As a landlord, your biggest fear is probably having a tenant file bankruptcy while the tenant is in the middle of the lease with you. Because bankruptcies will reduce or completely negate the amount of rent the tenant owes you, landlords typically get the short end of the stick when a tenant files bankruptcy.
However, there are some preliminary steps that you, as a landlord, can take to protect yourself. Though there are few things in the actual lease contract to prevent against bankruptcy that are enforceable, there are preventative measures can give you some peace of mind.
Employing Tenant Screening Processes
When you are renting out a property, you can help avoid sticky situations regarding bankruptcy by implementing a tenant screening process. This will allow you to determine the tenant’s current credit, whether the tenant has ever filed bankruptcy before, and, in some cases, if any family members have ever filed for bankruptcy in the past.
This screening process will allow you to root out potential “problem” tenants before you draft and sign a lease agreement with them, which will effectively keep the odds of them choosing to file bankruptcy lower.
Additional Precautions that You Can Take as a Landlord
Besides sticking to a screening process, there are additional precautions you can take to protect against tenant bankruptcy. For instance, you can have the potential tenant give you security deposits, third-party guarantees, surety bonds, or letters of credit.
If you’re not sure how to implement the precautionary measures described above, don’t worry! Landlord Support Services can help you set up ways to protect yourself against bankruptcy.
Additionally, if you have a tenant who is filing a chapter 7, chapter 11, or chapter 13 bankruptcy, the Utah eviction attorneys at Landlord Support Services can help you understand what your rights as a landlord are.
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