The New York Times
Real Estate Q&A (2nd half)
229 W. 43rd St.
New York, NY 10036
May 21, 1995
Q.: What is supposed to happen to the tenants of a building, when their landlord goes bankrupt?
Perry Meyers, BronxA.: "If the tenants are rent-stabilized or rent-controlled, nothing happens," said Michael Finder, a Manhattan lawyer, who specializes in landlord-tenant matters. "Neither the bankruptcy court, nor any subsequent purchaser would be entitled to affect the rights of rent-regulated tenants."
"If the tenants are not rent-regulated, but have signed a lease," Mr. Finder said, "then it is possible that the lease contains a provision covering bankruptcy of the landlord. In some cases," he said, "a lease might permit the bankruptcy trustee either to alter the terms of a tenancy, or terminate it."
"Unregulated tenants without leases," Mr. Finder said, "have no protection and could have their tenancies terminated at any time by the landlord, the bankruptcy trustee or any subsequent owner of the building. Regardless of the ultimate resolution of the bankruptcy proceedings, however, tenants in such a building are often faced with more immediate concerns."
"There are typically problems with maintenance and services in a building, when a landlord goes bankrupt," Mr. Finder said, adding that "Tenants can take legal action in Housing Court to compel the landlord or whoever is in charge of the building to remedy any violations."
Steven A. Neil, a Manhattan lawyer, who specializes in real estate, pointed out another issue that often arises in such situations.
"As far as tenants are concerned, the biggest question is to whom they should pay their rent," he said, adding that "The problem is compounded, when tenants are faced with conflicting demands for payment from different parties. If a tenant is in any way uncertain as to who should get the rent," Mr. Neil said, "then the best advice is to hold onto it and wait, until the dust settles and you get some direction from a court."