MEMORANDUM OPINION AND ORDER
HARVEY M. LEBOWITZ, Bankruptcy Judge.
On October 29, 1980, the Plaintiff, Rich Mar Apartments, filed a “Complaint to Terminate or Modify Automatic Stay” seeking the ejection of the Defendant Debtor from a residential apartment for non-payment of post-petition rent due under the terms of a lease entered into prior to the filing of the bankruptcy petition. The Debtor filed an Answer on November 14, 1980, and appeared along with counsel at a hearing held on November 26,1980. Although the Court issued its ruling from the bench at the conclusion of the hearing, counsel for the Plaintiff requested that this Court file a written opinion in order to clarify any conflict between the jurisdiction of this Court under the Bankruptcy Reform Act of 1978, Pub.L.No.95-598, 92 Stat. 2683 (1978) (codified at 11 U.S.C. §§ 101-1330 (Supp. Ill 1979)) (the “Code”), and the exclusive original civil jurisdiction of the District Courts
of Maryland over actions involving a landlord and tenant under the Maryland Courts and Judicial Proceedings Code Annotated § 4-401 (1980). The Court agrees with counsel’s suggestion that this is an area in which clarification is necessary and has therefore filed this opinion.
Although evidence was offered at trial by both parties, the pertinent facts either are not in dispute, or were stipulated by counsel. Doreatha Knight, the Debtor, entered into possession of premises known as 30-H Richmar Road, Owings Mills, Maryland, on April 25, 1980, under the terms of a lease executed a day earlier with the landlord, Rich Mar Apartments. Despite the provision of the lease that the annual rental was to be paid in monthly installments of $242.00 beginning on May 1, 1980, no rent was paid by the Debtor with the exception of a single payment in September 1980. The Debtor’s petition for relief under Chapter 7 of Title 11 was filed on July 15, 1980, and the Defendant Stephen H. Kimatian was duly appointed Interim Trustee by order of this Court on July 25, 1980. On September 15, 1980, the landlord filed a complaint in state court seeking relief for the non-payment of rent. Thereafter, the Debtor filed a “Petition For Stay And/Or Dismissal” in the state court purporting to stay those proceedings. The landlord then filed a “Complaint To Terminate Or Modify Automatic Stay” in this Court requesting this Court to terminate the stay imposed by § 362(a) of the Code, or in the alternative to order the Interim Trustee to adopt the lease. At trial, counsel stipulated that the Debtor has no interest in the premises other than that represented by the lease. The Interim Trustee was duly served, but has not answered the complaint and did not appear at trial.
To the extent that Rich Mar’s claim is based upon the Debtor’s pre-petition default in rent, its status is no different from that of other scheduled creditors whose efforts to collect debts are stayed by § 362(a) of the Code.
Because the claim is one that “could have been commenced [against the Debtor] before the commencement of the case under this Title,” § 362(a)(1) stays any action against the Debtor to recover on the debt unless a Bankruptcy Court has granted relief from the stay under § 362(d).
Inasmuch as Rich Mar apparently took the position at trial
that it was proceeding solely on the basis of post-petition default in rent, the Court is not called upon to consider whether § 362(d) relief should be granted with respect to the pre-petition default. Furthermore, relief from stay for the purpose of ejectment or collection of the post-petition default is inappropriate because under the circumstances of this case there is no stay imposed by § 362(a). With the exception of § 362(a)(3) and § 362(a)(4), § 362(a) contemplates the staying of acts against the Debtor or his property that are based upon claims arising prior to the filing of the bankruptcy petition.
See
Collier on Bankruptcy ¶ 362.04, at 362-27 (15th ed. 1980). Clearly, a claim based upon post-petition default is not within the scope of such a stay because such a claim could not have been made before the bankruptcy. Thus, no relief is required under § 362(d) in order for a creditor to take action on claims arising post-petition which are outside the scope of the stay imposed by § 362(a)(3) and § 362(a)(4).
The stay of acts against property of the estate provided by § 362(a)(3) and § 362(a)(4) is likewise inapplicable in this case. It is undoubtedly true that the Debt- or’s interest in the leasehold at the time of the filing of the bankruptcy petition was an equitable interest that became property of the estate by virtue of § 541(a)(1) of the Code.
Such an interest, however, would also be an unexpired lease subject to the provisions of § 365. Section 365 provides that the trustee may assume or reject any unexpired lease of the Debtor.
In a Chapter 7 case, § 365(d)(1) provides that failure of the trustee to reject or assume within sixty days is deemed to be a rejection.
Inasmuch as the hearing in this case was held more than four months after the order for relief was entered, and the trustee has not acted affirmatively to assume or reject, the Court must deem the lease to have been rejected by the trustee.
Section 365(g)(1) provides that the trustee’s rejection is to be treated as a breach of the lease that took place immediately before the filing of the bankruptcy petition.
Despite this clear expression of Con
gressional intent, it is evident that § 365 was not drafted with residential leases in mind. In the context of this opinion a residential lease is intended to encompass the conventional consumer arrangement under which the Debtor takes possession of premises as the tenant for the purpose of residing in those premises on a continuous basis, rather than for the leasing of premises for an investment or business purpose. The provisions of § 365 seem solely to contemplate contracts and leases arising in a commercial context or possibly ones which could produce income for the estate. See, e.
g,
11 U.S.C. § 365(b)(3) (Supp. Ill 1979) (providing for certain treatment for shopping center leases). That which may seem commercially reasonable, however, has a devastating impact upon a consumer debtor residing in an apartment under a lease. The trustee’s rejection, be it either affirmative or presumptive, would place a tenant in breach under § 365(g)(1) even if there has been no other default under the terms of the lease.
Moreover, the trustee is not likely to assume a residential lease because the estate would not benefit from an obligation to pay the Debtor’s post-petition rent. Thus, a literal reading of § 365 of the Code would adopt a policy that allows a landlord to evict tenants regardless of default solely on the basis that the tenant has sought relief under the Code. Such an inequitable result could not have been intended.
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MEMORANDUM OPINION AND ORDER
HARVEY M. LEBOWITZ, Bankruptcy Judge.
On October 29, 1980, the Plaintiff, Rich Mar Apartments, filed a “Complaint to Terminate or Modify Automatic Stay” seeking the ejection of the Defendant Debtor from a residential apartment for non-payment of post-petition rent due under the terms of a lease entered into prior to the filing of the bankruptcy petition. The Debtor filed an Answer on November 14, 1980, and appeared along with counsel at a hearing held on November 26,1980. Although the Court issued its ruling from the bench at the conclusion of the hearing, counsel for the Plaintiff requested that this Court file a written opinion in order to clarify any conflict between the jurisdiction of this Court under the Bankruptcy Reform Act of 1978, Pub.L.No.95-598, 92 Stat. 2683 (1978) (codified at 11 U.S.C. §§ 101-1330 (Supp. Ill 1979)) (the “Code”), and the exclusive original civil jurisdiction of the District Courts
of Maryland over actions involving a landlord and tenant under the Maryland Courts and Judicial Proceedings Code Annotated § 4-401 (1980). The Court agrees with counsel’s suggestion that this is an area in which clarification is necessary and has therefore filed this opinion.
Although evidence was offered at trial by both parties, the pertinent facts either are not in dispute, or were stipulated by counsel. Doreatha Knight, the Debtor, entered into possession of premises known as 30-H Richmar Road, Owings Mills, Maryland, on April 25, 1980, under the terms of a lease executed a day earlier with the landlord, Rich Mar Apartments. Despite the provision of the lease that the annual rental was to be paid in monthly installments of $242.00 beginning on May 1, 1980, no rent was paid by the Debtor with the exception of a single payment in September 1980. The Debtor’s petition for relief under Chapter 7 of Title 11 was filed on July 15, 1980, and the Defendant Stephen H. Kimatian was duly appointed Interim Trustee by order of this Court on July 25, 1980. On September 15, 1980, the landlord filed a complaint in state court seeking relief for the non-payment of rent. Thereafter, the Debtor filed a “Petition For Stay And/Or Dismissal” in the state court purporting to stay those proceedings. The landlord then filed a “Complaint To Terminate Or Modify Automatic Stay” in this Court requesting this Court to terminate the stay imposed by § 362(a) of the Code, or in the alternative to order the Interim Trustee to adopt the lease. At trial, counsel stipulated that the Debtor has no interest in the premises other than that represented by the lease. The Interim Trustee was duly served, but has not answered the complaint and did not appear at trial.
To the extent that Rich Mar’s claim is based upon the Debtor’s pre-petition default in rent, its status is no different from that of other scheduled creditors whose efforts to collect debts are stayed by § 362(a) of the Code.
Because the claim is one that “could have been commenced [against the Debtor] before the commencement of the case under this Title,” § 362(a)(1) stays any action against the Debtor to recover on the debt unless a Bankruptcy Court has granted relief from the stay under § 362(d).
Inasmuch as Rich Mar apparently took the position at trial
that it was proceeding solely on the basis of post-petition default in rent, the Court is not called upon to consider whether § 362(d) relief should be granted with respect to the pre-petition default. Furthermore, relief from stay for the purpose of ejectment or collection of the post-petition default is inappropriate because under the circumstances of this case there is no stay imposed by § 362(a). With the exception of § 362(a)(3) and § 362(a)(4), § 362(a) contemplates the staying of acts against the Debtor or his property that are based upon claims arising prior to the filing of the bankruptcy petition.
See
Collier on Bankruptcy ¶ 362.04, at 362-27 (15th ed. 1980). Clearly, a claim based upon post-petition default is not within the scope of such a stay because such a claim could not have been made before the bankruptcy. Thus, no relief is required under § 362(d) in order for a creditor to take action on claims arising post-petition which are outside the scope of the stay imposed by § 362(a)(3) and § 362(a)(4).
The stay of acts against property of the estate provided by § 362(a)(3) and § 362(a)(4) is likewise inapplicable in this case. It is undoubtedly true that the Debt- or’s interest in the leasehold at the time of the filing of the bankruptcy petition was an equitable interest that became property of the estate by virtue of § 541(a)(1) of the Code.
Such an interest, however, would also be an unexpired lease subject to the provisions of § 365. Section 365 provides that the trustee may assume or reject any unexpired lease of the Debtor.
In a Chapter 7 case, § 365(d)(1) provides that failure of the trustee to reject or assume within sixty days is deemed to be a rejection.
Inasmuch as the hearing in this case was held more than four months after the order for relief was entered, and the trustee has not acted affirmatively to assume or reject, the Court must deem the lease to have been rejected by the trustee.
Section 365(g)(1) provides that the trustee’s rejection is to be treated as a breach of the lease that took place immediately before the filing of the bankruptcy petition.
Despite this clear expression of Con
gressional intent, it is evident that § 365 was not drafted with residential leases in mind. In the context of this opinion a residential lease is intended to encompass the conventional consumer arrangement under which the Debtor takes possession of premises as the tenant for the purpose of residing in those premises on a continuous basis, rather than for the leasing of premises for an investment or business purpose. The provisions of § 365 seem solely to contemplate contracts and leases arising in a commercial context or possibly ones which could produce income for the estate. See, e.
g,
11 U.S.C. § 365(b)(3) (Supp. Ill 1979) (providing for certain treatment for shopping center leases). That which may seem commercially reasonable, however, has a devastating impact upon a consumer debtor residing in an apartment under a lease. The trustee’s rejection, be it either affirmative or presumptive, would place a tenant in breach under § 365(g)(1) even if there has been no other default under the terms of the lease.
Moreover, the trustee is not likely to assume a residential lease because the estate would not benefit from an obligation to pay the Debtor’s post-petition rent. Thus, a literal reading of § 365 of the Code would adopt a policy that allows a landlord to evict tenants regardless of default solely on the basis that the tenant has sought relief under the Code. Such an inequitable result could not have been intended.
This Court therefore holds that the trustee’s rejection of a residential lease constitutes an abandonment of the estate’s interest in the lease to the Debtor. As a result, the lease is no longer property of the estate, and the stay imposed by § 362(a)(3) and § 362(a)(4) is no longer applicable. Thus, following the abandonment, a residential landlord may enforce his rights under the lease with respect to post-petition defaults without the necessity of seeking relief from stay in a Bankruptcy Court.
The rights of the landlord to proceed in state court without relief from the § 362(a) stay, however, are limited in three respects. First, the landlord’s action must be one based wholly upon the Debtor’s default under a residential lease in rent payments due after the filing of a bankruptcy petition. Second, during the period after the filing of the bankruptcy petition but prior to the trustee’s rejection, the stay imposed by § 362(a)(3) and § 362(a)(4) remains in effect because the Debtor’s interest in the leasehold is property of the estate. Third, the landlord must proceed in state court on the basis of his rights created under the lease, and may not treat the lease as breached solely because of the trustee’s rejection. When these three conditions are satisfied, the landlord may proceed in a state court without the need to obtain a prior order of a Bankruptcy Court that the § 362(a) stay has been conditioned, modified, or terminated under § 362(d).
For these reasons the Court concludes that Rich Mar is not stayed by § 362(a) from proceeding in State Court against the Debtor on the basis of post-petition defaults. Accordingly, no relief can be had upon the complaint as filed in this Court, because in the absence of a stay none would be appropriate.
For the foregoing reasons, it was the 26th day of November, 1980, by the United States Bankruptcy Court for the District of Maryland,
ORDERED, that the Complaint to Terminate or Modify Automatic Stay filed by Rich Mar Apartments be DENIED.