Posted by Bill K. (AZ) on March 12, 1999 at 21:34:35:
Randy,
I understand that you were just venting, but I have to congratulate you on “doing all the right things”. I fall into the boat you describe.
While there are some odd “perks” for being a disreputable citizen, I don’t think that either of us would enjoy a life like that. It must be horrible not knowing when your house of cards will come tumbling down. Or, worse yet, not even realizing that you’re living in a house of cards.
Take heart. “Doing all the right things” is a better way to live. Pat yourself on the back. Your “system” works better. You get to dream when you sleep whilst the other folks have nightmares.
I had dinner with one of the leading bankruptcy attorneys in my area last night and of course we chatted about real estate.
We discussed lease options and tenant problems. I was mortified… She informed me that if a tenant filed bankruptcy or was placed in debtor’s court, she could wheel and deal to withold payments to me for a minumum of 6 months and possibly was long as 5 years if I had not terminated the lease. I often read on this site, it would only hold you up a month or so.
She indicated the bankruptcy laws can overturn any contract, regardless of the content within.
Should I overcome this by always getting a large option consideration in case I have no payments for the one year option?
We discussed screening the tenant extensively, but we both agreed that system is never full proof.
Please advise.
I think your friend grossly overstated the problem. Two reasons. First, deadbeat tenants don’t have the money to hire slick bankruptcy lawyers like your friend, who would charge a minimum of $1,000. Second, courts won’t permit a tenant to stay in a property with no rent being paid, while they or their lawyer concoct some kind of defense.
While the tenant litigates, the court can, and usually will order rent to be paid either to the landlord or into court. They even have a name for it - “adequate protection”. From that fund, a mortgage and other expenses can be paid. But, they don’t do this automatically. If property owners don’t seek good legal counsel and just sit back and do nothing they’ll get nothing.
Posted by Randy -IL- on March 12, 1999 at 11:40:10:
…can stealing be made legal. Where else in the world can a person buy all the things they want and sign all the contracts they can get their hands on and not have to pay for it? Granted some of the things will be repo’d, but for the most part it’s the biggest fleecing of America I can think of.
Where else in the world are deadbeats rewarded so greatly by doing things the “wrong” way? I went to college, made decent grades, stayed single, had no children out of wedlock, and stayed off of welfare all the while wondering where my rent and living expenses were coming from. The reward the government system has given me for doing things the “right” way is getting to start out in the real world with huge school debt.
You see, if I were just a loser and did things the “wrong” way (i.e; had babies, got myself on welfare, maybe even jail time) I would have been rewarded with no school debt which is a BIG head start into the real world. All the while the gov’t would have paid my rent, given me food, and paid for tuition and books.
On top of that I found out yesterday that I was named a creditor in a bankruptcy action. Like I said…Only in America is stealing legal.
(Sorry for the venting…America really is the best place to live, but I’m very miffed at the “system” today)
I think his story a “slight” excaggeration of the truth. First of all, ANY tenant can file bankruptcy and hold you up for a while, vis-a-vis the lease/option. If this happens, you can march into bankruptcy “stay” be lifted so you can evict the tenant. This relief, in my experience, is universally granted by the court. You will be out of luck for a few months if you move quickly.
If the tenant hires an attorney and starts fighting you, sure it could take six months or more. However, this has nothing to do with a lease/option. ANY tenant or debtor can pull this stunt and hold you up.
Randy, there are 183 other countries besides America
in this world. Have you thought about living and
starting a life for yourself out in any one of those
other countries?