Search Site
Menu
Landlords Beware of the Tenant Bankruptcy Scare

Hindsight is 20/20, at least that is what one Landlord might say after fighting for multiple months to regain possession of his property from a non-paying Tenant.  In this case, the Tenant strategically filed a bankruptcy action the day before the Landlord was set to regain possession of his property.  The result –possibly having to wait six months to just get possession of his house from the Tenant during the pendency of the bankruptcy action.  This Landlord was dealing with a serial bankruptcy filer, someone who knows how to use the system to their personal advantage.  Once a bankruptcy action is filed, an automatic stay goes into effect which essentially stops (“stays”) all pending actions, including eviction actions to regain possession of your property.  If a non-paying Tenant files bankruptcy while living in your home, they will be able to continue living there (making no rent payments) until the bankruptcy case is resolved.  Below are 3 ways a Landlord can protect themselves from the Tenant bankruptcy scare in the future:

(1)  Creditworthiness and financial stability are crucial aspects for a Landlord to consider when evaluating a potential Tenant.  Ask yourself: Can this Tenant afford these monthly rental payments based on their past financial history? There should be no hesitation here.  Making this determination early on will save you a lot of time, money and the value of your property in the future.

(2)  Actually conduct comprehensive background searches.  A one-page credit inquiry or even worse, a Tenant’s “word” on their financial soundness, will simply not suffice when you are considering to put your property in a stranger’s hands.  Also, conduct a search on any person that is going to be residing at the property for more than 2 weeks.  This is an important procedure that must be done prior to Tenants/occupants residing at your property.

(3)  Lastly, consider having an attorney review or draft your Residential Lease Agreement to assist in protecting your interests before permitting a Tenant to move-in.  Trust me, hiring an attorney to do an initial review on your lease in the early stage is far more cost-effective than having to retain after the Tenant stops paying rent, or even worse, files bankruptcy.

So, how does this story end? With a lot of lessons learned and with our firm’s assistance, a new, suitable Tenant to lease the Landlord’s property.

Leave a Reply

Your email address will not be published. Required fields are marked *

Contact a Dedicated Texas Business Lawyer To Schedule a Consultation
Call 281-367-1222 or contact us online to schedule a meeting.

Strong In Action

  • Spring 2019

    The Strong Firm represents borrower in $42.3 million HUD construction loan for multifamily real estate development in Walton County, Florida.

    Read More
  • Spring 2019

    The Strong Firm acts as legal counsel for borrower in $32.1 million HUD construction loan for multifamily real estate development in Conroe, Texas.

    Read More
  • Spring 2019

    The Strong Firm aids borrower in $31.7 million HUD construction loan for multifamily real estate development in Nueces County, Texas.

    Read More
  • Spring 2019

    The Strong Firm represents borrower in the refinancing of a $3.57 million commercial mortgage-backed security for a commercial office facility in Montgomery County, Texas.

    Read More
  1. 1
  2. 2
  3. 3
  4. 4
  5. 5
  • Peer Rated 2019 Award

Recent Blog Posts

Legislation Authorizes Paid Sick Leave for Workers Suffering from Coronavirus

New legislation passed in response to the COVID-19 pandemic allows certain workers to receive paid sick leave even if their employer previously did not provide it. In March, the federal government enacted the Families First Coronavirus Response Act (FFCRA). This law assists employers that give their employees paid time off
Read More
Legislation Authorizes Paid Sick Leave for Workers Suffering from Coronavirus

Lenders Suspend Home Foreclosures Due to COVID-19, But What Happens Next?

Many large financial institutions are suspending foreclosures because of the massive economic damage caused by COVID-19. Some banks have stopped proceedings indefinitely. Others have set time limits for foreclosure suspensions such as 60 or 90 days. Even as health and financial issues remain uncertain, this is a good time for
Read More
Lenders Suspend Home Foreclosures Due to COVID-19, But What Happens Next?

How Can I Create Estate Planning Documents During the Pandemic?

Even in its first few weeks, the COVID-19 pandemic caused many people to examine or reassess what is most important to them. The need to prepare in case of an emergency or untimely death has been highlighted by the tragic losses occurring around the country. What can you do if
Read More
How Can I Create Estate Planning Documents During the Pandemic?

Complying with Corporate Annual Meeting Requirements during the COVID-19 Quarantine

How do you hold a corporate annual meeting when the entire country is in lockdown? On the surface, it might seem like a simple matter of using a favorite video conferencing tool and perhaps checking to see if it’s been hacked. Annual meetings for corporations are more than get-togethers. They
Read More
Complying with Corporate Annual Meeting Requirements during the COVID-19 Quarantine
  • Video Vault


    Watch videos done by our legal team to gain a better understanding of your legal needs. Our lawyers give video insight into areas such as Real Estate, Business Law, Mergers & Acquisitions and much more.

Pay Retainer Online

Use our easy-to-use and secure online payment feature.
We accept all major credit cards.

Pay Your Retainer

Contact us

Quick Contact Form