Legal Question in Landlord & Tenant Law in California

Re: Does the lease get impacted when the tenant files for bankrupcty

First, you need to clearly understand Mr. Bennett's suggestion that you get six months up front - he is not talking about a security deposit equal to six months' rent, he is talking about a pre-payment of rent on a lease of six months or more. California Civil Code Sec. 1950.5 provides that you may take no more than the equivalent of two months' rent as a security deposit. You can also (obviously) take the first month's rent. What Mr. Bennett is talking about is a pre-payment of no less than six months rent on a lease with a term of six months or more. Be sure you understand and write in your lease that the six months is not a security deposit, but rather advance payment of rent.

The issue you will run into is the bankruptcy. Pre-payment of rent could be seen as a preferential payment, and potentially set-aside by the trustee assigned to administer their case. If that happens, you might have to pay back into the court the funds they gave you as advanced payment of rent. Second, the debtors, in their bankruptcy, can elect to terminate any agreements they have, including your lease agreement. In most cases, the tenant will just continue paying rent, and the trustee won't disturb the lease, but they could if it is determined that they are paying excessive rents (given their financial situation) or other cause exists. As a landlord, you must be cautious if you know that this is going to happen. Once they file, you cannot evict them without spending a lot more time and money on getting relief from stay in the bankruptcy court. Add about $1,000 and several weeks to your eviction if you have to evict them while they are in bankruptcy. Depending on whether they file a seven or a thirteen, they could be in bankruptcy from several months to several years! I personally would probably pass on these prospective tenants and find someone with a little less baggage.

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Re: Does the lease get impacted when the tenant files for bankrupcty

I do not know about bankruptcy.

However, I would insist on a minimum of 6 months up front, and/or a co-signer.

You might want to resubmit your bankruptcy query.