Imagine being a property owner like Michael, managing residential units. Recently, one of his tenants filed for bankruptcy while still having 10 months left on a 1-year lease.
When I initially drafted the standard lease for Michael's properties, I included various tenant default provisions. However, he discovered that these provisions lose their enforceability once bankruptcy is filed. Now, Michael can't pursue unpaid rent or initiate eviction without obtaining approval from the bankruptcy court.
As a pragmatic and forward-thinking contracts lawyer, I recognize that even the most robust contract has its limitations. To safeguard against financially distressed tenants, landlords like Michael would benefit from getting a guarantor or a big-enough security deposit to cover his losses while the matter plays out in court.
If you are a residential property owner grappling with tenants you can't evict, let me ask you this: How effective is your tenant screening process? Conducting a thorough review goes beyond standard credit checks—it's a vital step in preventing financial setbacks.
Protect your investment and minimize risk. Reach out to me for advice and strategies for your rental property.