If I’ma landlord and have decided to file Chapter 13, what are my continuing obligations regarding my5 family property that will be part of the bankruptcy?

I have been told that I should discontinue mortgage payments and stop collecting rents and return the deposits (tenants are at will) and advise the tenants that the building may go into foreclosure. What do I tell the tenants when they ask what to do with their rent payments? What if there is a maintenance issue during this time? What are my obligations?

Asked on August 30, 2011 New Hampshire


FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

If you are planning on filing Chapter 13 bankruptcy protection (reorganization), whether you are obligated to return your tenant's deposits and whether you plan on keeping the property you own depends upon how you can restructure your debt and what your bankruptcy attorney advises you to do subject to court approval.

I would continue collecting the rents but turn the rents over to the lender. Assuming there is a maintenance issue with the rental, you will need to make the repairs for your tenants. I suggest retaining some of the rents paid for maintenance issues. You should have your bankruptcy attorney advise you how to deal with the rental you have as to keeping it or letting it go in a foreclosure.

IMPORTANT NOTICE: The Answer(s) provided above are for general information only. The attorney providing the answer was not serving as the attorney for the person submitting the question or in any attorney-client relationship with such person. Laws may vary from state to state, and sometimes change. Tiny variations in the facts, or a fact not set forth in a question, often can change a legal outcome or an attorney's conclusion. Although AttorneyPages.com has verified the attorney was admitted to practice law in at least one jurisdiction, he or she may not be authorized to practice law in the jurisdiction referred to in the question, nor is he or she necessarily experienced in the area of the law involved. Unlike the information in the Answer(s) above, upon which you should NOT rely, for personal advice you can rely upon we suggest you retain an attorney to represent you.