Experts View New Bankruptcy Law as Good News for Real Estate Market

WASHINGTON, DC-With the US House of Representatives’ ratification yesterday, the US Congress has passed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, much to the delight of a bevy of organizations affiliated with commercial and multifamily real estate. The legislation contains a provision that closes a loophole in the bankruptcy code that had, among other consequences, allowed renters seeking to skirt eviction by filing for bankruptcy to live rent-free in their residences or leased retail spaces for months.

Section 311 of the bill partially sums up the relevant provision, noting that the legislation: “Denies an automatic stay of specified residential real property eviction proceedings by a lessor against a debtor if: the lessor obtained judgment for possession prior to the bankruptcy filing date; or lessor furnishes certification of specified debtor offenses.”