BY JOHN KIRITSIS, ESQ., CPA, MBA, MS, JD, LL.M
Dealing with a residential tenant’s bankruptcy in New York City (NYC) requires careful navigation of both bankruptcy laws and landlord-tenant regulations. Bankruptcy proceedings can significantly impact a landlord’s ability to pursue rent payments and eviction. Here are steps to take when dealing with a residential tenant’s bankruptcy in NYC:
- Obtain Legal Counsel:
Consult with an attorney experienced in both bankruptcy and landlord-tenant law. Bankruptcy is a complex legal area, and having knowledgeable legal representation is essential.
- Understand the Bankruptcy Chapter:
Determine the type of bankruptcy the tenant has filed for. Common types include Chapter 7 (liquidation) and Chapter 13 (reorganization). Each type has different implications for the landlord-tenant relationship.
- Automatic Stay:
Upon filing for bankruptcy, an automatic stay goes into effect, which prohibits most collection activities, including eviction, against the tenant. This stay can impact your ability to pursue unpaid rent and eviction proceedings.
- Bankruptcy Notice:
If a tenant files for bankruptcy, you will receive notice from the bankruptcy court. This notice will provide information about the case and the assigned trustee.
- Attend the Meeting of Creditors:
As a landlord, you will be required to attend the Meeting of Creditors (341 meeting) where you can ask questions about the tenant’s financial situation and intentions regarding the lease.
- File Proof of Claim:
If the tenant owes back rent, you may need to file a proof of claim with the bankruptcy court to be considered as a creditor. This can enable you to recover unpaid rent as part of the bankruptcy process.
- Negotiate with the Trustee:
Depending on the bankruptcy chapter, the tenant’s trustee may be involved in administering payments to creditors. Communicate with the trustee to discuss the terms of the lease, any unpaid rent, and the tenant’s intentions.
- Seek Relief from the Automatic Stay:
In some cases, landlords can seek relief from the automatic stay if there are grounds to do so. This could be based on lease violations or other factors.
- Monitor the Case:
Stay informed about the progress of the bankruptcy case and any court orders that may impact your ability to collect rent or pursue eviction.
- Consult with Legal Counsel:
Throughout the bankruptcy process, continue to work closely with your attorney to ensure compliance with bankruptcy laws and explore your options.
It’s important to remember that bankruptcy proceedings are subject to federal laws and regulations, which take precedence over state and local landlord-tenant laws. Your primary goal should be to work within the legal framework to protect your rights as a landlord while respecting the tenant’s rights under bankruptcy law. Legal representation is crucial in navigating this complex process successfully.
Citations, References and Potentially Useful Resources for Further Information:
New York State Constitution
Federal Securities Regulation
New York State Martin Act
New York Condominium Act
New York State Security Regulations
New York Business Corporation Law
New York Limited Liability Company Law
New York Uniform Partnership Act
Federal Internal Revenue Code
New York State Tax Laws, Rules & Regulations
New York City Tax Laws, Rules & Regulations
Winston Churchill Owners, Inc. v. Regents Real Estate Associates
Board of Managers of the Park Regis Condominium v. Park Regis Owners Corp.
Park Sutton Condominium v. 447 E. 57th St. LLC
28 E. 10th Street Corp. v. Veras
Riverside Syndicate, Inc. v. Munroe
Essex House Condominium v. Marks
The Parc Vendome Condominium v. Atkinson
54-56 Meserole Street Owners Corp. v. Rossi
The Beekman Regent Condominium v. Bottiglieri
Chelsea 19th LLC v. West 19th Street Realty LLC
New York Department of Finance
New York City Department of Buildings
New York City Bar Association
New York State Bar Association
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