Ever wonder what happens when a tenant dies while still occupying your rental property on an active lease agreement?
Deni walks through the legal consequence when a renter dies while leasing your property.
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Deni: Hi everyone and welcome to Spark Rental live broadcast and podcast. As you can see, I’m by myself. Brian is away for the week, and I have some technical problems with my laptop and my other stuff, so I had to do this from my phone. I am at the shore. I took my granddaughter here for her birthday. So just pardon me if, if any of. You know, the sounds or the video is not perfect. Last week, Brian and I talked about 1031 exchanges, and I hope you got some good information on how to defer capital gains and some other taxes. This week, we’re going to be talking about a bit of an odd subject or I am. And that’s what happens when a tenant dies in your property. I know it’s kind of an odd subject, but it is something that if you’ve been in this business long enough, you probably have dealt with it, or you will eventually have to deal with it. I’ve had several. I managed larger communities’ way back like years ago, and we used to literally have death checks because we had quite a few senior citizens and one of the communities that I managed and literally if we didn’t get rent or whatnot, we would check to make sure. So, with that being said, welcome and let’s talk about it. So how do you find out what happens or how did you find out like did a relative call? Because there’s different ways to handle this. Did you get called by the police? Because I had that happen to or you know, like I just said, we for senior citizens or those at risk or somebody that pays their rent constantly and all of a sudden, they disappeared, you don’t see them, or you don’t see their car move.
Deni: We used to check on them. So, the other thing is when you do go in to check on somebody, do not touch anything, nothing you if they are and this happened to me. I literally had somebody. Passed away on a bed like. So, you call the police, obviously immediately. And then they handle everything else. And then you want to secure the unit after the police leave and do what they have to do. As far as relatives and whatnot. You want to contact relatives and whatnot. We have free tenant letters. And I really, really, really suggest that you when you do a lease, you make sure that your renters fill out an emergency contact. Because if you don’t have that and something happens, it’s a total nightmare to try to find who? Who do you call? Do you know what I mean? It can be difficult. So, at that point, you just pull out that contact information and then you know exactly who to contact immediately. So just moving on a bit, what do you do with their items like now here you have all of this stuff. So, what do you do? Well, hopefully in most cases you’ll have an executor to speak to and you’ll ask for proof of that because you just don’t want to assume.
Deni: Secondly, you want to work with that individual and possibly a probate court. And this is all going to go according to your state’s laws, and you want to deal with the lease, the rental issues. I mean, technically, the rent is if you’re especially if you’re on a fixed term lease and there is time left on that lease, there’s still an obligation for the estate to pay the rent. Now, you know, the situation I was in, we cleaned it up and let them out and just got done with it. But I mean, everything is different. So, you have to do whatever you think is right in those situations. Also make sure you save your rental applications along with those emergency contact forms. And that’s why I always say to keep them in a safe place but save those rental applications because they contain a lot more information. And you might need some of that information just in case. So now we got to figure out what happens to this lease agreement. Well, basically, a deceased tenant’s estate is legally responsible, like I said, for the rental payments. So, and that’s until the lease expires. And then depending on if it’s a month-to-month, depending on your state’s regulations, you have to give the estate holder, whether the children, spouse, or the executor notification. So, you want to give them whatever it is 30, 60 days. Now, who can get in? Do not let everybody have entrance.
Deni: And this gets really dicey because especially if you have multiple children or children and a spouse, possibly an ex-spouse, and they all want to get in and you let the wrong person in and they take the stuff, you could be liable. So don’t let anybody in unless they have proof of who they are. A death certificate, something that names them, the executor, or go through the courts and find out. So, whatever you do, don’t just let anybody in. The other thing is, before you let anyone in, go in and take pictures and a full inventory because you don’t want them to come in and take stuff and somebody. You know, say, I want it. Kids will do that. They’ll take something that really was willed to somebody else and it’s missing. And then they’re looking at you like, why did you let that person in? So you’ve got to be very, very careful, but cover your butts, take pictures of everything, and then don’t provide again, like I said, a key to anybody unless, you know, they are a part of that estate, or at least the head of the estate don’t provide keys to anyone again unless they have absolute proof, court proof that they are an executor or somebody who is handling the estate. It isn’t a bad idea to have an attorney. There is a letter called a release of the right of possession. Now you can go online, and you can get one of them. There are templates, but to be honest with you, this is again a really touchy issue for a landlord or a real estate investor.
Deni: And the last thing you want is an estate coming back to sue you or come after you for any of this stuff. So, it might be better to spend a few hundred dollars and let an attorney go ahead and create this release of the right of possession. And basically, that’s a letter and it provides you access and protects and releases the tenant from further rights once the keys are given back and forth and then everything is done and it’s signed by the next of kin or the party who is responsible, that they relinquish the rights to the possession of the property and then it’s yours. So that’s an important document to have at the finalization of all this. And then the security. I know I’m giving you a lot of information and I apologize, but the security deposit, again, you have to be very careful. You treat it the same way. You walk through, you know, normal wear and tear don’t get deducted. Any damages would get deducted. And then what you definitely want to make sure that you do is never, ever, ever make somebody did this and gotten so much trouble. I know somebody who did this. It was the daughter-in-law of a deceased person. And she was handling supposedly the estate. And she said, make the check out to me. And I actually was helping this person because I knew them, and I was the property manager.
Deni: I said, don’t, don’t make it out to her. And they did. And there was a whole big issue around it. So, you don’t ever make it out to anybody but the deceased’s name or the estate of and then the deceased’s name. Because to just do it that way, if most deceased will have an estate and an account that they can deposit it into, so don’t listen to oh, I won’t be able to cash it or any of that stuff. That’s not your problem. You’re strictly there to do what you need to do. And that apartment did not belong to that person who was trying to get that check. So be careful with that. And just to finalize all this, I just want to make sure that you check your state’s laws, check your estate laws, see how estates are handled. There are some states like Florida that do things a little weird. So, you just want to make sure that you know some of this, too, along with your general landlord-tenant laws. So, if you want one of the emergency letters, it’s free. Just sign into the app that we have an app, app.sparkrental.com, and just go to tenant letters and you’ll see it listed on there. It’s completely free to use and you can even edit it. So that is all I have today. Brian will be back next week, and I hope you guys have a great rest of your week and we’ll see you next week. So, bye-bye.
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