Help-My Landlord has become bankrupt!

Milady27 · 20 August 2008 at 2:40PM

I have just found out that my landlord has become bankrupt and their estate has gone to a corporate restructuring company to whom I now have to pay my rent. I paid a deposit before that scheme came in last year protecting deposits. Is my deposit in jeopardy and what are my rights as a tenant? If they tell me that I will not get my deposit back am I within my rights to withold my last months rent before I move out. I have not damaged the property in any way and have kept it in a good condition and in normal circumstances would have received my deposit back without question.

silvercar · 20 August 2008 at 3:04PM

Difficult one.

In theory you are a creditor of the bankrupt for your deposit, or you will be at the point when the deposit should be repaid.

In the mean time, it seems that the landlords affairs have been taken over by this company and you are now a tenant of the company (the landlord having been deprived of his assets). In order to keep the tenancy alive you have little option but to pay rent to this company or you would be in breach of the tenancy agreement and could be evicted.

I would quiz the company about your deposit. No point speaking to the landlord as (a) he's got no money (b) he is not in control of what was his affairs and couldn't give you the deposit back even if he wanted to.

As for your rights as a tenant, I would expect that you will receive notice to leave as soon as your fixed term ends.

PayDay · 20 August 2008 at 6:17PM

Get in touch with Shelter and ask them for their advice. They have a free phone line and an email contact address.

Milady27 · 21 August 2008 at 9:46AM

Thanks. I did actually speak to Shelter who gave me some good advice. I'm just more worried about getting my deposit back more than anything else. I paid a lot of money in good faith as a deposit and have not broken or damaged anything in the property so it seems really unfair if the company refuses to pay it back.

unhappy99 · 18 October 2008 at 12:21AM

We have discovered in recent days that our landlord has not been paying the mortgage on the property that we have been renting since May of this year. We received a letter from a solicitors on behalf of our landlords' mortgage lender saying that the property is being repossessed.

The repossession hearing is in December and my partner and I are wondering what options we have open to us? We paid a deposit in full, however the landlord won't speak to us and he is out of the country, therefore we have no contact with him, despite the fact that we have e-mailed him on a number of ocassions and tried to contact his mobile.

Would like some advice, as we have conflicting stories, about whether or not we have a case to put to his lender to pay them and honour the terms of our contract or bail out and put it down to experience?

Does anyone know if your landlord goes bankrupt and is not in the country, do you get your deposit back? (It hasn't been expressed to us whether or not it has gone into the fund that was set up by the Government that is secure)
Please help as we could be out of our house at Christmas and are frightened that it we leave, we will be in breach of our contract and the landlord could sue us!

Premier_2 · 18 October 2008 at 9:42AM

Lenders lend money - they are not in the market to let property.

Lenders expect any money they lend to be repaid. When it's not repaid, they take action to recover the money.

What do you want to speak to your LL about? If it's about the deposit you originally paid, you should have an adddress in this country in which you can legally serve notices on him. Was the deposit protected? If so, you have no worries even if the LL goes bust. If not, then sorry but you've probably lost the deposit if the LL goes bust. Seek legal advice on whether to continue to pay rent.

Your best option would be to start looking for somewhere new to rent now. You could go to the court hearing and ask if they will delay the repossession order for a short while (usually not longer than about 2-4 weeks) to allow you time to finalise your moving into somewhere else, but the court will ultimately allow the lender to repossess the property if they are not getting their money back that they originally lent - they don't have any choice in this.

The LL cannot sue you for breach of contract if you are following the order given by a court to leave the property - any such attempted claim would be laughed out of court.

unhappy99 · 18 October 2008 at 11:21PM

Thankyou for your advice, I am aware that the lenders are more interested in recouping their intial investment, as it has now become clear that the LL is bankrupt, or if not, due to declare it soon. However, the reason we wanted to contact the LL was to try and arrange a surrender agreement with the LL and to try and find out whether or not he has any intention to attend the hearing (increasing his chances of keeping the house) naaive I know but maybe there is hope?

We are considering writing to the lender to inform them of the fact that we have been living in the house since this May, as we are not sure whether they are aware of this. Obviously we wish to do this because we know that as long as we are in the predicament that we are inm the lender are losing money and we are prepared to make an agreement with them to pay the mortgage, at least until the end of our tenancy agreement. (Surely this is a consideration in the current economical climate???)

Originally we were renting the property with a view to buying it at the end of the period - discussed with the LL.
Another question for anyone that can help - Lets say, long term, the house is repossessed and following the repossession we decide to buy it, will the address itself be blacklisted or is it the person who owned the house? As my partner seems to think that blacklisting of addresses is a myth and it goes onto the person not the house they live in? Surely if the house is sold to someone else it is cleared? Or is the fact that we are associated with the address a contributing factor to how our credit information will be affected?

I know this is long winded, but we are really desparate for some advice, more so me as my partner seems so laid back about the whole thing!
Unhappy99

Premier_2 · 19 October 2008 at 9:55AM

You should contact the lender to explain that you are currently tenants in the property - the lender may not know this, or even that it is currently let.

How long was the initial fixed term of the TA for? If it was only six months then you can still legally end the TA on that date.

If you are still interested in purchaseing the property, contact the LL and/or lender expressing your intention to buy. It may be enough to allow the LL to sell to you without the property being repossessed, or the lender will probably explain how to go about making a formal offer (but be aware they probably won't automatically accept it as they will have an obligation to obtain the best possible return)

Regarding blacklisting, your partner is correct. Any poor credit is reflected in the personal credit record of the individual concerned; an address is not blacklisted.

ruggedtoast · 19 October 2008 at 10:28AM

Im afriad unless your deposit is protected by that scheme youre just another creditor to your bankrupt landlord.

mark_balfour · 13 May 2009 at 4:02PM

my landlord has informed me he is going bankrupt but He tried to see his mortgage advisor here because he hasnt informed the mortgage company that he is sub letting the property out. My deposit is under a protection scheme so I know thats safe but should I carry on paying him the rent as I dont think he is paying the mortgage and is just lining his own pockets!! but what are my rights if the property is reposesssed by the mortgage company?

silvercar · 13 May 2009 at 5:39PM

You need to find out if he is telling the truth. Could just be a story to get you to move out so he can sell up.

You could write to the lender and notify them you are a tenant in the property.

You clearly have not yet found out all the facts. Speak to your landlord and investigate. You are confusing bankruptcy and repossession.

Help-My Landlord has become bankrupt!

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