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Apartment Groups Commend House Action on Landmark Bankruptcy Bill
WASHINGTON, DC -- The National Multi Housing Council (NMHC) and National Apartment Association (NAA) commend the U.S. House of Representatives for its swift passage of bankruptcy reform legislation today and hail the measure as a win not only for apartment owners, but also for apartment residents.
Ten years ago, NMHC/NAA launched a campaign to remove a loophole in the U.S. Bankruptcy Code that allows renters to abuse the system. Specifically, the Code’s automatic stay provision allows renters facing eviction to live rent-free in their apartments until the stay is lifted by the courts, which can often take six months or more. This can be especially devastating to the small apartment operator who depends on the rental income to manage the property and pay the bills.
The automatic stay loophole has even spurred marketing campaigns by attorneys and non-attorneys promoting it as a way to live “rent-free” for months at a time.
This not only places severe financial burdens on apartment owners, it also harms consumers. Every apartment unit taken off the market due to these abusive situations reduces the availability and increases the cost of rental housing for others.
“In 1996, the Los Angeles County Sheriff’s Department estimated that nearly 4,000 residents filed for bankruptcy to avoid eviction,” said Jim Arbury, NMHC/NAA Vice President of Government Affairs. “If you estimate that each of these filings cost the owners a conservative $3,000 in lost rent and legal costs, that adds up to $12 million in losses in one year in one city. And, of course, 4,000 fewer apartments for residents seeking housing.”
Thanks to NMHC/NAA advocacy, the bill passed earlier by the Senate and the one passed today by the House include a provision that revises the automatic stay and grants relief to apartment owners who have obtained an eviction judgment prior to the filing of a bankruptcy petition.
“With today’s vote, the Senate has stopped this ‘free ride’ which abuses the Bankruptcy Code’s ‘fresh start’ principle,” said Jim Arbury, NMHC/NAA’s Senior Vice President of Government Affairs. “This relief has been a long time coming with eight years of debate and amendment. We are delighted that Congress is finally taking action to finish the job and restore fairness to the system.”
NMHC and NAA operate a Joint Legislative Program and represent the nation’s leading firms participating in the multifamily rental housing industry. NMHC/NAA’s combined memberships are engaged in all aspects of the development and operation of apartment communities, including ownership, construction, finance and management. Together, the organizations operate a federal legislative program and provide a unified voice for the private apartment industry. Nearly one-third of Americans rent their housing, and almost 15 percent of all U.S. households live in an apartment home. For more information, contact NMHC at 202/974-2300, e-mail the Council at info@nmhc.org, or visit NMHC’s web site at www.nmhc.org.
Contact: Michael Tucker, 202/974-2360, mtucker@nmhc.org
For Release: April 14, 2005 |
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