Roughly 5,200 renters across a dozen cities woke up one morning in the spring of 2024 to discover that the entity holding their lease had stopped existing. The co-living company Common Living, which had built its business around leasing entire apartment buildings and floors from property owners and then re-renting furnished rooms to individual tenants, filed for Chapter 7 liquidation in Delaware bankruptcy court on May 31, 2024, and shut down operations almost immediately afterward. For the people who had signed leases with Common rather than with the buildings’ actual owners, the ground didn’t shift under them. It disappeared.
The company vanished, but the rent was still due
Common wasn’t a landlord in the traditional sense. It operated more like a middleman, signing master leases on 79 co-living communities in cities including New York, Chicago, Los Angeles, Washington, D.C., and Austin, then subdividing bedrooms and charging renters monthly rates that started around $1,130 with utilities included, according to ARLnow’s reporting on one of its Crystal City, Virginia properties. When the company folded, tenants technically still had a lease, but the counterparty on that lease had stopped operating, stopped paying its own obligations, and — per its own bankruptcy filing — held liabilities of up to $50 million against assets of only about $10 million.
Habyt, the Berlin-based firm that had merged with Common in 2023, put out a statement acknowledging the shutdown. “It is with a heavy heart that we announce the closure of Common,” said Habyt CEO Luca Bovone. “The Common team has dedicated themselves to delivering innovative living solutions to customers. It is deeply disappointing to end this journey.” The company said it would try to fulfill its obligations to residents “to the best of its ability during this period, subject to the requirements of U.S. Bankruptcy Code,” according to Multifamily Executive — language that offered little in the way of a concrete promise to anyone with boxes half-unpacked in a bedroom they’d signed a year-long lease for.
The bankruptcy case itself, filed under case number 1:24-bk-11130, is still grinding through settlement approvals and insurance-related litigation more than two years later, court records show — a reminder that when a rental middleman collapses, the fallout for the people who lived there doesn’t resolve on any predictable timeline. Common wasn’t the first operator in this space to run into trouble; the company had absorbed the co-living portfolio of a competitor, Starcity, back in 2021, and had already drawn tenant complaints and regulatory scrutiny over lease practices before its eventual collapse, according to earlier coverage from The Real Deal.
Why a sale or a shutdown hits renters harder than a simple move
Most renters assume that if their landlord sells the building, or the operator managing it goes under, the lease itself survives the transition — and often it does, at least on paper. But a lease is only as good as the solvency and cooperation of whoever is bound by it. When that counterparty is a venture-backed startup burning through investor cash rather than a traditional building owner with equity in the property, the protections renters assume they have can turn out to be thinner than advertised. Common had raised more than $113 million in venture funding at its peak, according to bankruptcy reporting, and expanded from roughly 2,000 units to more than 5,000 in just a few years — growth that outpaced the unglamorous work of making each individual building profitable.
That mismatch between fast expansion and the reality of long-term lease obligations is exactly what left renters exposed. A traditional building sale usually just changes who cashes the rent check; the lease itself typically transfers with the property. A master-lease operator failing is different — the tenant’s actual contractual relationship is with a company that can simply stop existing, leaving the property’s real owner to sort out who has a legitimate right to occupy which rooms, on what terms, and for how long.
The buyout clause as insurance against disappearing landlords
It’s this exact scenario that has pushed more renters, particularly those who’ve already been burned once, to ask for an early-termination or buyout clause before they’ll sign anything again. A buyout clause is a provision that lets either party end a lease early in exchange for a predetermined fee, most commonly the equivalent of two months’ rent, according to Apartments.com’s own guidance for rental managers. Historically, these clauses have been framed as protection for landlords who need to reclaim a unit, or for tenants facing a medical emergency, safety threat, or military deployment. What’s changed is who’s asking for them and why: renters who’ve lived through an operator collapse or a chaotic ownership change now want that same escape hatch written in from day one, specifically in case the company on the other end of the lease turns out not to be as stable as it looked during the tour.
That’s a rational response to what actually happened to Common’s tenants. A written lease is supposed to be the thing that protects a renter’s stability for the length of its term. But that protection assumes the other party can honor it. When the operator that signed your lease has more debt than it can pay off with its own remaining assets, the paper you signed stops functioning as a shield and starts functioning as a claim in a bankruptcy proceeding — one of many, competing with everyone else the company owed money to. Renters who’ve been through that once aren’t interested in relearning the lesson. They want the exit priced and written into the contract before they hand over a deposit, not negotiated in a panic after the company managing their building has already stopped answering the phone.
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