> So what happens when the company that owns the property goes bankrupt because, say, it can't raise rents?

The building becomes foreclosed and bank-owned, or is sold to a new landlord.

Most landlords can raise rent. Less than 2.8% of units are controlled, though 48.6% of units are stabilized. Only 31.9% of units in this city are not regulated - and landlords tend to do pretty well here. Occasionally you'll read about a shitty one that ruins their tenants' apartments to try and force them out instead of buying their leases, but that doesn't happen very much anymore -- and when it does, the city stomps on their necks.

Rent control is almost entirely phased out. When one becomes vacant, it becomes rent stabilized - or is removed from the program entirely.

Rent stabilization is much more common, and has some limitations: the amount the landlord _may_ increase the rent is limited per year; if a unit becomes vacant, the landlord may raise the rent by a larger percentage; if the landlord renovates / improves the unit, they may raise the rent by a number based on the cost of renovation. Renovation typically only happens during vacancy.

A unit becomes deregulated once rent becomes higher than $2,500 and either 1) becomes vacant or 2) the adjusted household income of the tenant is over $200,000/yr for two consecutive years.

Stabilization entitles the tenant, in good standing, to lease renewal (in other words, landlord can't kick you out unless you break the terms of the lease).

Some landlords voluntarily put units under stabilization, in return for a break on their property taxes.

> If the company goes bankrupt then the building is probably put up for sale, and could get sold to a developer rather than another landlord right?

Yes. However, the developer would then gain the responsibilities of being a landlord and could not evict tenants that are in good standing. The stabilized/controlled status of each unit stays with the unit, and is not determined by who owns the building. Units exit the program based on vacancy, legally raised rent level, and tenant income. New units enter into the program when landlords decide to get property tax breaks when they build new properties.

> Seems like a fairly straightforward end-run around the law. You go bankrupt in your building and I'll buy it at auction for some price, and the reverse.

Why, when you could just sell the building to another landlord/capital investment firm for 120% of what you bought it for two years ago? ;) A lot less risky, considering you don't need to go through bankruptcy court and the whole several-years-in-jail-for-fraud thing.

It's a pretty good system. Sometimes it screws the landlords. But it almost never screws the tenants.

Which is kind of the opposite of the Ellis Act, it seems: it gives landlords carte blanche to screw the bejesus out of their tenants as soon as the market winds blow their way.

Don't get me wrong: we definitely have a housing crisis here as well. Some neighborhoods have seen (because units have vacancies often - some people move every freaking year in this city) rent increases from 600sq ft @ $800/mo to 600sq ft @ $2100/mo in a matter of five years.

Of course, the smart tenants in those neighborhoods haven't moved, and are only paying $900/mo.

Either way, landlords interested in purchasing a building know how much each lease is for. They know the stabilization status of a unit. And many of them purchased the buildings they own decades ago for less than 10% of the current market price. It's not like they get surprised by the regulation status on the units they own.