Whether a judge has authority to issue orders for rent escrow payments during the pendency of a summary process eviction action, and, if so, the circumstances under which it is appropriate to exercise that authority.
In the case of Davis v. Comerford, SJC-12712, (Mass. Sept. 16, 2019) a landlord served a tenant-at-will with a Notice to Quit but the tenant failed to vacate the premises. The landlord filed for summary process alleging failure to pay rent, to which the tenants answered with several affirmative defenses and counterclaims, including breach of the warranty of habitability and the covenant of quiet enjoyment, retaliatory eviction, violation of Chapter 93A, and violation of the security deposit statute. At a hearing, the judge for the Southeastern Housing Court ordered that rent be escrowed pending trial.
The tenant claimed the court failed to properly consider various housing code and security deposit statute violations and appealed the case. The case was then transferred to the Massachusetts Supreme Judicial Court (SJC).
The SJC concluded that a court has both the statutory and equitable authority under various Massachusetts General Laws to order a tenant at sufferance to make interim use and occupancy payments during the pendency of an eviction action. A judge can only exercise that authority upon motion by the landlord. The court must then hold a hearing in which myriad factors and circumstances are considered. The judge, in his or her ruling, should identify the factors considered most relevant and explain the overall balancing of those factors. The judge may order payments to be paid into the court, into the escrow account of either the landlord’s or tenant’s attorney, or, in limited circumstances, directly to the landlord. These payments must reflect the “fair value of the use and occupation” of the premises, which may or may not be equal to the rent charged by the landlord.
In determining whether interim use and occupancy payments are appropriate, the judge should consider:
The time delay expected before trial;
The amount of rent due, whether the landlord has received full or partial payments, and the amount of the landlord’s mortgage and other property expenses;
The threat of foreclosure to the landlord;
The tenant’s counterclaims and affirmative defenses, and the merits of each; and
Whether the tenant paid out of pocket for any repairs under the repair and deduct law.
No one factor is determinative, but the court will look to the applicable factors, and determine what is equitable on a case-by-case basis.
What This Means for Realtors®
MAR has long supported legislation that would allow courts to require that rent payments be escrowed in order to close a loophole that allows some tenants to go months without paying rent. This case may provide a framework to move that legislation forward. Additionally, this ruling will provide more consistency throughout the Housing Courts in Massachusetts and provides a path for resolutions that are equitable for both landlords and tenants. While this decision is specific to eviction cases, the Court’s rationale may be applicable to other rent-withholding scenarios.
Remember, Realtors® should avoid providing legal advice and advise both tenant and landlord clients to seek legal counsel in a summary process proceeding.