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Roger
Roger, Attorney
Category: Bankruptcy Law
Satisfied Customers: 31012
Experience:  BV Rated by Martindale-Hubbell; SuperLawyer rating by Thompson-Reuters
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My daughter has leased a home in Austin for two years and has

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My daughter has leased a home in Austin for two years and has a lease agreement with the owner that required her to put up a $2,600.00 damage deposit which she did last summer. Now her landlord has notified her that she has filed for bankruptcy and that my daughter needs to contact the mortgage company and pay her rent to them. Is that the correct procedure and what is the disposition of her damage waiver funds? The landlord says she believes those funds are placed in trust. What is the normal resolution of this situation?

If the landlord is going to turn over the property to the lender, your daughter will have to contact it about continuing the rental agreement with the lender/new owner. Also, her deposit should be turned over to the lender/new owner as well. This money is not part of the person's bankruptcy because it is not her money - it's your daughter's.

 

Bear in mind that the lender/new owner does not have to assume the contract and can make your daughter vacate the property. The contract is cancelled by the landlord's filing of bankruptcy. Even if this occurs, she should be able to recover her deposit less any expenses for reasonable repair.

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