01420 565310

0
0
Subtotal: £0.00

No products in the basket.

The Tenants Bankrupt!

We have come across two decisions from earlier this Summer dealing with the problem of what to do when faced with a Tenant who is made bankrupt or enters into a Debt Relief Order.

Generally anyone who is made bankrupt or obtains a Debt Relief Order is subject to certain moratoriums on proceedings and the recovery of money which they owed prior to the Court Order making them bankrupt etc. This means that landlords can find themselves with a tenant who has run up arrears which they then cannot recover save for making a claim in the insolvency process under which it is likely they will only recover a small proportion of the monies.

In Sharples v. Places for People Homes Limited (bankruptcy) and Godfrey v. A2 Dominion Homes Limited (debt relief order) the Court of Appeal gave consideration as to whether a Landlord may bring Possession proceedings relying on arrears as a ground for possession not withstanding that the Tenant was subject to some form of insolvency procedure.

The Court determined that Landlords could bring proceedings relying on the rent arrears in the usual way if the ground could be made out then the insolvency of itself would not prevent the court making an Order for Possession in these circumstances. What the Court did say is that the Court could not make a monetary Judgment and nor could it suspend any Order on terms requiring the arrears to be paid.

Whilst often a Landlord may be best advised to rely on Section 21 if at all possible obviously this is not always available. Landlords will therefore still have the option of Section 8 proceedings.

4 thoughts on “The Tenants Bankrupt!”

  1. I do not understand the following sentence or I am reading it the wrong way, or, perhaps, it needs some punctuation? Whichever way I read it, it doesn’t make sense to me. “Provided in the usual way the ground could be made out the insolvency of itself would not prevent the court making an Order for Possession in these circumstances.”

  2. I would welcome an extension to this article covering what action is needed (if any) if a tenant is made bankrupt but continues paying the rent. What is our duty to the landlord and to The Insolvency Service.

Leave a Comment

Quick Links

Registered address

PainSmith Solicitors,
1 Mansfield Business Park,
Station Approach,
Lymington Bottom Road,
Medstead, Hampshire
GU34 5PZ

Nice to know

Authorised and Regulated by the Solicitors Regulation Authority (SRA Number 562686)

Painsmith Solicitors Limited trading as Painsmith Solicitors, Director: Marveen Smith. Registered No. 07617210.

Scroll to Top