A tenant’s filing of a bankruptcy petition does not automatically terminate the remaining term on an unexpired lease. When a tenant files a bankruptcy petition, this triggers an automatic stay associated with bankruptcy proceedings. An automatic stay prohibits potential creditors from taking legal action against the bankruptcy debtor without first obtaining relief (permission) from the bankruptcy court.
While the automatic stay is in effect, the landlord cannot serve a three-day notice to terminate the lease for nonpayment of rent or breach of lease and cannot commence an unlawful detainer action against the tenant. The automatic stay, however, in residential unlawful detainer actions, generally does not stay an eviction where the landlord already obtained an unlawful detainer judgment before the tenant filed its bankruptcy petition. In that situation, the landlord can still obtain a writ of possession and serve a notice to vacate.
The automatic stay remains in effect for 30 days after the bankruptcy filing and can be further extended based on specific procedures set forth under Federal Bankruptcy Laws. The interplay between bankruptcy law and unlawful detainer actions in California is complex.
For additional help with landlord-tenant bankruptcy matters, including how a bankruptcy can affect the landlord or the tenant’s rights, contact us for a free consultation. By Zachary D. Schorr, Schorr Law, A Professional Corporation, www.schorr-law.com, 310-954-1877, firstname.lastname@example.org.