Introduction

Can a landlord terminate a residential tenancy under the Bankruptcy Act? And if so, when? And under what conditions?

Throughout my legal career, I have been interested in and worked with tenancy law, both residential and commercial, while insolvency, bankruptcy, etc. have never been my great passion.

However, I recently became involved in a case that linked these two disciplines, and to my surprise, I found that very little had been written on the subject and even fewer printed judgments were available (zero, to be precise).

The specific case from the spring of 2025 concerned a person who had been declared personally bankrupt. He lived in a rented apartment in one of Denmark's largest cities at a completely unique address on a 30-year-old and very advantageous lease. Few people would probably suspect the landlord of wanting to replace the tenant with someone who would be willing to pay a significantly higher rent. The landlord therefore used Section 58 of the Bankruptcy Act to terminate the lease agreement, which the tenant opposed. I represented the tenant during the court hearing, and my first thought was that the Tenancy Act's rules on termination are exhaustive - But that is not entirely correct, as will be explained below.

A landlord can actually terminate a residential lease as a result of bankruptcy, but there are many requirements that must all be met before this can be done.

When can a landlord terminate a lease due to the tenant's bankruptcy?

The first question that arises is whether the tenant is already in default, e.g. with the payment of rent, before the bankruptcy. In that case, the bankruptcy does not prevent the landlord from continuing to terminate the lease agreement.

But if the tenant is not in default, the landlord must – before terminating a residential lease under the Bankruptcy Act – start by asking the trustee whether the bankruptcy estate wishes to enter into the lease agreement.

In the vast majority of cases, the bankruptcy estate has no interest in entering into the rental agreement. If the bankruptcy estate enters into the rental agreement, it is fine for the landlord, who is assured of continuing to receive rent, but just because the bankruptcy estate does not enter into the rental agreement does not mean – as many might expect – that the landlord can then terminate the rental agreement. Not at all.

However, if the trustee can see that a larger deposit to the bankruptcy estate can be expected to be repaid, the trustee can request the Probate Court to have the lease included during the bankruptcy.

The lease can only be included in the bankruptcy if it can be made probable that the bankruptcy estate will make a net profit from it. This must take into account that the estate, upon termination of the bankrupt's residence, will be obliged to provide a deposit to be able to rent a new residence. This does not leave a person who has gone bankrupt without a permanent residence.

Only if the residential lease has been included as part of the bankruptcy estate can the landlord terminate the lease agreement, cf. section 58 of the Bankruptcy Act, cf. section 37, subsection 2, and the decision on this is made by the Bankruptcy Court – not by the trustee. There must therefore be a court order from the Bankruptcy Court in which the court accepts that the residential lease is included.

Termination under the Bankruptcy Act is not subject to the same formality requirements as those applicable under sections 182-183 of the Tenancy Act, and thus, for example, termination may occur without prior notice and without reference to the rules of the Tenancy Act. This is despite the fact that the Tenancy Act is a protective prescriptive provision, not least when it comes to termination and termination.

Ending

And now back to the specific case. What was decisive in it was that the landlord could not document that the Bankruptcy Court had included the residential lease in the bankruptcy estate. Since the lease had not been included, the original lease agreement between the landlord and the bankrupt continued to apply regardless of the provisions of the Bankruptcy Act, and since the tenant had not breached the lease agreement under the Tenancy Act, the landlord's request to evict the tenant was denied.

There is no doubt that this is a niche area, and as mentioned, I have not been able to find a single printed judgment that recognizes the termination of a residential lease under the rules of the Bankruptcy Act. However, for those who may exceptionally be involved in this type of case, it is of enormous personal importance whether they can stay in their home or not.

If you have any questions about the above, you can contact attorney (H) Søren Vasegaard Andreasen for a non-binding discussion.

Read more about our advice within tenancy law here.