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Ever (Not known)     06 May 2021

Tenant insolvency/bankrupt clause rental agreement

In my place, i saw one small rental shop has closed for almost one year plus and understood tenant business got bankrupt and tenant owner disappeared and finance company filed the case and seized the shop through court order almost one year plus now. And landlord, keep circling to court to release this property.

I am landlord own the small commercial property, in that one of newbie private limited company asking for lease. Is there any way to avoid the above seize situation not to interfere any court order to seize my property in tenant got bankrupt?

In register rental lease agreement, can we add the clause stating that incase of bankrupt/insolvency, external party or debitor of tenant has no right to  seize/lock my property and owner has full right, after rent in default for 2 months can take back control of property and remove their goods?

Please advise





 5 Replies

Dr J C Vashista (Advocate)     07 May 2021

Commercial query.

You can afford to seek professional service.

It would be better to consult and engage a local prudent lawyer for appreciation of facts/ documents, professional advise and necessary proceeding.

Sankaranarayanan (Advocate)     07 May 2021

Approach a local lawyer  and can get clarity from the local lawyer

G.L.N. Prasad (Retired employee.)     07 May 2021

If you can not afford to engage an advocate, collect a copy of the lease agreement of a PSU bank or petrol bunk as they take care of essential risks and you can modify the same to your requirement.

Pradipta Nath (Advocate)     07 May 2021

Everything cannot be afforded as free!!

T. Kalaiselvan, Advocate (Advocate)     08 May 2021

The default in two months rental payment can be invoked immediately when the tenant is not paying the monthly rental amount for more than two months in a row.

The bankruptcy clause is not necessary neither it is known to the rental agreement concept.

As a landlord, yo can invoke the default of rental payment clause and initiate eviction process as per law immediately instead of allowing the tenant to not pay the monthly rental payments for years and permitting him to declare as bankrupt. 

You can get the lease agreement drafted with the assistance of an advocate to make it more effective 

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