We just found out that our landlord has filed for bankruptcy and will be losing all properties. We have lived here for 8 years and our lease ends in December. We were just wondering what will happen and what our options we may have.
1 Answer from Attorneys
Re: Rental Property
11 U.S.C. § 365(h) seems applicable and 11 U.S.C. § 363(f) might be applicable.
In the case of In re Haskell L.P., 321 B.R. 1 (Bankr. D. Mass. 2005), the Court recognized there is a disagreement among the Courts about whether the trustee can sell a piece of real estate free and clear of the lessee's interest in the property 11 U.S.C. § 363(f) regardless of a lessee's Section 365(h) rights. In that case, it denied the debtor-lessor's motion to sell a piece of real estate free and clear of a 99 year lease because the lessee objected to the motion and the debtor could not show that the lessees' interest would be adequately compensated.
Your lease is probably not recorded in the Chancery Court so it is not protected from loss to a " good faith buyer without notice." In the case of IN RE MMH AUTOMOTIVE GROUP, LLC, 385 B.R. 347 (Bankr. S.D. Fla. 2008), a bankruptcy sale was made free and clear of a billboard lease because the buyer did not have actual notice of the lease when it purchased the property in a bankruptcy sale.
The Court must be made aware of your lease so you will have opportunity to object to any sale of the property that does not adequately protect your interest. The debtor's bankruptcy schedules filings may include your lease in the category of "executory contracts." However, the listing might be amended without notice to you.
Therefore, consider a motion requesting: 1. declaration of the lease 2. declaration by the trustee of intent to assume or reject the lease; and 3. leave to publish the court's declaration in the Chancery Court Records in order to impart notice to any good faith purchasers.
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