Tenant Bankruptcy -- delaying w Skeleton Bankruptcys -- 3rd party taking over space?

10 Replies

I need help and hope someone has tried this before. I have a tenant that has not paid for over 6 months rent (becoming dire), they continue with first a Skeleton Bankruptcy, followed by not completing the paperwork properly (30 Days) dismissed, then coming back with a real bankruptcy. Problem is, there are two parties on the lease and both have done this with personal bankruptcy, but now I fear they will now file business bankruptcy. It is a restaurant in Southern California and their chef has left and they have no business, but obviously this party has done this before. I already have a new tenant for the location, that wants to get in. When we have called the police, they don't get involved saying it is a civil matter. My new tenant would like to take possession of the premises, with their signed lease in hand and change the locks (the bad tenant is letting homeless people sleep inside at night). We think upon doing this, she will call the cops, but it is a civil matter and they won't get involved. She is so low on money that she took another job, working at night at a convenience store. Our concern, we are on the last leg of relief of stay and are worried it will piss off the judge and they will not grant relief of stay. Right now we are at the point of requesting the final relief of stay -- 20 days, then back to filing a 3 day pay or quit and unlawful detainer -- another 33 days. Now if they file business bankruptcy, that could delay an additional 20 days -- two and a half months -- could loose property. Has anyone taken possession of the property in that way?

If you take illegal possession, you'll be much worse off.  Curious, if they did personal BK's, how I'd that affect evicting he business, which. I assume is he lessee?

The business is a DBA and not its own separate entity. therefore, I think along with their personal the business bankruptcy will not take hold, but will stall another potential 20 days. Ever know anyone who did what we are contemplating?

@Richard Alvarez  If you don't have on already, I would network with other landlords and go to the court house in search of an excellent eviction or bankruptcy attorney. 

Unfortunately BK filings done correctly are a lawful stall tactic.  You should get yourself legal representation to help expedite the relief from stay(s).  A good attorney can prove to a BK judge an abuse of BK filings if that's what's happening.  Even after the relief from stay, you're probably going to get additional stall tactics on your unlawful detainer.  

Do not attempt to take possession or let your new tenant take possession.  You've got a tenant with a known history of working the legal system and who obviously has money for repeated filing fees.  They'll sue you in a heartbeat and they will be in the right as they currently have legal standing and possession until the stay is lifted AND until you complete your unlawful detainer. Judges in CA courts in my areas are very punitive when it comes to DIY property recovery.  Don't do it.

Thanks for your input K. Marie Poe. You mentioned additional stall tactics with an unlawful detainer, what would those be? We do have an attorney (one recommended from bigger pockets and one before that, whom everyone in this area uses) but they all seem to tell you I can get possession and the bankruptcy should not affect the case. But with both attorneys, the bankruptcy trumped everything they have tried. You had indicated, '

A good attorney can prove to a BK judge an abuse of BK filings if that's what's happening.' Will that be a hard thing to do? The two partners have both done the exact same thing, skeleton bankruptcy followed by a real bankruptcy. Will that be sufficient evidence to show that is their tactic? In addition, on the filings from the tenant, they claim that they tried to pay the rent and we would not accept it. The Lessor has provided proof against this, along with refuting other lies and the information provided to their attorney. Recently she got behind on an electric bill ($4,500) and placed a lock and chain on the doors covering the panel -- witnessed by the Lessor. Then we are told she went to where the partner now works as a chef and was loudly overheard telling him (friends of lessor) that the Lessor has put a lock and chain on the electrical panel. Since that chef left, they have absolutely no business and are lucky to get 1 or 2 tables a night (have now closed for dinner). They also have terrible reviews on the internet and a past waitress told us they are watering down the wine, taking food off plates coming back and replating and the gal is the chef with no experience cooking. We don't understand, why would they stay when they don't have any business? Finally to top it off, they are allowing the homeless into the property to sleep on night. Ever heard of this before or suggestions? 

The BKs do trump almost everything in an eviction until you get a relief from stay.  If you've got an attorney not very experienced dealing with the BK courts you could be throwing money away.  Many RE attorneys hired to deal with evictions have zero experience with BK filings by tenants.  Just my opinion of course.  The good ones who've been around know to look for possible abuses and irregularities in the filings. 

As for delaying the UD, that's child play.  The tenant can answer the complaint with any number of bogus counter complaints.  

You may want to consider cash for keys and lease termination.  Given that you have a commercial tenant ready to move-in, you may come out ahead paying to get rid of this one.

One other thought.  If strangers are being allowed to sleep at the property there may be a way to go after the tenant for lease violations that are not rent related.  BK filings do not necessarily prevent owners from evicting for abuse or waste or endangerment of the property. At the very least you could post a notice to remedy any physical lease violations or they must quit.  What does the lease say?  What's the insurance situation? Your attorney should be guiding you on all of this and looking out for any and all ways in which you can lawfully preserve and protect the property.  You also have the right enter to enter for inspections with notice.  Again, your attorney should be brainstorming on this, not me. :)

We finally were able to get the tenant out going through the court system. Unfortunately that tactic worked out for them, while we were out the rent for those 6 months. The California court system protects the tenant over the landlord and this delay tactic certainly worked in their favor.

Originally posted by @Richard Alvarez :

We finally were able to get the tenant out going through the court system. Unfortunately that tactic worked out for them, while we were out the rent for those 6 months. The California court system protects the tenant over the landlord and this delay tactic certainly worked in their favor.

Glad to hear your nonpaying tenants are gone.  I'm curious about your comment that CA courts protect tenants over the landlord.  Were your tenants given any special considerations by the UD court?  If you file the UD and your tenants don't answer the complaint, it doesn't take 6 months to get to an eviction.  The BK courts (which are federal) have their rules, but that's not the CA courts.  

There's a lot of trash talk about CA courts being tenant friendly. I just don't see it.  I'm assuming I've evicted a few more tenants than you have. There are always opportunities for abuse, or people working the system.  But that happens everywhere and is not specific to the CA UD courts. 

Or maybe you're referring to CA law as opposed to the courts?  If you have units under rent control in a residential property in places like Berkeley, SF or City of LA, that's when you see true "tenant friendly" courts.  But most rentals in CA are not under rent control or rent stabilization.  You were evicting a commercial tenant who knew the lawful stall tactics available to them.  IMO that hardly makes CA courts "tenant friendly".