My tenant died – now what?
It is a sad and sensitive situation when a landlord or tenant passes away during the course of a lease agreement. The situation needs to be managed with an element of thoughtfulness and care, especially as you will often be dealing with the grieving family of the deceased. Dealing with the human aspect is a lot easier when you understand how to deal with the legal aspect.
Death does not cancel a lease
The first and most important legal aspect to be aware of in the case of an untimely passing of either a landlord or tenant is that a lease is not automatically cancelled upon the passing of a party. The lease remains in full force and effect and would need to be handled by an executor of the deceased estate.
In the vast majority of cases, when a natural person passes away, their estate is reported to the Master of the High Court who will appoint an executor to deal with the winding up of the deceased estate. If the individual left a last will and testament, then their wishes for the identity of the executor is usually mentioned in the will. The executor may elect to engage the services of an attorney to assist with the winding up of the estate.
The executor of the estate is responsible for the rent
Once an executor is appointed, they are responsible for dealing with the lease agreement in the place of the deceased person. The executor will need to determine if they feel it is appropriate to either cancel the lease or to continue to fulfil their obligations under that lease. This will depend on the individual situation.
If the deceased was the only person occupying the property then the executor may elect to cancel the lease, for example by giving 20 business days’ notice under the Consumer Protection Act and paying the applicable cancelation penalties.
On the other hand, if the deceased’s surviving family continued to occupy the property, then it may be preferable to continue the lease agreement and for the estate to make the rental payments. In these cases, when the estate is finally wound up, it is best for all involved to renegotiate the lease agreement to include the new parties.
In instances of the tenant’s passing, the surviving family members would need to be included on the lease. Where the deceased was the landlord, the property would transfer to the deceased’s beneficiary and in that case, no amendment to the lease would be required as the new owner automatically steps into the shoes of the old owner.
It can take time to appoint an executor
An unfortunate situation that occurs is where a tenant passes away and the rental falls into arrears while the family of the deceased waits for an executor to be appointed – the landlord will have to wait until an executor is appointed before collection processes can commence. Only once an executor is appointed can a Letter of Demand be sent.
For this reason we highly recommend that where you are renting to families, you do not solely rely on one individual for rental payments and always have multiple persons sign the lease as co-tenants.
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