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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