VIC Can Trustee Claw Back Rent from Landlord?

[Macaque]

A credit company is threatening legal action for a five-year-old debt.

If I pay rent in advance, say 2 years, and they bankrupt me, can the trustee claw back the rent from the landlord? I have no relationship with the landlord other than as a tenant.

 

[Tim W]

How are these two things related?

 

[Tim W]

If the purpose of paying an expense in advance
is to defeat a bankruptcy action by disposing of cash
that could otherwise be used to pay the debt(s),
then clawback is not out of the question.

 

[Macaque]

Isn't there full consideration?

 

[Macaque]

Oh and sorry I mean residential tenancy lease, not a commercial lease.

 

[Rob Legat - SBPL]

Doesn't change the answer. Tim is correct. If the bankruptcy trustee determines that you've taken an action to defeat creditors, they will go after the money.

 

[Macaque]

Not according to S121(4)
Despite subsection (1), a transfer of property is not void against the
trustee if:
(a) the consideration that the transferee gave for the transfer was
at least as valuable as the market value of the property

 

[Rob Legat - SBPL]

You're renting, not buying. That section means that an 'equal' exchange is fine, because while you will have parted with the cash, you will have a property the trustee in bankruptcy can realise. The section is designed to defeat people selling their properties off to friends and family for a tiny amount to divest themselves of assets.

 

[Macaque]

So you're saying that a landlord could acceptsa payment of rent in advance, uses that money and then the trustee will hold the landlord liable for repayment of that money, possibly bankrupting the landlord if the money was spent, even thought the landlord is not a creditor and has given full consideration for the money?

 

[Rob Legat - SBPL]

Yes. The same as you could require a refund if the lease was suddenly ended. The landlord has not given "full consideration for the money" until you've actually occupied the residence for the relevant time period. A pre-payment of rent is payment for a future event.