Tenant’s Personal Bankruptcy

Is Rent Still Obligatory?

When a tenant files for personal bankruptcy, many landlords wonder what this means for the tenancy. Is there a risk that the rent will stop coming in, or that the tenant will have to leave the property? And what rights do landlords have in this situation? Do you need rent loss insurance? Let’s dive in and explore what landlords need to keep in mind!

Does the Tenant Stay in the Apartment Despite Personal Bankruptcy?

A tenant’s personal bankruptcy does not automatically terminate the lease agreement. Landlords cannot terminate the lease solely based on the tenant’s insolvency. There is no special termination right under tenancy law in this regard. This means that the tenant can generally remain in the property as long as the rent continues to be paid. While this offers some reassurance to landlords, it also means that in case of missed rent payments, standard notice periods and legal procedures must be followed.

Should the Tenant Inform the Landlord About the Personal Bankruptcy?

Generally, tenants are not legally obligated to proactively inform landlords about their insolvency. One exception is the security deposit, which is considered part of the bankruptcy estate and subject to seizure during the insolvency proceedings. In such cases, the insolvency administrator will inform the landlord about the process. It can be helpful for landlords to proactively talk to tenants to clarify the situation early and avoid uncertainties.

Rent Arrears and Termination Protection During Personal Bankruptcy

If the tenant has already accumulated rent arrears before filing for bankruptcy, the opening of insolvency proceedings offers a form of protection against termination. According to the Insolvency Code, landlords cannot terminate the lease due to rent arrears incurred before the insolvency filing. This means no immediate termination is possible based on old arrears. However, this protection does not apply to current rent payments—if the tenant falls behind during the insolvency with two consecutive payments, the landlord can issue a termination without notice.

What to Do if the Tenant Does Not Pay Rent During Bankruptcy?

If the tenant fails to pay rent during the insolvency, the usual termination rules apply. After two consecutive unpaid or partially paid rents, the landlord has the right to terminate the lease without notice. This step may be necessary if there are doubts whether the tenant will overcome their financial difficulties and regain solvency anytime soon. A termination without notice is a legally secure option to avoid prolonged uncertainty.

What Happens to the Security Deposit in Insolvency?

If the tenant has paid a deposit, it becomes part of the bankruptcy estate and is managed by the insolvency administrator. As long as the tenant pays the rent, the deposit remains untouched with the landlord. However, if the tenant moves out, any remaining deposit amount is transferred to the insolvency administrator and used to settle debts. Landlords can offset outstanding claims against the deposit but cannot claim beyond the deposit amount. Thus, landlords should be aware that they might not recover the full deposit if there are outstanding claims.

Renting to an Insolvent Tenant – What Should Landlords Know?

An insolvent tenant might also seek to rent a new property, which presents special challenges for landlords. Landlords have the right to request a credit report (SCHUFA) or a certificate of rent payment history. These documents provide insight into the prospective tenant’s financial situation and help assess the risk of payment defaults. Additionally, tenants generally have a duty to disclose ongoing insolvency proceedings, allowing landlords to make informed decisions before signing a lease.

How Much Rent Can an Insolvent Tenant Pay?

There is no legal cap on the rent amount an insolvent tenant can be charged. However, landlords should ensure the rent is reasonable relative to the tenant’s income, as high rents can increase the risk of payment difficulties. Although insolvency administrators may advise tenants to move to more affordable housing, this is a recommendation—not an obligation.

Tenant’s Personal Bankruptcy – What Does It Mean for Landlords?

For landlords, a tenant’s personal bankruptcy is not a cause for panic but also not a reason for complete complacency. It is important to carefully monitor the tenancy and act promptly if rent payments are missed. Open communication with the tenant can help prevent misunderstandings and foster cooperative solutions. If payment issues arise, landlords still retain the right to terminate the lease under standard conditions. A structured approach and clear communication are key to managing such situations successfully.

Rental pool apartment as an investment

Looking for a property as an investment with as little risk as possible? Then you should take a look at how a rental pool works, what advantages and disadvantages it has and what you should look out for. 💡

Adjusting the rent fairly

For various reasons, you should continually develop the rent of your property. Otherwise, the resale value will also suffer sooner or later in addition to your return. However, you should always be fair to your tenants when increasing the rent. Here you can find out what you need to pay attention to. 🤝

Boost Your Returns: How to Become Your Tenants’ Power Supplier

Tenant electricity gives landlords the opportunity to generate additional income. By selling electricity directly to your tenants you can turn your building into a profitable mini power plant.

Renovating an Apartment & Passing Costs on to Tenants

Modernizations in real estate affect both tenants and landlords. Learn which costs can be passed on, what rights apply, and how the cost allocation works.