What happens when a tenant dies in the middle of a lease term? A previous article reviewed some of the considerations you’d need to take into account where a seller dies prior to the closing of a purchase transaction. Today we’ll tackle the related issue of what happens when a tenant dies in the middle of a lease. There are a few different avenues to check when dealing with this type of scenario.
Ending the Lease
First, you need to know the law about how an estate can terminate a lease when the tenant dies. A few years ago, the state eliminated what is referred to as a “death penalty” in leases . Section 514 of the Landlord Tenant Act covers the death of the tenant. This section of the act only applies to death of the tenant when the individual was the sole tenant of the residential unit, and gives the decedent’s estate the ability to terminate in certain scenarios. The executor or administrator may give 14 days notice to terminate the lease upon the last day of the second calendar month that follows the calendar month in which the tenant died or upon surrender of the rental unit and removal of all the tenant’s personal property.
For example, if the tenant dies on Aug. 20, the representative provides appropriate notice to terminate the lease and all items are removed in September, the lease is over on Oct. 31. If they do not actually remove the items until Nov. 15, though, then the lease is not over until Nov. 15 and the estate still would be responsible for rent until that date.
It is also important to note that section 514 does not relieve the tenant’s estate of liability. This includes liability for rent money and any other debt incurred prior to the termination of the lease. The estate is not liable for any damages related to breach or inadequate notice, as long as the termination is done within those 14 days.
Next, be sure to check the lease terms. Paragraph 28 of the PAR Residential Lease has language that just tracks the law. Some landlords might offer more beneficial terms, though, in which case the tenant/estate can take advantage of those terms. The lease cannot have stricter terms, however – the parties could not override the law and agree to lease terms that require the estate to pay penalties or for extra months, for example.
Another aspect to consider is if both landlord and estate agree, the parties can renegotiate the terms after death. There is not a requirement for the parties to renegotiate, but there are certainly scenarios that play out better when parties come to an agreement. A lot of times the estate cleaned out the apartment and the landlord wants to move on, so they agree to end the lease earlier than the typical. If agreed to by both parties, that would be fine.
Another common question that we get is what about the tenant’s belongings? Can the landlord just put them into storage and wait for them to figure out what they want to do? No, when a tenant dies, their belongings are not considered abandoned under the Landlord Tenant Act, but are handled under the laws that apply to estate property. Landlords should consult an attorney before addressing any personal property in these situations.
Situations like these are why it is critically important to keep information about the tenant. Occasionally, the landlord or property manager will have zero idea who the next of kin is. They will not have a phone number, address or even a name sometimes. That severely slows the process down, and at times the landlord might have to just wait until someone contacts them. Sometimes, it requires the landlord to consult with an attorney to figure out what to do. Keeping records will be the best way to protect the landlord in the event there is a death of tenant, to make sure they have the contact of someone who at least would have a connection to the potential administrator or executor.