MRVP tenants? Other state and federal laws require that subsidized leases and agreements be assumed by whoever takes title after foreclosure (not just “banks”). 12 The rules of the subsidy program continue to apply after foreclosure. Almost all subsidized tenants are “bona fide” under the new law and therefore can only be evicted for just cause.

27. 27 What other protections do tenants in foreclosed properties have? All post-foreclosure owners must maintain the property up to standards of the State Sanitary Code. 13 No matter what their status, tenants have the right to a court hearing prior to eviction. Under no circumstances can a post-foreclosure owner force a tenant to leave without a court order. 14

28. 28 Where can I find more information on the new law and other laws protecting tenants after foreclosure? The full text of the new “just cause” eviction law can be found at: http://www.malegislature.gov/Laws/GeneralLaws/PartII/TitleI/Chapter186A /Section1 http://www.malegislature.gov/Laws/GeneralLaws/PartII/TitleI/Chapter186A /Section1 A more detailed summary of this law, as well as other laws that affect the rights of tenants in foreclosed properties, can be found at: www.masslegalservices.org/Tenant-Rights-After-Foreclosure and http://www.lawlib.state.ma.us/subject/about/tenantsinforeclosure.html For additional information contact: Judith Liben Senior Housing Attorney Mass. Law Reform Institute 99 Chauncy St., Boston, MA 02111 617-357-0700 x327 jliben@mlri.org

29. 29 Endnotes 1 The Just Cause Eviction Law, G.L. c. 186A, is found at http://www.malegislature.gov/Laws/GeneralLaws/PartII/TitleI/Chapter186A/Section 1. http://www.malegislature.gov/Laws/GeneralLaws/PartII/TitleI/Chapter186A/Section 1 2 “Tenant” and “Bona fide tenancy” are defined in c. 186A, § 1. 3 “Foreclosing owner” is defined in c. 186A, § 1. 4 The provisions dealing with the contact information notice are in § 3. 5 See c. 186A, § 2. 6 This language comes from the statutory definition in § 1. It is not clear at this time how broadly courts will interpret this language but it would appear to cover many actions by foreclosing owners other than service of legal documents. 7 “Just cause” is defined in § 1. 8 §§ 3 & 4 address the notices required for a foreclosing to evict for just cause. 9 § 6 addresses the penalties for unlawful evictions.

30. 30 Endnotes 10 See §§ 702 & 703 of the federal Protecting Tenants at Foreclosure Act of 2009, 12 U.S.C. § 5220 note; Pub. L. No. 111-22, tit. VII, 123 Stat. 1632, 1660-62 (2009) (as amended by Pub. L. No. 111-203, tit. XIV, § 1484 (2010)). 11 See Deutsche Bank v. Matos, No. 10-SP-2731 (Hampden County Housing Ct., Oct. 21, 2010). Deutsche Bank has filed a notice of appeal. 12 See M.G.L. c. 186, § 13A (as amended by Section 5 of St. 2010, c. 258, An Act Relative to Mortgage Foreclosures (August 7, 2010)) and the federal Protecting Tenants at Foreclosure Act of 2009. Full texts of these laws found at http://www.lawlib.state.ma.us/subject/about/tenantsinforeclosure.html. http://www.lawlib.state.ma.us/subject/about/tenantsinforeclosure.html 13 For more about the basic rights of tenants in foreclosed properties see: http://www.masslegalservices.org/node/23601 and http://www.lawlib.state.ma.us/subject/about/tenantsinforeclosure.html. http://www.masslegalservices.org/node/23601 http://www.lawlib.state.ma.us/subject/about/tenantsinforeclosure.html 14 See endnote #13 above.