Can a landlord draft a lease with a tenant after the bankruptcy has been granted and the property was included in that bankruptcy? 21 Answers as of June 25, 2014

If a property was included in a Chapter 7 Bankruptcy and has been granted, can a landlord still rent that property to collect rent? This means, the courts have granted you the relief of that debt, so the landlord doesn't have to pay the mortgage, but then decides to rent out the property to collect money but doesn't apply the money.

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RealChek Legal Services, PLC | Thomas E. Moorhead
As long as the landlord has an ownership interest in the property, he/she has the right to rent the same. The mortgage would not be discharged in the bankruptcy because it is secured by the property. The terms of the mortgage may change but the landlord still have to pay the mortgage or return the property. If there is a foreclosure, then the landlord still has title until the redemption period runs (usually 6 months).
Answer Applies to: Michigan
Replied: 6/25/2014
The Barrister Firm
The Barrister Firm | Christopher Benjamin
Your question focuses on the wrong issue; too many times the tenant is worrying about whether a landlord is fulfilling his obligations to his creditor but this is of no concern to the tenant. The landlord's ownership of the property is sufficient for him to partake in the benefit of renting it for profit. The creditor has it remedies under the law to pursue the landlord for delinquent obligations. Your only concern as a tenant is that your lease is not breached; which will only happen if you are required to relinquish possession (to no fault or breach of your own) prior to the prescribed term of the lease. When you rent property, you are entitled to possession of the property for the prescribed period of the lease and quiet and peaceful enjoyment (which includes limited maintenance) of the property for that time. You are paying for a place to live and as long as that is not interfered with than you need not worry about whether the landlord is fulfilling his obligations to his creditors and his failure to do so (without affecting your tenancy) is not a cause or defense for not paying rent.
Answer Applies to: Florida
Replied: 6/19/2014
EDWARD P RUSSELL | EDWARD P RUSSELL
Assuming that the landlord was the debtor in bankruptcy he will continue to own the property after the discharge so that he can rent the property and keep the rents. He will have to continue to pay on the mortgage if he wishes to keep the property.
Answer Applies to: Minnesota
Replied: 6/19/2014
GARCIA & GONZALES, P.C.
GARCIA & GONZALES, P.C. | Richard N. Gonzales
Yes (if I understand the question).
Answer Applies to: Colorado
Replied: 6/19/2014
Hayward, Parker, O'Leary & Pinsky, Esqs.
Hayward, Parker, O'Leary & Pinsky, Esqs. | Michael O'Leary
A landlord can enter into a post-bankruptcy lease with a tenant, even if he is no longer paying the mortgage. The landlord still owns the property until it is sold at foreclosure, or some other event occurs which transfers title. A bankruptcy filing does nothing to change the title to the property. If the mortgage holder is aware of the tenant they can, in certain circumstances, enforce an "assignment of rents" clause contained in the mortgage, which directs the tenant to pay the rent directly to the mortgage holder. However, this rarely happens with residential property. It is frequently done with commercial property such as strip malls, etc.
Answer Applies to: New York
Replied: 6/19/2014
    A Fresh Start
    A Fresh Start | Dorothy G Bunce
    I am assuming that you are asking if someone who has filed bankruptcy may rent property s/he still owns, and the answer is yes. A tenant has not right to dictate how the landlord uses the rent money. Nevada law does provide some protection for tenants in this type of situation.
    Answer Applies to: Nevada
    Replied: 6/19/2014
    The Law Office of Darren Aronow, PC
    The Law Office of Darren Aronow, PC | Darren Aronow
    If the bankruptcy case is not closed then no, they can not rent without notifying the trustee.
    Answer Applies to: New York
    Replied: 6/19/2014
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    That is NOT your issue. It is between the landlord and his lender. If you are a tenant you need to pay the rent.
    Answer Applies to: California
    Replied: 6/19/2014
    R. Steven Chambers PLLC | R. Steven Chambers PLLC
    If I understand your question, yes. You seem to have a misunderstanding about the effect of the bankruptcy. The landlord will have to pay the mortgage in order to keep the property. Just because the debt is discharged (meaning the landlord has no personal liability for it) doesn't mean the mortgage (the right of the lender to foreclose) is also gone. So it appears that the premise on which you've based your question is erroneous. The landlord does have to pay the mortgage in order to keep the property. Secondly, my question is, what concern is it of yours if the landlord doesn't have a mortgage? It sounds as if you are the tenant. The purpose of rent is compensation to the landlord for the use of his property. As long as the landlord is providing the property as a place for you to live, he is free to have a lease and collect rent.
    Answer Applies to: Utah
    Replied: 6/19/2014
    Barnhart Law Office
    Barnhart Law Office | Bruce C Barnhart
    Yes, a landlord may enter into a lease agreement after the landlord files a bankruptcy petition. The landlord may collect rent. However, nearly all mortgage/promissory agreements require that the landlord pay the rent to the mortgage company and give the mortgage company a security interest in the rents.
    Answer Applies to: Nebraska
    Replied: 6/19/2014
    Kirby G. Moss PC | Kirby G. Moss
    If I understand the facts, the landlord is who filed the bankruptcy and he, if keeping the property is going to have to pay the mortgage. Bankruptcy does not discharge the mortgage, allowing one to keep the property, thus he can still rent it out after the bankruptcy.
    Answer Applies to: Indiana
    Replied: 6/19/2014
    Garner Law Office
    Garner Law Office | Daniel Garner
    If you are the tenant, I would advise you to look for another place to live. The landlord is going to be foreclosed upon if he is not paying the mortgage. If you are the landlord, and if you are in Oregon, you should not be drafting a lease under these circumstances but should offer no more than a month-to-month rental with full disclosure that the tenants could be forced to move with 90 days' notice.
    Answer Applies to: Oregon
    Replied: 6/19/2014
    Law Offices of George H. Shers | George H. Shers
    You have to find out what the real facts of the matter are. If the apartment house was included in the bankruptcy, the lender would have gotten permission of the court to foreclose on its mortgage and not just drop the secured loan.
    Answer Applies to: California
    Replied: 6/19/2014
    Law Offices of David H. Relkin
    Law Offices of David H. Relkin | David H. Relkin
    You need to clarify the question. Who is the Landlord and what does it mean that the property was included in the Bankruptcy.
    Answer Applies to: New York
    Replied: 6/19/2014
    Musilli Brennan Associates PLLC
    Musilli Brennan Associates PLLC | John F Brennan
    Generally, if you are renting you have to pay someone, the owner, the trustee or a new owner. Another's bankruptcy does not excuse you from paying.
    Answer Applies to: Michigan
    Replied: 6/19/2014
    Goldsmith & Guymon
    Goldsmith & Guymon | Marjorie Guymon
    As long as the landlord owns the property it can rent the property, collect the rent and use them however it pleases. However, the type of bankruptcy may determine whether the landlord has continuing leases or month to month leases. The tenant may not be bound under the terms of the original lease.
    Answer Applies to: Nevada
    Replied: 6/19/2014
    Boston Law Firm
    Boston Law Firm | Eryk Boston
    I assume that you mean that you stated your intention was to surrender the property. If so, the bank could foreclose during the lease period. At the very least, you should disclose the situation to a prospective tenant and limit the lease to a month by month agreement. It may also help to talk with the bank and see what their intention is. You may be able to come to an agreement with them which will clarify your options. If the bank does not wish to foreclose immediately, it is in their interest to have someone living at the property as abandoned properties deteriorate quickly. Discuss your case with your bankruptcy attorney or a landlord/tenant attorney before taking any action. For information only. Not for legal advice.
    Answer Applies to: Virginia
    Replied: 6/19/2014
    Harper Law Offices, Inc. P.S.
    Harper Law Offices, Inc. P.S. | Joseph T. G. Harper
    A debtor generally can still rent this out after having been granted a discharge, but that debtor would also still need to work something out with the lender to either retain the house or otherwise reinstate the mortgage. Additionally, the debtor should consult with the debtor's bankruptcy attorney to make sure that renting the property won't raise any red flags for the trustee. If the discharge has been granted, and the case is closed, or on it's way to be closed, there might not be any additional issues. Possible issues to include not disclosing income, or not having the rents covered by an appropriate exemption, and other creditors could object to any discharge on the basis of not making such disclosures. This may not necessarily apply to the debtor here depending upon the stage of the bankruptcy proceedings. You should carefully discuss these plans with your bankruptcy attorney.
    Answer Applies to: Washington
    Replied: 6/19/2014
    Dessy & Dessy, a Professional Corporation | Ronald D. Dessy
    A person can enter into a lease of real property at any time that they remain the owner of the property. However, if the landlord was granted relief from the debt, he probably gave up the right to use bankruptcy to stop the lender from foreclosing, and will shortly no longer be the owner. Whether the lease would survive a foreclosure is a somewhat complex question that depends on whether leases commercial residential, along with the terms of the lease, and possibly the discretion of the foreclosing lender.
    Answer Applies to: California
    Replied: 6/19/2014
    Deborah F Bowinski, Attorney & Counselor at Law | Debby Bowinski
    Yes. If the landlord does not pay the mortgage the lender will foreclose. Regardless, if you want to rent the property you must pay a fair price to the owner or you are being unjustly enriched. The landlord has no obligation to let anyone stay in the property rent-free, and as long as he or she owns the property they are in control of who gets to use it and for what amount of rent.
    Answer Applies to: Colorado
    Replied: 6/19/2014
    Ronald K. Nims LLC | Ronald K. Nims
    Bankruptcy court doesn't take ownership away from a property owner when it discharges the property owner from personal liability on the mortgage - the bank would still have a lien on the property but to obtain title to the property, the bank would have to go through a foreclosure action in state court. Since the landlord would still be the owner of the property, the landlord could lease the property. Of course, the lease could be avoided by the bank in a foreclosure action but that's true of almost every lease.
    Answer Applies to: Ohio
    Replied: 6/19/2014
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