Divorce and Tenant Bankruptcy

At the Orange County Law Office of David P Schwarz we have litigated numerous divorce and tenant bankruptcy cases. Please contact our office at 949 735 9266 or via the web. We can also be reached by email at dpslaw66@gmail.com.

A Divorce lawyer will explain to his client that a Lease will not Terminated “Ipso Facto” by Tenant Bankruptcy: A tenant's insolvency or bankruptcy does not itself terminate an unexpired real property lease. This is so even if the lease expressly authorizes immediate (early) termination should the tenant become insolvent or bankrupt; such an “ipso facto” clause is void and unenforceable. Therefore a bankruptcy will not terminate a tenancy.

A Divorce attorney will also explain to you “Notwithstanding a provision in … an unexpired lease, or in applicable law, an … unexpired lease of the debtor may not be terminated or modified” on account of the insolvency or financial condition of the debtor (tenant) or the filing of a bankruptcy petition. Thus a client cannot get out of their tenancy by filing a bankruptcy. If they can not afford to pay the bankruptcy will not stop the tenancy.

The bankruptcy filing automatic stays (a) any action or proceeding against the debtor that was or could have been commenced before the filing of the petition, (b) the enforcement of a judgment obtained prepetition against property of the estate and (c) any act to obtain possession of property of the estate.

At the Orange County Law Office of David P Schwarz will explain to the client that the automatic stay takes immediate effect upon filing of the tenant's bankruptcy petition, whether or not the landlord has notice thereof. As of the filing, and unless the court grants relief from the stay the landlord cannot serve a three-day notice to terminate (for nonpayment of rent or other breach of lease). This is an important note as evictions will be slown down. Landlord cannot commence an unlawful detainer against the tenant, and cannot take further steps to prosecute a pending unlawful detainer.

The Divorce lawyer will explain to that the stay also precludes a master lessor from taking any action against a tenant sublessor that would adversely affect the possessory rights of a subtenant debtor who has filed a bankruptcy petition. This protects the subtenant from the petition for bankruptcy.

The automatic stay has overriding authority in stopping all action by landlords actions against subtenants. Landlord's termination notice to prime tenant would have resulted in termination of bankrupt debtor's subtenancy and thus violated automatic stay, landlords' pursuit of unlawful detainer against master tenant violated automatic stay that took effect with subtenant's bankruptcy filing despite landlords' attempted stipulation that subtenant debtor's subordinate sublease would be protected notwithstanding outcome of state court unlawful detainer.

At the Orange County Law Office of David P Schwarz we are well qualified attoneys in divorce and tenancy bankruptcy. Please contact our office at 949 735 9266 or via the web. We can also be reached by email at dpslaw66@gmail.com.

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