Should I pay my rent if my landlord has filed for bankruptcy?

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Should I pay my rent if my landlord has filed for bankruptcy?

I moved about a month and a half ago into an apartment. The day after I moved in I was served seizure of property papers by the sherriff’s office. The apartment building had been seized and the sherriff that served me told not to pay the landlord anymore money and to change my locks. The landlord came last night and said that I owe rent because the seizure has been lifted. I called the sherriff’s office this morning and they said the sale of the property has been put on hold because the landlord has filed bankruptcy. What should I do?

Asked on June 14, 2011 under Real Estate Law, Louisiana

Answers:

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

Answered 10 years ago | Contributor

Since your landlord has filed for bankruptcy, an automatic stay has gone into effect. This means that (at least temporarily) the foreclosure process has been stopped. Depending on the chapter (i.e. type) of bankruptcy, you may end up paying your rent to the bankruptcy trustee or to the court instead of paying directly to the landlord.  However, until further notified pay your landlord (and get/keep the receipt).

The bankruptcy filing does not affect your right to remain in your rental or affect your landlord's obligation to allow you to remain there.   However, if there's a written lease and it has a term that states that the tenancy is terminated if the landlord declares bankruptcy, the in such an event your lease would end.  Also, if the property ends up ultimately being foreclosed on by up your landlord's mortgage lender that would end your landlord's ownership (at that point you would no longer pay rent to them but to whomever the lender then designated). 

Note:  In the event of a foreclosuree, if you have a written lease you can continue to occupy the premises until the end of the lease period, or 90 days, whichever is longer (unless the new owner intends to occupy the home as their primary residence; in that case a 90 day notice to move would apply).  If you have a month-to-month lease, or no lease at all, you must be given at least 90 days notice to move.  Additionally, in cases where state law provides more protection than the federal law, the state law applies. 

You should consult directly with a landlord-tenant attorney in your area for further explanation of your rights.


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