The "Endangerment of Property" and "Illegal Use of Controlled Substances" Automatic Stay Exceptions

 Posted on October 28, 2016 in Automatic Stay

A landlord can take back possession of a rental quickly if you're endangering the rental or illegally using a controlled substance there.

Our last blog post was about an exception to the protections of the “automatic stay” for residential tenants. Basically, you can stop an eviction if you file a bankruptcy case BEFORE the landlord gets a judgment of possession. That’s a court determination that the landlord has the right to take possession and evict you. After this judgment, filing bankruptcy doesn’t stop an eviction, except under some unusual circumstances discussed in our last blog post.

However, there’s a whole separate procedure allowing a landlord to quickly evict you even if you’ve filed bankruptcy, if you’re accused of one of two kinds of bad behavior:

• Endangerment of the rental property
• Illegal use of controlled substances on the property

Allows Landlord to Take Possession without a Judgment of Possession

Generally, when a residential landlord starts an eviction proceeding, or an “unlawful detainer” or “F.E.D” action, if successful the landlord receives a judgment of possession. But it doesn’t necessarily need that if it believes that either the “endangerment” or “controlled substances” exceptions apply. So be very careful if you are a tenant and there’s any chance of being accused of one of these two behaviors.

How Landlord Raises these Exceptions to the Automatic Stay

Here’s the procedure you need to watch out for.

The landlord can file with the bankruptcy court a certification under penalty of perjury, at any time. That certification would state that in the prior 30 days you have “endangered [the rental] property.” Or else you have “illegally used or allowed to be used a controlled substance on the property.” Or else the certification would state that an eviction proceeding had been filed based on these facts. The landlord must serve a copy of this certification on you. See Section 362(b)(23) of the United States Bankruptcy Code.

Defeating the Landlord’s Certification

You can file an objection to the landlord’s certification within 15 days of its filing. If you don’t within 15 days, then automatically the landlord is allowed to proceed with its eviction action. If it started the eviction before you filed bankruptcy, it could finish it. Otherwise it could start and complete its eviction. Your bankruptcy’s automatic stay against the landlord taking possession of your rental property would protect you no further. Section 362(m)(3).

But if you do file a timely “objection to the truth or legal sufficiency of the certification,” the automatic stay protection may continue. The bankruptcy court holds a hearing within 10 days. It “determine[s] if the situation giving rise to the [landlord’s] certification... existed or has been remedied.” If the court is convinced that the “situation... did not exist or has been remedied,” the automatic stay protection continues. Otherwise, the landlord can immediately proceed with eviction. Section 362(m)(1 and 2).