What would happen to my land lease contractif the owner declares Chapter 7?

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What would happen to my land lease contractif the owner declares Chapter 7?

I have been in this contract with the Owner for about 4 years now. Today I received a notice of Chapter 7 from the court. This is a house that we live in. Do I have any options, or have I just wasted the last 4 years of payments?

Asked on March 14, 2011 under Bankruptcy Law, Arkansas

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

First, chapter 7 by a land owner does not directly affect his tenants--it affects his obligations to pay (i.e. any debts of his), but does not affect obligations of others to pay him or his obligations under contracts and leases to perform. So the bankruptcy does not necessarily directly affect you.

It is possible thaht he will lose his land in the bankruptyc as the process unfolds; either he may refuse to pay a mortgage (if he has one), and the lender repossess; or if he owns the land free and clear of a mortgage, it may be sold and the proceeds used to pay his creditors. If he loses the land, that will sever your lease with him--you can't lease from someone who doesn't owe anything--but may well be able to negotiate a new lease with whomever buys it. You may even have the chance to but the land yourself.

If he doesn't lose the land, then there's a good chance nothing changes.

So while you are right to be concerned, this is not automatically or necessarily bad for you; you need to see how matters develop.


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