Would You Buy a House with a Tenant That Filed for Bankruptcy?

2 Replies

As a cash buyer,

Would you buy a house with a tenant that has just filed for bankruptcy?

The tenant is also 3 months behind on rent.

The property is in Clayton County, GA.

The current owner cannot evict the tenant because they are in bankruptcy,

but I wonder if a new owner can.

It seems like they could because they do not have a prior agreement with that tenant.

New owner

New lease agreement

If they don't like it, they can get out.

What are your thoughts?

Originally posted by @Chadwick Cadet :

As a cash buyer,

Would you buy a house with a tenant that has just filed for bankruptcy?

The tenant is also 3 months behind on rent.

The property is in Clayton County, GA.

The current owner cannot evict the tenant because they are in bankruptcy,

but I wonder if a new owner can.

It seems like they could because they do not have a prior agreement with that tenant.

New owner

New lease agreement

If they don't like it, they can get out.

What are your thoughts?

Bankruptcy covers pre-petition debt, not debt after filing.

If the tenant filed Chapt 7, you are in good shape because they can't file again for 8 years. They must pay post petition debt (rent) after the filing or face eviction. If they filed Chapt 13, the court makes them pay from the filing date on plus some amount necessary to bring the unpaid rent current over the course of time.

If after filing, they started missing rent payments, you would submit a request to the court, the judge would order them to bring the rent current or be evicted.

You can get the information from their filing at Pacer (Public Access for Court Records) they will list the reason they filed and their current income. If their current income is $0 and they lost their job, you have to decide based on the type of job they do.

Can they find a new job quickly? If they worked in a buggy whip factory, probably not. If they wrote code for some software company, maybe it's okay. If the reason they filed was medical bills (which is quite common) you are probably okay, if they filed because of their trip to Las Vegas and they lost too much money, maybe not okay.

Every filing is different and you may want to look at the circumstances before you decide.