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rent arrears possession orders - is bankruptcy a barrier?

20 July 2011
On 15 July, the Court of Appeal decisions of Christina Sharples v Places for People and Stephen Godfrey v Dominion Homes ltd shed some light on rent arrears possession orders when tenants are bankrupt or have debt relief orders.

It has become increasingly common for tenants in financial difficulty to be made bankrupt or apply for a debt relief order to secure some protection from those debts. A tenants rent arrears will usually be included within these orders.

In the recent conjoined Court of Appeal decisions, the tenants appealed against the possession order made in the landlords favour by the County Court. The tenants argued that the existence of the bankruptcy and debt relief order prohibited the making of a possession order whilst the bankruptcy or debt relief order was in place. The Court of Appeal disagreed with this argument and made the following points:

  • the existence of a bankruptcy or debt relief order did not preclude the making of a possession order and it didnt matter when the bankruptcy/debt relief order was made
  • the court could make a suspended possession order but that couldnt be suspended upon any condition involving the payment of rent arrears
  • any rent arrears that are not provable in the bankruptcy or not subject to the debt relief order could be claimed in possession proceedings.

The key factor here is that, although rent arrears are likely to be written off following a tenants bankruptcy or debt relief order, the landlord still has the option to commence proceedings for the recovery of the property.

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The content on this page is provided for the purposes of general interest and information. It contains only brief summaries of aspects of the subject matter and does not provide comprehensive statements of the law. It does not constitute legal advice and does not provide a substitute for it.

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