If my landlord went bankrupt and our rental house reverted back to original owner, who do I pay rent to?

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If my landlord went bankrupt and our rental house reverted back to original owner, who do I pay rent to?

My landlord announced a couple of months ago that he had gone bankrupt and the house I rent was going back to original owner; she would be giving us the house on a land contract. He also told us at the time not to worry about rent. However he is now breathing down my neck about it but should he still get the money for rent or should I be paying the actual owner of the house?

Asked on July 26, 2011 Michigan

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

You need to determine your landlord's legal status. Has the property officially reverted back to the original owner? If so, then he is no longer the legal owner. You have no obligation to pay him rent (although you do owe the original owner). However if you have not been notified of any legal change, then it's a good bet that he is still the owner. If so your rent is still payable to him.

Quite possibly this is due to something called the "automatic stay". This is what goes into effect when someone files for bankruptcy. Basically, any of the bankrupt's creditors or anyone having a claim in the "bankruptcy estate" (i.e. the property of the person who is filing for bankruptcy) must put their claims on hold, at least temporarily. Therefore, in this case, possibly the original owner has not yet been able to take the property back over. So this means that your landlord is still the legal owner.

However, if his bankruptcy has in fact been filed, then his assets (including your rental payments), are now the property of the bankruptcy trustee. This means that your rent should be paid to the trustee, not your landlord. That having been said, you should have received official notification of this from the trustee and/or bankruptcy court. So if and until you do, you should still make your payments to your landlord. You don't want to face possible eviction.

At this point, ask your landlord just what his legal status is. Ask about payments to his trustee. Ask about just where the original owner stands. But again, until you are formally notified of a change, you must continue to pay your rent to your landlord.


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