When a Retail Owner Moves Away but Continues to Pay Rent
Updated November 2021
Thinking about death is always a complicated topic, and it can be difficult trying to handle this sensitive situation whenever it affects your business. Working as a landlord, there's a chance that you will have to face the task of doing business when a tenant dies in your rental property.
You should know a landlord's rights and responsibilities in the event of a tenant's death, which can save you confusion, stress, and even legal problems.
These guidelines focus on tenants who lived alone or were the sole name listed on the lease agreement, but they can also be informative for those dealing with more complicated situations.
Get informed about how to proceed after a tenant passes away. This is a period where you will need to act within the bounds of the law while also acting with empathy, which can be difficult to do. Being as prepared as possible will lessen the inevitable strain.
A Table Of Contents On What To Do If A Tenant Dies In Your Property
Though tenant deaths happen at rental properties more often than most people realize, many landlords don't know what to do when they are faced with this situation. Learn more about how to handle this trying transition today:
- A Tenant Dies In Your Rental Property; Now What?
- Step 1: Contact Authorities
- Step 2: Wait For Official Notification
- Step 3: Secure The Property
- Step 4: Communicate With The Executor
- Step 5: Be Patient With The Process
- What Happens To An Apartment Lease When Someone Dies?
- Month-To-month Lease Obligation After Death
- Long-Term Lease Obligation After Death
- Limiting Entry To The Late Tenant's Home
- If A Tenant Dies, What Happens To The Deposit?
- Lease Provisions And Tenant Death: What's The Deal?
- Beyond The Agreement: Focus On Communication
- FAQs: What Should A Landlord Do When A Tenant Dies?
- What does a landlord need to do if a tenant dies?
- What happens if someone dies in a rented property?
- If a tenant dies, is there any lease obligation after death?
- Who is responsible for cleaning out the apartment after the death of a tenant?
- Does landlord insurance cover the death of a tenant?
- What happens to a lease if the owner dies?
A Tenant Dies In Your Rental Property; Now What?
Most landlords never consider that one of their tenants might pass away. Usually, this isn't something that crosses your mind until it actually happens. If a tenant dies, what's next for your property, your business, and the status of the rental lease that was in place between you and the late tenant?
Step 1: Contact Authorities
If you find yourself in the unfortunate situation of discovering that your tenant has passed away, contact 911 or the appropriate authorities immediately. They will handle the scene as needed, and you should wait to take any further action until authorities permit you to do so.
Step 2: Wait For Official Notification
Regardless of whether or not you know about your tenant passing away, you must wait until you receive written notice of this passing. This written documentation will be important as you transition your property.
Acquire a written notice of the tenant's death, either from the next of kin or the executor of the tenant's estate. This notice is important when it comes to recouping any financial loss, assisting family members, and transitioning the property for new occupants.
Once you have official notice, you will be able to take certain actions that you might not otherwise be able to.
Step 3: Secure The Property
Once you are informed of a tenant's death, you have the right to secure the property from any potential theft of possessions. Check that all the doors and windows to the unit are locked. In most states, this can be done as soon as you know about the tenant's death, even if you haven't yet received official notice.
If the tenant lived alone, you might even consider changing the locks to make sure the home is secured against any friends or family members who also have keys.
The goal of securing the property is to ensure that no one can enter the property without your knowledge, even if they are related to the deceased tenant. The tenant's belongings need to be properly administered according to their estate, so you should help secure the property and allow this to occur.
If you are working with a property management company, make sure to talk with them about how to proceed and who will be handling the property in this interim period. Your contract with the property management company might even include specifics on how this type of situation will be handled, so be sure to review that contract as well.
Step 4: Communicate With The Executor
Another important thing to do is to open the lines of communication with the deceased tenant's executor. This will enable you to discuss transitioning the real estate back to you. After all, a lease agreement does not terminate automatically upon a tenant's death, so you don't have a legal right to repossess the property or remove the tenant's possessions without going through the proper steps.
The executor will be a big part of making sure that you can smoothly retake control of your rental real estate, so you want to be sure to establish a strong relationship from the beginning. They will be dealing with many aspects of the late tenant's estate, but that should not stop you from actively working with them when necessary. It is part of their responsibility as an estate executor.
In some cases, an estate will not yet have an executor, so you will need to work with an assigned individual or a probate court to deal with your lease and rental-related issues. Contact housing authorities and your local jurisdiction for direction if you are not sure who to contact in the case of a tenant's death.
Step 5: Be Patient With The Process
Remember that the family members, possibly including the estate executor, are grieving the loss of a beloved family member and friend. While you might be focused on regaining control of the property as quickly as possible, their priorities will not align with yours.
The process is not going to be immediate, so have patience. The original lease agreement stands until you and the executor can close it out, so you need to continue as if the tenant is still occupying the property.
What Happens To An Apartment Lease When Someone Dies?
One of the biggest questions landlords have when navigating a tenant's death is what happens to an apartment lease when someone dies. Does the lease agreement expire automatically because the individual passed away, or is there something else that needs to be done to transition the property's legal use back to you, the property owner?
A lease agreement extends to the expiration date, even if the tenant passes away. This means that what happens next depends on whether the tenant was in a month-to-month or longer-term agreement.
Month-To-Month Lease Obligation After Death
First, let's cover what happens if you were in a month-to-month lease with the late tenant.
Generally, the official written notice of the tenant's death acts as a 30-day notice and signals the end of the lease.
What does this mean for the property, the estate, and you?
This means that the estate is responsible for paying all rent owed to the landlord for 30 days after the written notice is delivered. Coordinate with the executor about removing possessions and cleaning out the rental property by the appropriate deadline.
The executor may request an extension to remove belongings, and it is up to you and the letter of local law to determine if that is permissible. In most cases, landlords will agree to an extension to make the process easier for everyone involved.
Long-Term Lease Obligation After Death
If tenants had already agreed to a long-term lease before they passed, landlords and executors might be unsure about what should happen next.
It's important for everyone involved to understand that the deceased tenant's estate is legally responsible for rental payments until the lease expires.
However, most landlords are interested in re-renting the unit as soon as possible, and most executors don't want to pay rent on an empty unit.
In that case, work with the executor and treat the situation as a broken lease agreement, where the executor pays rent until you are able to re-rent the property and the new tenant moves in.
Alternatively, you can allow the tenant's estate to break the lease without any repercussions. What you decide to do is up to you, and you should make sure to balance what is best for your business with what is the morally right thing to do.
Landlords can learn a lot about how to handle these situations the right way from landlords who have already dealt with a tenant's death. Recently, we consulted with Avvo's Legal Counsel and asked them questions on what to do if a tenant passes away in your rental property.
In the video below, watch Eric Worral and Steve White of RentPrep discuss this topic with Esther Sirotnik of Avvo.
You can also subscribe to our RentPrep for Landlords" Podcast for weekly episodes.
Limiting Entry To The Late Tenant's Home
One aspect of dealing with the aftermath of a tenant passing away that can be particularly awkward for landlords is managing who can and cannot enter the property. After you secure the property, it is possible that friends and family may want to enter the rental unit.
If family members approach you about entering the property, protect yourself from potential disputes down the road and always accompany guests into the home.
Make a list of anything removed, such as clothing for the deceased or photos for a memorial service. Though it can seem petty, you do not want to allow anyone to take any items unless you have recorded what is being taken. Explain with as much gentleness as possible that this is simply for accountability.
Once you establish communication with the executor, you can surrender a key and let them manage the tenant's personal property. If any family members approach you after you have passed this authority over to the executor, let them know that they will need to contact the executor to enter the property.
Even if some family members may get upset about this, it's the appropriate way to ensure that your late tenant's belongings are distributed and handled the way they are meant to be.
If A Tenant Dies, What Happens To The Deposit?
Some landlords mistakenly believe that they do not need to return the security deposit if a tenant passes away, but that is simply not true. The security deposit must be handled in the same way that it would be in any other situation.
Landlords can use a deceased tenant's security deposit to cover unpaid rent, damages, and any other costs established in the lease agreement. The unused portion of the deposit must be returned to the executor in lieu of the late tenant.
Landlords should create an itemized list of deductions from the security deposit and provide that along with any remaining funds. This is the same process used with any tenant, and it is key that you do not skip these steps just because the situation may be a little different.
In the event that the deposit doesn't cover all the repairs required to return the rental property to an acceptable level of habitability, you must work with the executor to cover those costs.
You can file a creditor's claim if the estate is in probate, or work directly with the executor in getting the funds to make repairs and cover damages the tenant may have caused.
Lease Provisions And Tenant Death: What's The Deal?
Over the years, some landlords have adapted their lease agreements to include a clause that requires late tenants' estates to pay rent for the entire agreement period no matter what. While this might seem like a great way to protect your profits, it's not always the right choice.
In fact, many states, such as Pennsylvania, have forbidden this kind of "death penalty" from leases in the state. Before deciding to add this type of penalty to your leases, make sure you review state and local laws to be sure it is permitted.
Beyond The Agreement: Focus On Communication
Communication with the executor is going to be key every step of the way. If you are having trouble getting the executor to work with you, do not hesitate to get your own legal representation to ensure you are able to get the funds necessary to continue managing the rental unit.
Throughout this process, the executor will request forms from you about the lease agreement, security deposit, and any other documentation that may have been signed by you and the late tenant. This is another reason it is so important to keep your documentation thorough and up-to-date at all times.
To download a mega pack of forms explicitly made for landlords like you, check out our RentPrep Landlord Form bundle today.
FAQs: What Should A Landlord Do When A Tenant Dies?
What does a landlord need to do if a tenant dies?
Suppose one of your tenants dies and they were the sole individual on the lease agreement. In that case, you will need to work with the late tenant's estate executor to end the lease agreement, close out the security deposit, remove the tenant's belongings, and wrap up any other financial obligations.
The process is relatively straightforward if you consider that the steps you need to take are the same steps you would be taking if a tenant were going to move out early. The major difference, of course, is that you will be working out the situation with the estate executor rather than with the tenant.
Do not do anything to the property, such as remove the tenant's belongings, until you have worked with the executor to make formal decisions about the process. Document everything along the way to avoid any potential legal issues down the line with family members or other individuals who may disagree with the executor's actions.
What happens if someone dies in a rented property?
What happens after someone dies in a rented property depends on who the individual was and their relationship to the property.
If the sole tenant passes away, the property will be handled by communication between the landlord and the estate executor or next-of-kin taking over the estate. Until otherwise agreed upon, you should act as if the original lease agreement is still in place. You should not do anything other than securing the property from theft or other issues until you communicate with the executor.
If someone on the lease agreement passes away but is not the only individual on the lease, the agreement will continue with the living individuals. If those individuals find that they cannot continue to pay rent or do not want to live there any longer, they will need to request an early termination or break their lease.
As a landlord, you can determine what you feel is appropriate. Many landlords allow leases to be dissolved early in these situations, but it is also within your rights to request the remaining tenants pay rent until you can find a new tenant.
If a tenant dies, is there any lease obligation after death?
No, the lease is not null and void when a tenant passes. In a month-to-month lease, the death acts as a notice, so the lease will expire within the next full calendar month. In long-term leases, the estate is responsible for the length of the lease, but many landlords will let the estate break the lease agreement even though they're not required by law to do so.
Who is responsible for cleaning out the apartment after the death of a tenant?
First and foremost, the designated next-of-kin and executor will be responsible for removing and dispersing the tenant's belongings before the lease period is over. If they leave anything behind, you may end up needing to dispose of these items. However, there might be specific rules about how you can and cannot do that.
This will depend on your state, and you should treat this with caution. It's a good idea to handle this as abandoned property and take all precautions before removing any property from the rental. Calling your local town clerk might be a good idea, to see if there are any laws on this matter as the laws vary by state.
Does landlord insurance cover the death of a tenant?
The answer to this common question is dependent on the specific terms of the landlord's insurance policy. Policies written to cover replacement costs might cover losses directly related to a tenant passing away, while policies written to cover actual cash value might not.
Ultimately, however, the specifics are going to be found in the details. It's key for landlords to read through the details of their policies to have a complete understanding of what is and what is not covered. Contact your insurance company with any questions that you might have.
What happens to a lease if the owner dies?
If the rental property owner passes away, the lease agreement will be transferred with ownership of the property. In some cases, the late owner will have indicated exactly who will get ownership; in other cases, an executor will sort that out. Either way, the lease agreement and its written terms will continue to remain in effect for the duration of the lease.
A new landlord, once instated, will need to follow the lease's terms just as the renter will need to continue paying rent and following the lease terms.
For example, immediate eviction after the death of the owner would not be allowed. Instead, the new owner would have to follow standard lease agreement rules for ending the lease before it expires.
Cautiously Continue Your Business
The bottom line in a situation where your tenant has passed away is that you will, eventually, need to continue your business and re-rent the unit. However, you should also proceed with caution to ensure that you are following all necessary legal procedures along the way.
As mentioned, a lease agreement doesn't simply end when a tenant passes away, so you need to make sure that you properly end the lease with the estate before you do anything further. From there, your communication with the estate's executor will dictate how and when the property will be cleaned out so you can move on with business.
This process is going to be difficult, and you will need patience. Landlords often see time as money, but rushing can lead you to greater financial or even legal trouble, so slow down to ensure you take all appropriate steps along the way.
Source: https://rentprep.com/property-management/tenant-dies-your-rental-property/
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