Rent Escrow: a rare win for landlords

September 16, 2019:- Today the Supreme Judicial Court (SJC) announced a decision that gives landlords cause to rejoice.

Following motion by a landlord, a court has statutory and equitable authority… to order a tenant at sufferance to make interim use and occupancy payments during the pendency of an eviction action.

On behalf of MassLandlords, I submitted an amicus brief in the case, Davis v. Comerford, and my main worry was that the court would set an unrealistic threshold for landlords to meet before a rent-escrow order could issue. That worry was misplaced, I am relieved to say. Instead of following the advice of the Harvard Legal Aid Bureau and requiring landlords to show the threat of “irreparable harm,” (i.e. harm that money cannot fix) the SJC tells judges which factors to take int account and to then engage in an “overall balancing of the equities.”

The first factor?

[T]ime lost in regaining [real property] from a party in illegal possession can represent an irreplaceable loss to the owner.

The other factors in the non-exhaustive list of factors that the judge should weigh are;

  • Amount of rent owed;
  • Number of months with no payments/partial payments;
  • Landlord’s monthly obligations;
  • Whether landlord faces the threat of foreclosure;
  • Tenant’s likelihood of success on the merits of defenses/counterclaims;
  • Whether tenant has been withholding rent because of conditions, or has repaired and deducted cost from rent;
  • Whether code violations are de minimis or substantial;
  • Whether tenant is indigent.

In addition to making clear that judges can order rent escrow and not setting an impossibly high bar for landlords, the SJC said this:

We further conclude that payment into an escrow account maintained by the court or counsel for one of the parties typically will provide sufficient protection to a landlord, but we clarify that a judge may order payments directly to a landlord if certain additional factors are present, such as where the landlord demonstrates that use and occupancy payments are necessary for the landlord to pay a mortgage on the premises or meet other pressing financial obligations.

For the slip opinion of the Davis v. Comerford decision click here.

Chamber legislative breakfast_with Lindsey and Silvia (3)
Peter Vickery, Esq.

3 thoughts on “Rent Escrow: a rare win for landlords

  1. Congratulations on a beginning- if not a solution with real teeth to the free rent trick problem. A landlord should not have to show ANY extenuating personal circumstances to have an escrow order issued. If the rent was “withheld for failure to complete repairs” , it presumably exists, and would have been tendered under ordinary circumstances. The right of the tenant to withhold would not be abridged, but the landlord’s right to receive would be protected. Can not the individuals at the SJC see this? What legal argument informs their seemingly one-sided decision?

    Bill Saltman

    1. If the SJC had taken the advice of the Harvard Legal Aid Bureau’s amicus brief, a landlord would have to show “irreparable harm,” i.e. harm that money cannot fix, an insuperably high threshold for most landlords. So this decision is quite a relief.

      1. Actually, this is a mischaracterization of the Harvard Legal Aid Bureau’s argument. At no time did its brief advocate for the injunctive standard. Rather, the discussion about the injunctive standard was limited to the second question asked by the Court in its Amicus solicitation (“whether the order contained an adequate legal and evidentiary basis for injunctive relief”). The Court did NOT ask whether the injunctive standard was the appropriate standard, and we did not address that question. We answered the question that was asked — that the order from the trial court did not meet the injunctive standard. Period.

        Our brief made clear that we believe that the court has the authority to issue escrow orders (which was the first question in the Amicus solicitation), and the SJC agreed that there is both statutory and equitable authority to do so. We also requested the SJC to provide more guidance to trial courts considering these motions, including what factors should be considered.

        MassLandlord’s position and the Legal Aid Bureau’s position on the 2 questions asked by the Court in its Amicus Solicitation were very similar: we both said that the court has authority to order the payment of use and occupancy while a case is pending, and I believe that we both agree that the trial court did not have sufficient evidence using an injunctive standard to order escrow.

        Both landlords and tenants won with this decision. We should all move forward.

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