Q: What are the lease obligations for a deceased tenant’s estate?

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Q: What are the lease obligations for a deceased tenant’s estate?

Q: What are the lease obligations for a deceased tenant’s estate?

If the tenant dies while renting a privately owned condo, what is expected of the lease?

What are the lease obligations for a deceased tenant's estate?answer-icon-masterInteresting question. Put another way, you seem to be asking if the landlord has a valid claim in probate for the unfulfilled lease obligations of the estate.

Let’s take a step back a bit, define some terms, and discuss how this works:

When an individual passes away, most of the assets belonging to that individual become part of that individual’s estate. The assets have to be distributed somehow, and this is done under state laws in a process called probate. During this process, the courts – basically a group of lawyers who sit around meeting rooms going through files – notify known beneficiaries and creditors, and attempt to settle accounts.

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The idea is generally to pay the lawyers’ fees (funny how they put themselves first in line), the IRS, state and local revenue officials, banks, credit cards and any other creditors out of the estate funds.

Only after this process is complete do probate officials distribute the remaining assets to heirs. If there is a will, the will is the governing document.

If there is no known will, then the courts distribute the remaining assets according to a standard plan under what are called intestate rules.

The critical question from the landlord’s position is this: Can you file a claim against the deceased’s estate for unfulfilled lease obligations?

As with most probate issues, this is a matter for state law. In your case, we need to turn to Texas law. And yes, under the law, unless you have a clause in the lease that terminates the lease on death, the estate’s obligation to pay rent does not cease with the death of the tenant.

The deceased’s estate (not the heirs!) remains on the hook, legally, for unpaid rent through the end of the lease. However, you have the duty to mitigate damages by making reasonable attempt to re-rent the unit.

Other Things to Consider

There are a number of smaller items to consider as well. Did the tenant provide you the name of an emergency contact or someone to contact in the event of death? Unless you and the tenant made other arrangements in advance, Texas Property Code Title 8, Chapter 92.014 requires you to allow this individual access to the rental unit at a reasonable place and time – in your presence or the presence of your representative – to remove the deceased tenants’ belongings.

You are also authorized to remove the deceased’s belongings and place them in storage. If you do so, you must keep the property in storage and send a registered letter to the emergency contact designated by the tenant, if any. You may not discard these belongings for at least 30 days from the date of the postmark on the registered letter. If you fail to do this properly, under Texas law, you are liable for any actual damages to the deceased’s estate.

If you are owed money, even after accounting for security deposits, you may be able file a lien with the probate office – In your case, the Harris County Probate Court. If there are items left in the dwelling, you may consider placing a lien on non-exempt property. Generally, this means electronics. You would set a date for a public auction of these items, notify next of kin or estate representatives, and sell the property for as much as you can get. Anything excess of the amount owed to you should be turned over to the deceased’s estate. Meanwhile, the family or representatives estate should be free to take possession of the exempt property.

What’s exempt? Here’s the breakdown in the State of Texas:

  • wearing apparel
  • tools, apparatus, and books of a trade or profession
  • schoolbooks
  • a family library
  • family portraits and pictures
  • one couch, two living room chairs, and a dining table and chairs
  • beds and bedding
  • kitchen furniture and utensils
  • food and foodstuffs
  • medicine and medical supplies
  • one automobile and one truck
  • agricultural implements
  • children’s toys not commonly used by adults
  • goods that the landlord or the landlord’s agent knows are owned by a person other than the tenant or an occupant of the residence
  • goods that the landlord or the landlord’s agent knows are subject to a recorded chattel mortgage or financing agreement. (Section 54.042)

For Texas rules regarding landlords’ liens, see the Texas Property Code, Title 5, Chapter 54. Note: The law itself states that a residential landlord’s lien applies when a landlord of a single or multi-family residence is owed rent that is past due.

Furthermore, under Texas law, a contractual landlord’s lien is not enforceable unless it is underlined or printed in conspicuous bold print in the lease agreement (Sec. 54.043).

You must also refund the security deposit, if any, subtracting any lawful deductions, to the individual named by your tenant when he or she provided you with an emergency contact.

Note:

It’s not uncommon for scammers to watch obituary notices in the paper and then come to landlords, posing as the deceased’s next of kin. Be wary of this practice, and don’t grant access to just anybody. Stick with the emergency contacts the tenant provided to you and don’t let anyone else get access unless they are officially appointed as the executor of the estate.

Quick tip:

Check your landlord’s insurance policy. Do you have rent-loss coverage that kicks in in the event of the death of a tenant? This may be something to consider – or even a small life insurance policy. If a tenants’ remains are left undiscovered for any amount of time in an apartment, you will have quite a clean-up job to do, and that will require cash on hand.

Author Bio
Writing about personal finance and investments since 1999, started as a reporter with Mutual Funds Magazine and served as editor of Investors’ Digest. He now publishes feature articles in many publications including Annuity Selling Guide, Bankrate.com, and more.
Author Bio for Jason Van Steenwyk

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