SJC Authorizes Mass. Housing and District Court Judges to Issue Rent Escrow Orders in Pending Eviction Cases

Because Massachusetts has made it illegal for landlords to simply move a tenant out, a landlord must first obtain a court order to evict a tenant, which can be a lengthy process, particularly with respect to residential tenancies. After serving the tenant with a notice to quit and entering a complaint with the court, the tenant has an opportunity to respond with its own motions, including filing a discovery or transfer form, which can prolong the eviction process. The process can take even longer if either party appeals the lower court’s initial order. If a tenant still does not leave after an eviction is ordered by the court, the landlord is not allowed to evict the tenant himself, and only a constable or sheriff may remove a tenant and their belongings from a property.

When an eviction is necessary, landlords typically have an interest in the eviction moving as quickly as possible so tenants who are in violation of the lease can be replaced by new rent paying tenants. Tenants, on the other hand, may want the eviction to drag on as long as possible and delay any payment obligations or moving costs. Small residential landlords may be left with no rental income and no way to expedite the eviction process. While several housing court judges have issued orders requiring that a residential tenant continue to pay rent during the pendency of an eviction case, up until now, there has not been a formal ruling by a Massachusetts appellate court that rent escrow orders were legal.

On September 16, 2019, in Davis v. Comerford, a tenant appealed a rent escrow order entered by the housing court to the Massachusetts Supreme Judicial Court, arguing that the judge did not properly consider the tenant’s counterclaims relating to housing code and security deposit violations. This case presented two questions: (i) whether a judge has authority to issue orders for interim rent escrow payments during the pendency of a summary process eviction action, and (ii), if so, the circumstances under which it is appropriate to exercise authority.

The appellate court ruled that a judge does have such authority, and further, that a landlord must file a written motion for rent escrow with a subsequent hearing to be held on the motion, where the following set of factors and circumstances are to be considered: (i) the tenant’s counterclaims and defenses, especially any code violation/property condition claims which would result in a reduced fair rental amount; (ii) whether the tenant had to pay out of pocket for any repairs under the repair and deduct law; (iii) the tenant’s own financial situation, as well as whether they have a lawyer or are proceeding on their own; (iv) the time delay expected before trial or final resolution, noting that a request for a jury trial will typically delay the case substantially; and (v) the amount of rent due, whether the landlord has received full or partial payments, the amount of the landlord’s mortgage and property expenses and whether there is a threat of foreclosure to the landlord. The judge must also issue written findings supporting his/her ruling prior to the issuance of a rent escrow order. If a rent escrow order is issued, the judge can order that the rent escrow payments be placed into court, into the tenant’s attorneys account, into a landlord attorney’s account, or if warranted, paid directly to the landlord.

Previously, there were no specific guidelines for rent escrow orders. This new ruling creates a framework for lower courts to use in considering rent escrow orders going forward.