The Law Dictionary

Featuring Black’s Law Dictionary Free Online Legal Dictionary 2nd Ed.

What to do if my Landlord Has Filed for Bankruptcy

Tenants do have rights if landlords file bankruptcy. President Obama signed a bill into law called the Protecting Tenants at Foreclosure Act of 2009. This law states that new landlords must honor the remaining term of the tenant's lease. If the lease is month to month, the tenant has ninety days to move. Tenants can use this time frame to find new places to live if the new owner wants to change the lease terms or live in the home themselves.

When landlords file bankruptcy, it may be an attempt to keep the house and save it from foreclosure. When property owners file bankruptcy, the bank is stayed from continuing collection efforts, even if the owner is behind on payments. It is possible that if the landlord wants to keep the property the tenants will experience no change in their lease.

Lenders may appeal to the bankruptcy trustee to take the property out of bankruptcy protection. If this appeal is granted, the foreclosure process will continue.

If a lender forecloses on a property, the lender may offer the tenant a sum of money to move out of the property. This situation happens if the lender wants to resell the property. Tenants can use this money to help them move into a new home.

It is important to note that throughout the entire bankruptcy process, tenants are still obligated to pay their rent as agreed in the rental or lease agreement.

Some new owners will keep the terms of the previous lease agreement. That means tenants do not have to worry about moving. Instead, they will simply pay rent to the new landlords.

Unfortunately, during the period of the bankruptcy, landlords are not obligated to up hold their end of the lease. Examples include utilities and repairs that are normally paid for by the landlord.

Also during the bankruptcy proceedings, the bankruptcy trustee can choose to accept or reject the lease. If the trustee rejects the lease, the landlord does not have to uphold their part of the lease. If the trustee approves the lease, the landlord must resume his end of the lease. Either way, the tenants are protected under the Protecting Tenants at Foreclosure Act of 2009.


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