Landlords Bankruptcy Issues Trickle Down to Tenants - Total Bankruptcy
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Landlords’ Bankruptcy Issues Trickle Down to Tenants


Say you are a tenant in a building owned by an individual, and that individual goes bankrupt. You’ve paid your rent on time for years. What about you?

Greg Mellen of the Long Beach Press Telegram in California, highlights the cyclic nature of bankruptcy by looking at local residents faced with this dilemma.

He has the story of LaTonya Jennings, a former Marine, forced from the apartment she’s occupied since April. U.S. marshals arrived one morning to retrieve her keys, and, in a few hours, her belongings were on the front lawn. Her roommate, Joe Mulhern, says he was ordered out by marshals who had their weapons drawn.

Both Jennings and Mulhern acknowledged that a notice giving them 10 days to vacate the premises had been posted on their door the previous week. Naturally, they called their property manager.

Betsey Lebbos owns the building the two tenants occupied and she is going through bankruptcy. She claims the order to vacate, posted by the bankruptcy court, was fraudulent and invalid because it had not been signed by a judge. And that’s what she told her tenants.

“I never in my wildest dreams thought they could do this,” Lebbos says. She says she is working hard to reverse the order. “This is totally illegal.”

The U.S. Marshals Office in Los Angeles says they don’t take sides, but simply follow the instructions of the bankruptcy court when enforcing evictions.

The Lebbos case is still proceeding through the courts, but that’s hardly good news for LaTonya Jennings. Workers arrived at the apartment building and emptied much of its contents—her belongings—and she was told the contents could not be returned to her until certain legal proceedings were completed, leaving her on the sidewalk and exasperated.

In this case, Jennings and Mulhern were forced out of their apartments because of evictions and property disputes that do not directly concern them.

President Barack Obama recently signed legislation providing renters with a 90-day window to move before they can be evicted from a foreclosed property, the law does not apply to property seized through a bankruptcy court.

An attorney with the Legal Aid Foundation said she had not heard of tenants being evicted by the courts. Tamara Webster notes that evictions related to foreclosures have risen sharply during the recession.

According to some estimates, 20 percent of foreclosures affect homes with renters.

Jennings and Mulhern are struggling to right the situation. Jennings works a part time job after losing her contract position doing executive administration.

Her roommate Joe Mulhern is 68 and unemployed. Lebbos says both her tenants were given fair warning. She says both signed leases that informed them the property was in litigation and that “reasonable notice to vacate may be required.”

The two have found another apartment to share, at a higher rent, while they explore their legal options. They are pursuing their security deposits, prorated rent, and property seized during the eviction. It will not be an easy fight, but Jennings and Mulhern are simply glad to have found another roof to put over their heads in the mean time.

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