It’s a situation no agent wants to think about, but the death of a tenant is something many do face. Sharon Fox-Slater says the right response could save you and your landlords from confusion, stress and even legal problems.
In an ideal world, no agent would ever be confronted with the death of a tenant at a rental. Sadly, the reality is that many will have to deal with it eventuality. Whether a lone tenant simply passes peacefully in their sleep, or the death is far more traumatic, agents need to be prepared.
The death of a tenant can not only be emotionally challenging, it can also have serious financial ramifications for the landlord. Most property investors cannot afford to be without rental income indefinitely, making it important to understand protocols and procedures to follow when dealing with tenant death.
Obligations and requirements when a tenant passes
Agents must follow the state and local laws applicable for appropriately handling tenant deaths at rentals including serving notices, terminating leases, returning bonds, disposing of tenant possessions and disclosures. Failing to do so, could pose legal issues.
One of the main aspects to understand and convey to your landlord is that when a tenant dies, the lease does not automatically terminate, nor does the landlord have the right to immediately take possession of the property or remove the tenant’s belongings.
If a sole tenant passes (the only tenant on the lease), you must follow your state’s procedure for ending the lease and returning the bond. It should be noted that the deceased tenant’s property, debt and contracts transfer to the estate or next-of-kin – this includes their rental agreement.
If a co-tenant dies (joint tenant) this does not automatically end the lease either. The remaining tenant can simply stay on – and their rights and responsibilities continue under the tenancy agreement. However, if they wish to leave, you can negotiate with them to end the lease early and take vacant possession.
The landlord is entitled to rent, paid from the bond, the deceased estate or from a co-tenant, until the lease ends and to regain the property in the same state it was in at the start of the lease (with fair wear and tear excepted).
Vacant possession and cleaning
The next-of-kin/executor is responsible for the deceased’s rent and for providing vacant possession. They need to deal with the tenant’s possessions and arrange cleaning of the property, including any specialist cleaning required.
How landlord insurance can respond
Most landlord insurance policies will respond to claims relating to tenant death, but there are varying levels of cover, inclusions and exclusions. Unlike EBM RentCover, some insurers may not cover damage, while others may not cover rental losses. It pays for landlords and agents to check the policy or contact their insurer to see what is and isn’t covered.
In cases where sole tenants pass away, landlords can often face prolonged periods without rent due to the time required to re-instate the premises, track down next-of-kin to remove possessions or, if the state trustee is made responsible, the time it takes for the possessions to be auctioned and the funeral held.
Landlord insurance may respond to loss of rental income in this circumstance (provided the deceased was the only person named on the lease) under the tenant death provisions. Landlord insurance may also respond to repair costs if the next-of-kin or executor fails to foot the bills.
If a co-tenant chooses to remain at the property, they are required to continue paying rent. However, if they are not able to do so and stop paying, an insurance claim may be possible under a different section of the policy, such as rent default, to cover the rental losses.
How to assist your landlord with an insurance claim
Chances are, if a sole tenant passes away, the landlord will need to make a claim on their insurance for loss of rent and even for cleaning expenses. To assist your landlord in making an insurance claim, you should:
• Secure the property as soon as you are notified of a tenant’s passing (and once access is permitted) –
o make sure the doors and windows are locked and ensure any pets are taken care of
o take a witness with you when you enter the premises and video the property and its condition
o don’t let anyone enter the property or remove anything
o once you are advised of the executor (sight proof), provide them with a key as it is their responsibility to take charge of the tenant’s personal property.
• Contact their insurer to check cover inclusions and what paperwork is required
• Open the lines of communication with the deceased tenant’s executor or next-of-kin so you can discuss transitioning the rental property back to the owner
• Ensure the landlord gets written notification of a tenant’s death
• Liaise with the executor or next-of-kin about vacating the property and disposal and removal of the tenant’s possessions
• When the property is vacated, have the home cleaned (specialist cleaning may be required) if the executor has not already done so
• Keep all receipts
• Document all contact with the deceased’s executor or next-of-kin and keep excellent records about any actions you take regarding the property
• Advertise the property for re-leasing as soon as practicable and keep written evidence of advertising activity
• Once the property has been re-let, assist the landlord to submit an insurance claim with relevant supporting documentation
Unfortunately, dealing with the death of a tenant at a rental is something many agents will have to deal with. Each year EBM RentCover handles 15 to 20 claims relating to tenant death – with claims ranging from a couple of thousand dollars to tens of thousands once forensic cleaning, damage repairs and rental losses are factored in.
At EBM RentCover we offer more than landlord insurance – we offer proactive customer service and support. Our team of compassionate claims specialists can guide you through the process, helping to minimise the emotional and financial stress associated with making an insurance claim, especially in such traumatic circumstances