Available at SSRN: https://ssrn.com/abstract=7383038 or http://dx.doi.org/10.2139/ssrn.7383038
Abstract:
When a residential tenant files for bankruptcy, their landlord confronts a deceptively simple question: Can I evict? The answer depends on a web of intersecting Bankruptcy Code provisions: the automatic stay under 11 U.S.C. § 362(a), the exceptions under § 362(b)(22) and (23), the assumption-or-rejection framework of § 365, and the treatment of rejection damages under § 502(g). These provisions also layer on state-law eviction procedures that vary significantly in the notice periods required before a landlord may file for eviction after nonpayment and the procedural steps required to obtain and execute a judgment for possession.
And despite numerous cases that attempt to adequately define the metes and bounds of the automatic stay, its application to the landlord-tenant relationship continues to vex those seeking to regain possession of their residential real property after the tenant files bankruptcy.
In The Bankrupt Tenant: Implications of the Automatic Stay in Eviction Proceedings, Bankruptcy Judge Aubrey L. Thomas of the Western District of Texas and Sydney Ramirez take what looks like a narrow landlord-tenant question and use it to make a much broader, and important, point about the automatic stay:
§ 362(a)(3) is not the automatic stay.
That sounds obvious when stated that way. Yet courts and practitioners regularly analyze an eviction almost entirely by asking whether the debtor's lease or possessory interest is "property of the estate." Judge Thomas and Ramirez argue that this can cause everyone to miss the independent protections in §§ 362(a)(1), (a)(2), and (a)(6). Those provisions protect the debtor, not merely property of the estate.
That distinction can make all the difference.
Many Stays, Not One
The authors start with the structure of § 362(a). It lists eight categories of stayed acts, six of which matter in the eviction context.
Sections 362(a)(1), (a)(2), and (a)(6) prohibit various actions against the debtor. Other provisions, particularly § 362(a)(3), protect property of the estate. Section 362(a)(2) straddles both groups, because it stays enforcement of a prepetition judgment against the debtor or against property of the estate. The protections overlap, but they are not interchangeable.
That becomes important when a landlord argues:
The lease terminated before bankruptcy, so there is no property of the estate and therefore no stay.
Maybe the first half of that sentence is correct. The second does not necessarily follow.
The authors rely heavily on the analytical method of City of Chicago v. Fulton, 592 U.S. 154 (2021): read each subsection of § 362(a) according to its own words, rather than treating § 362(a) as a single undifferentiated prohibition. Fulton held only that passive retention of property does not "exercise control" over estate property under § 362(a)(3). Justice Sotomayor's concurrence made the limits of that holding explicit: creditors "may very well" violate other subsections of § 362(a) even when they do not violate (a)(3).
Cordova v. City of Chicago (In re Cordova), 635 B.R. 321 (Bankr. N.D. Ill. 2021), shows what that looks like in practice. After Fulton foreclosed the debtors' "exercise control" theory, they amended their complaint to allege that the City's continued impoundment of their vehicles violated §§ 362(a)(4), (a)(6), and (a)(7) instead.
The City argued that Fulton's "affirmative act" requirement should extend across all of § 362(a). The court rejected that argument. It reasoned that "exercise control" is unique to (a)(3), and that each subsection has its own wording and therefore its own predicates. It then found that the very conduct at issue in Fulton violated the stay under the other subsections, in part because the City's retention of the vehicles was aimed at compelling payment of a prepetition debt.
Translated to eviction law: even if the tenant no longer has estate property protected by § 362(a)(3), an eviction may still constitute:
- continuation of a proceeding against the debtor under § 362(a)(1);
- enforcement of a prepetition judgment against the debtor under § 362(a)(2); or
- an act to collect or recover a prepetition claim against the debtor under § 362(a)(6).
That is the article's central point.
The BAPCPA Eviction Exceptions May Be Narrower Than They Look
Sections 362(b)(22) and (23), added by BAPCPA, appear at first glance to give residential landlords relatively straightforward paths around the stay.
Section 362(b)(22) addresses a landlord who obtained a judgment for possession before bankruptcy. Section 362(b)(23) addresses endangerment of the property or illegal drug activity.
But Judge Thomas and Ramirez emphasize something easy to overlook: both exceptions are expressly tied to § 362(a)(3).
For § 362(b)(22), having commenced the eviction before bankruptcy is not enough. The landlord must already have obtained the judgment for possession. If the case is still pending when the bankruptcy is filed, the landlord cannot simply continue to judgment.
More provocatively, the authors argue that even where § 362(b)(22) applies, it removes only the obstacle created by § 362(a)(3). It does not expressly eliminate the debtor-centered stays in (a)(1), (a)(2), or (a)(6).
That reading, which I return to in the commentary below, substantially reduces the supposed safe harbor for landlords.
Their practical recommendation is correspondingly conservative: get a stay-relief or "comfort" order rather than betting that an exception applies.
Considering § 362(k), that is not excessive caution. A landlord who guesses wrong may face actual damages and attorney's fees, and potentially punitive damages, even where the landlord sincerely believed the stay no longer applied.
Section 362(l): A Cure Right That Depends Heavily on State Law
Even a debtor facing a prepetition judgment for possession may be able to hold off § 362(b)(22) through the two-step certification process in § 362(l).
Initial certification. With the petition, the debtor files and serves on the landlord a certification, under penalty of perjury, that applicable nonbankruptcy law would permit the debtor to cure the entire monetary default that gave rise to the judgment, even after the judgment was entered. The debtor must also certify that they have deposited with the clerk any rent that will come due during the 30 days after filing. Doing so keeps § 362(b)(22) from taking effect for those 30 days.
Final certification. Within that 30-day period, the debtor files and serves a further certification that the entire monetary default has been cured.
If the debtor fails to complete either step, or the landlord objects and the court sustains the objection, the exception applies immediately.
In consumer practice, these certifications are made on the voluntary petition itself and on Official Forms 101A and 101B. Because the mechanism speaks only of curing a monetary default, courts have held it unavailable where the judgment for possession rested on a non-monetary breach. See In re Griggsby, 404 B.R. 83 (Bankr. S.D.N.Y. 2009).
This is one of those Bankruptcy Code provisions whose apparent federal uniformity quickly disappears once state law enters the equation. If state law permits a tenant to cure after entry of judgment, § 362(l) may have real value. If state law has already extinguished the right to cure, it may provide none.
And the rent deposit presents an obvious practical obstacle. A debtor who is filing bankruptcy partly because they cannot pay rent is unlikely to have a month's rent available on the petition date.
So determining exactly where the landlord and tenant were in the state eviction process when the bankruptcy was filed remains essential.
Terminated Is Not Necessarily Expired
The article also gives useful attention to a distinction bankruptcy lawyers sometimes compress: a lease may be terminated without necessarily being expired for § 365 purposes.
Whether termination has finally extinguished the debtor's rights depends on state law, including anti-forfeiture rules, waiver doctrines, and any continuing right to cure.
The authors contrast cases in which state law permitted reversal of a lease termination with those in which termination was effectively final.
That means the bankruptcy lawyer cannot determine whether § 365 applies simply by reading the landlord's termination notice.
The necessary question is closer to:
Under applicable state law, was there anything left for the debtor to save when the petition was filed?
Rejection Is Breach, Not Rescission
One of the article's stronger arguments comes from Mission Product Holdings, Inc. v. Tempnology, LLC, 587 U.S. 370 (2019).
In Chapter 7, § 365(d)(1) generally causes an unassumed residential lease to be deemed rejected after 60 days. Older cases sometimes treated that rejection as effectively removing the lease from the estate and freeing the landlord to pursue eviction.
But Mission Product makes clear that rejection under § 365 is a breach, not a rescission.
Judge Thomas and Ramirez therefore argue that rejection does not magically erase the leasehold interest or constitute an abandonment of it. The rights that existed under nonbankruptcy law generally continue, subject to the consequences of breach.
Even more importantly, they argue that the answer ultimately does not depend on winning that estate-property fight.
Suppose a court nevertheless concludes that rejection removed the lease from the estate. The debtor is still a debtor. And §§ 362(a)(1) and (a)(6) still protect the debtor against certain proceedings and collection activity.
Hence their recurring theme:
Property of the estate matters, but it is not the whole stay.
The More Aggressive § 502(g) Argument
The article goes another step that deserves particular attention.
Section 365(g)(1) generally treats rejection as a breach occurring immediately before bankruptcy. Section 502(g) treats a claim arising from rejection as though it arose prepetition.
The authors use those provisions to argue that even rent that becomes unpaid after rejection may be treated as part of the landlord's prepetition rejection claim. Attempts to collect it would then be subject to the debtor-centered protections of § 362(a), and eventually potentially § 524.
That is a powerful debtor-side argument, but probably one where practitioners should expect serious pushback.
There is an intuitive difference between two claims. One says that rejection converts the landlord's damages arising from rejection into a prepetition claim. The other says that every obligation resulting from a debtor's continued postpetition occupancy should therefore be treated as prepetition debt. Among other things, continued occupancy provides the debtor with very real postpetition value.
The authors recognize that reality, but their § 502(g) analysis makes this one of the portions of the article most likely to generate litigation rather than immediate consensus.
Still, particularly where a landlord uses eviction primarily as leverage to force payment of amounts attributable to the rejected lease, §§ 365(g), 502(g), and 362(a)(6) give debtor's counsel a considerably better argument than merely fighting over whether a rejected lease remains estate property.
Perl and Fogarty: Two Questions, Two Answers
The article's analytical center is its comparison of two circuit decisions. Both arose from foreclosures rather than leases, but the authors argue the distinction does not matter.
Eden Place, LLC v. Perl (In re Perl), 811 F.3d 1120 (9th Cir. 2016), involved a debtor who stayed in his home after a foreclosure sale. The purchaser obtained an unlawful detainer judgment and a writ of possession. The debtor then filed a skeletal Chapter 13 petition, and the sheriff locked him out while the purchaser's stay-relief motion was pending.
The Ninth Circuit held that under California law, entry of an unlawful detainer judgment and writ of possession extinguishes all legal and equitable possessory interests. Because there was nothing left for § 541 to capture, the court found no stay violation. Its analysis proceeded entirely under § 362(a)(3). It never asked whether the unlawful detainer was a proceeding against the debtor under (a)(1), whether enforcing the judgment was stayed by (a)(2), or whether the lockout was an act to recover a claim under (a)(6).
Bayview Loan Servicing LLC v. Fogarty (In re Fogarty), 39 F.4th 62 (2d Cir. 2022), performed the analysis Perl skipped. The debtor lived in a house titled to an LLC she controlled and was not liable on the mortgage. She was, however, a named defendant in the foreclosure. The lender went ahead with the sale after her Chapter 7 filing, reasoning that the LLC was not in bankruptcy.
The Second Circuit held that §§ 362(a)(1) and (a)(2) are violated by a foreclosure sale when the debtor is a named party in the proceeding, even if the debtor holds only a possessory interest. It rejected the in rem/in personam distinction outright as having no basis in § 362(a)'s text. It also noted that the lender, as the debtor's direct adversary, could simply have moved for stay relief.
The authors' point is that the two decisions are not inconsistent. A debtor can hold no property interest and lose under (a)(3), yet still win under (a)(1) or (a)(2) because the proceeding is against the debtor. If anything, they argue, the case is stronger in the eviction context, where the tenant is the named, principal defendant rather than an incidental one.
But readers should know that the counterargument has a foothold. In In re Shuang, No. 24-10996, 2024 WL 3769548 (Bankr. S.D.N.Y. Aug. 12, 2024), the court extended Perl to subsections (a)(1) and (a)(2). It reasoned that California unlawful detainer proceedings are quasi in rem and therefore not "against the debtor." Meanwhile, the Ninth Circuit BAP's 2026 decision in In re Rodriguez distinguished Perl on its facts without deciding whether Perl applies to landlord-tenant cases at all.
For North Carolina practitioners, the open question is how a court would characterize a summary ejectment action. The tenant is the named defendant, and the complaint commonly seeks a money judgment for rent alongside possession. Both features point toward an action "against the debtor." But the in rem argument will be made, and it deserves an answer rather than an assumption.
Holdovers and the Fourth Circuit
This discussion is particularly interesting for Fourth Circuit practitioners. The article cites Premier Automotive Services, Inc. v. Flanagan (In re Premier Automotive Services, Inc.), 492 F.3d 274 (4th Cir. 2007), though only in passing. It uses the case as an example of courts framing the eviction question under § 362(a)(3).
Premier Automotive held, in the nonresidential context, that a possessory interest under an expired lease was not property of the estate.
The obvious creditor-side reaction is therefore to rely on Premier Automotive whenever a lease has ended before bankruptcy.
The article does not apply its framework to Premier Automotive directly. Its reasoning, however, suggests that the case answers only the § 362(a)(3) question. It is, in that respect, the Fourth Circuit's counterpart to Perl.
Even if Premier Automotive means the debtor has no remaining property interest, the next questions should be whether the landlord is:
- continuing a proceeding against the debtor;
- enforcing a judgment against the debtor; or
- taking action to collect a claim against the debtor.
For Fourth Circuit debtor attorneys, that may be the most immediately useful application of the article.
Do not concede the entire stay merely because you lose the § 541/property-of-the-estate argument.
The Better Way to Plead a Stay Violation
The article ultimately offers an extremely practical litigation lesson.
Do not simply allege:
"The landlord violated the automatic stay."
Instead, identify the conduct and tie it to the specific subsection, quoting its operative language:
Filing or continuing an eviction proceeding that names the debtor, including a pending summary ejectment: § 362(a)(1).
Execution of a prepetition judgment for possession: potentially § 362(a)(2).
Postpetition demands for delinquent rent, late-fee assessments, collection calls, past-due notices, or a notice to vacate: § 362(a)(6).
Taking possession of a leasehold or possessory interest that remains estate property: § 362(a)(3).
That approach does two things.
First, it follows Fulton's instruction to treat the subsections separately.
Second, it prevents a court from answering only the most familiar question, "Is this property of the estate?", and ending the analysis there. That question is often close and jurisdiction-dependent. Framing the debtor-protection subsections as independent grounds means an adverse ruling on it does not end the matter.
North Carolina Considerations
For North Carolina consumer bankruptcy lawyers, the article suggests that a residential eviction should be examined along two parallel tracks, not one.
The first is North Carolina landlord-tenant law. What exactly happened before bankruptcy? Was there merely a demand for rent? A summary ejectment complaint? A judgment? An appeal? A writ of possession? Has the debtor's legal or equitable possessory interest actually ended?
The second is federal bankruptcy law: What is the landlord doing to the debtor after the petition?
Those are separate questions.
That distinction can matter tremendously in the common last-minute bankruptcy, where a tenant files after summary ejectment proceedings have begun.
Debtor's counsel should therefore obtain the complete eviction chronology, not merely ask whether the client has "been evicted." That phrase can mean anything from receiving a threatening letter to having the sheriff standing at the door.
Likewise, a landlord who believes North Carolina law has finally terminated every possessory right would still be wise to obtain relief from stay. The alternative is assuming there is nothing left for §§ 362(a)(1), (a)(2), or (a)(6) to protect.
Commentary
The strongest insight in this article is actually broader than residential leases.
Bankruptcy lawyers have a tendency to use § 362(a)(3) as shorthand for the automatic stay, particularly whenever property is involved. Fulton should have made us more careful about that, not less.
The Supreme Court narrowed one particular theory under one particular subsection. It did not announce that § 362(a)(3) erases the other provisions of § 362(a).
Judge Thomas and Ramirez turn that lesson around in a useful way: losing under one stay provision does not mean that there is no stay.
Their argument concerning §§ 362(b)(22) and (23) is intriguing. But it is also the part of the article I would expect landlords' counsel to attack first, more so than § 502(g).
The text does say "under subsection (a)(3)," and that limitation deserves an answer. But the reading has costs:
- It leaves the exception little to do. The Judgment Exception is aimed at the landlord who has done everything except have the sheriff execute, and executing a prepetition judgment for possession is the core of what (a)(2) stays. If (a)(1) and (a)(2) remain in force, (b)(22) authorizes very little. That result sits in tension with the same anti-surplusage canon the authors draw from Fulton.
- Congress's own wording points the other way. The exception describes the covered proceeding as one "by a lessor against a debtor," language that echoes (a)(1).
- The authors hedge. They acknowledge the "absurd result" objection in a footnote and set the interpretive question aside as beyond the article's scope.
- The support is thin. The principal cited authority for the (a)(3)-only reading is a concurrence in the Ninth Circuit BAP's Rodriguez decision.
The reading is plausible and textually grounded, but it is not settled, and practitioners on both sides should treat it that way. Conveniently, that uncertainty points to the same advice the authors give: seek a comfort order.
The § 502(g) treatment of postpetition rent is also aggressive. Bankruptcy should not give the debtor a cost-free apartment merely because an earlier lease was rejected. A landlord who continues to provide housing postpetition is providing something of undeniable present value. Courts will understandably resist an analysis that appears to turn that continuing benefit entirely into discharged prepetition debt.
Two further limits are worth noting. First, Mission Product was a Chapter 11 trademark-license case. Applying its rejection-as-breach rule to the deemed rejection of a residential lease in Chapter 7 is a reasonable extension, but it is an extension.
Second, § 362(a)(6) reaches acts to collect a claim, and an eviction seeking only possession fits less comfortably within it. The Seventh Circuit decisions Cordova relied on involved creditors using leverage to extract payment of a prepetition debt. In Kuehn, a university withheld a transcript; in Radcliffe, a creditor threatened setoff. That suggests a limiting principle: (a)(6) is strongest when a landlord is using possession as leverage for money, and weakest when the landlord simply wants its unit back.
But even disagreement with those parts does not undermine the article's more fundamental argument.
The right question is not:
"Is the lease property of the estate?"
It is:
- Is the lease or possessory interest property of the estate?
- Is the landlord continuing a proceeding against the debtor?
- Is the landlord enforcing a prepetition judgment against the debtor?
- Is the landlord attempting to collect a claim against the debtor?
Only the first question is primarily about § 362(a)(3).
It is also worth remembering how long any of this protection lasts, which depends on the chapter:
- Chapter 7. The stay of acts against the debtor ends when a discharge is granted or denied, or the case is dismissed or closed (§ 362(c)(2)). That is typically a few months after filing. The stay protecting estate property ends when the property leaves the estate (§ 362(c)(1)).
- Chapter 13. Discharge comes only at plan completion, so the debtor-centered stay lasts far longer. That is where the distinction matters most.
- Repeat filers. Sections 362(c)(3) and (c)(4) may shorten the stay to 30 days or keep it from arising at all.
And perhaps the best practical point is also the simplest. None of this means bankruptcy gives a tenant a permanent right to remain in somebody else's property. The automatic stay determines who gets to decide when the eviction can proceed.
Usually, the safer answer is the bankruptcy court.
To read a copy of the transcript, please see:
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