If your landlord files for bankruptcy, you do have specific rights regarding the situation. During his first term as president, Barack Obama signed a piece of legislation into law known as the Protecting Tenants at Foreclosure Act of 2009. In it, it states that your landlord must honor your lease until the term ends. If you are currently on a month-to-month lease, you will have 90 days to vacate the premises.
Landlord Filing For Bankruptcy
If your landlord is filing for bankruptcy, he or she may be doing this in an attempt to save the property from being foreclosed upon. When an owner of a property files for bankruptcy, the bank has to stop trying to collect payments, even if your landlord has not made a payment in months. There is a possibility that your landlord will keep the property. In this case, you will not experience any changes to your lease.
An Appeal By The Lender
If your landlord’s lender decides that they want to appeal the bankruptcy, they have the right to do this. If they do file an appeal and it is granted, the process for foreclosure on the property will continue.
If a lender is able to foreclose on the property, they may offer you a specific amount of money to move out of the premises. Typically, the lender would take this action if they plan on reselling the property.
Your Lease Is Still Valid
It is important to remember that during the process of bankruptcy for your landlord, you are still obligated to make a payment for rent. Your lease or rental agreement is still valid.
If a new owner does take over, they may decide to keep the terms of your rental agreement or lease the same. In this type of situation, you will only need to change who you pay rent to.
Bankruptcy And Responsibilities
Unfortunately, your landlord is not obligated to follow the agreement that you made when you signed your lease with them if they are in the middle of a bankruptcy. This means that they may stop paying for repairs or utilities, which is absolutely legal.
In addition, you should also be aware that during the proceedings of the bankruptcy, the trustee who is handling the bankruptcy can decide to reject or accept your lease. If your lease is rejected by the trustee, your landlord does not have to abide by their agreement in the lease. However, if the lease is approved by the trustee, your landlord must abide by the lease until it has come to an end.
Jim Treebold is a North Carolina based writer. He lives by the mantra of “Learn 1 new thing each day”! Jim loves to write, read, pedal around on his electric bike and dream of big things. Drop him a line if you like his writing, he loves hearing from his readers!