Am I obligated to pay rent if landlord has filed aChapter 7?

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Am I obligated to pay rent if landlord has filed aChapter 7?

In June, I signed a lease with a private owner of a condo. I recently was informed by the owner and a certified letter on my door that landlord has filed Chapter 7 to halt the foreclosure on the unit. After doing research, the unit was scheduled to sell on the court steps on 10/05 which happens to be the same date that she filed for bankruptcy. I also just found out that the owner owes HOA over and14k. Am I still obligated by law to pay rent since she obviously never paid mortgage or should I wait to hear from the trustee?

Asked on October 21, 2010 under Bankruptcy Law, Georgia

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

1) The fact that a landlord does not pay a mortgage (or HOA fees or taxes) does NOT absolve the tenant of the obligation to pay rent. Your agreement is with her; you have no say and no control over what she does with her finances, but are obligated to honor your own agreement, the lease.

2) As long as she still owns the property, she is the landlord. If she loses ownership--e.g. it's foreclosed--then you would no longer pay her. But only when she's not the owner.

3) If the court (e.g. bankruptcy court) orders you to pay into a trust or the court itself, you'll do that; until then, pay the landlord. You can certain proactively reach out to the trustee to make sure you're aware of the instructions.

4) It is possible, if you want out of the lease and out of the propertly, that you may be able to argue that the lease was founded on fraud and is therefore unenforceable. The theory would be that the landlord knew she was likely to file bankruptcy or lose the unit AT THE TIME you negotiated and/or signed the lease, that to not tell you that would be a material omission (a failure to state a vital piece of information that could affect your decision whether to rent or not). If she was more-or-less solvent at the time and didn't know of a foreclosure or that she'd be filing bankruptcy, this would not apply. If you think you may wish to consider  this, discuss the case with an attorney who can evaluate it on all the specifics.


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