6 minutes | Feb 27th 2017

Ask Lucas 035: What Happens to the Lease When a Tenant Dies?

Summary: Kerry from Florida had a tenant pass away in the middle of a fixed lease term. How should she handle the remaining unpaid rent with the estate, and who should pay for all the extra marketing fees to find a new tenant? Landlordology and Ask Lucas are brought to you by Cozy. Transcript: Lucas: Ask Lucas, episode number 35. Hey, what’s up, everyone? Welcome to Ask Lucas. I’m Lucas Hall, and this is a bite-sized Q&A show where I answer your questions about landlording and property management. If you have a question, just leave a recorded message on AskLucas.com. If it’s applicable to a large audience, we’ll try to answer it in this show. Today’s question is from Kerry in Florida who’s asking, “What happens to a lease when a tenant dies?” Before I get there, let me tell you a little bit about Cozy. Ask Lucas is brought to you by Cozy, which provides modern property management tools to landlords and property managers just like you and me. Here’s the best part. It is completely free. I know you’ve probably heard this before and I’ve said it before, but it is truly, truly, truly free. I use it, and I love it. You can screen your tenants with full credit reports and background checks and you can collect rent online. It will work on every mobile device. Just this week, actually, Cozy has gotten even better. Cozy can tell you exactly how much to charge for your rental. You’ll get to see how much the neighboring rentals are actually getting in rent. Cozy can tell you how much you can expect to receive. No more wondering if you’ve priced your rental too high or too low. I’ve used Cozy for years to help manage my properties and I’m able to do it from anywhere. Check it out at Cozy.co. That’s C-O-Z-Y.C-O. Now, let’s hear from Kerry. Kerry: Hi, Lucas. My name’s Kerry, and I’m a new landlord in Florida. I recently had a tenant pass away unexpectedly and I’d like to help her family by breaking the lease. She was six months into a one-year lease. However, there are going to be substantial costs to be incurred, i.e., agent fees, realtor fees, to re-rent the property and I’d like to know who’s responsible for that. I can’t find the answer anywhere online. I know that my tenant’s estate is responsible for the remainder of the lease, but who’s responsible when you break the lease, both parties agreeing, and who absorbs then the costs of the realtor fees to get the place re-rented? I’d really appreciate an answer to this because it’s driving me crazy, and I can’t find it anywhere. Thanks, Lucas. Bye. Lucas: Hey, Kerry. Thank you for your question. Welcome to the show. I am so sorry to hear about your tenant. Unfortunately, as you are experiencing, we as landlords need to deal with situations like this and we need to deal with it respectfully and legally and morally in the best way possible. I’m going to give you some advice. I’m not going to tell you it’s legal advice. Please don’t take it that way. I’m not a lawyer, but do know that the laws on this do change from state to state and possibly even from municipality to municipality. With that said, generally speaking, the laws on the death of a tenant is that the estate that they leave behind is still responsible for a fixed-term lease. If it was a month-to-month lease, then they’d really only be responsible for about a month because you could consider death as proper notice, but if it’s a fixed-term lease and there’s still six months left, then that estate still has to pay those six months. Now that’s horrible because they’re dealing with a loss and you need to be more sympathetic of that. I will say that, generally speaking, death is considered abandonment and almost all the states that I’ve researched have some sort of statute that say, “When a tenant abandons a property, then the landlord is responsible to mitigate damages to that tenant.” In plain English, what that means is when they disappear, when the tenant is gone and usually they just decide to up and leave and they didn’t die, but they just decided to disappear and they don’t want to pay anymore, then you as a landlord still have to go find a replacement. You have to try to find a replacement and hopefully you will. When that replacement starts to pay rent, then the old tenant is no longer responsible. Then that lease is terminated. That’s usually how it goes. Generally, if the tenant just disappears on you, you’re not going to be able to track down that money. You’d probably have to file a small claims lawsuit or something to get one, two, or three months worth of rent while you were looking for a new one, but that’s how it’s handled. In death, it’s very similar. The estate is still responsible, but you have a responsibility to mitigate damages to that estate. It doesn’t say anything about realtor fees or marketing fees because essentially you would incur those fees anyway. You’re going to pay those fees next time you re-rent the place, whether that’s now or in six months when the original lease was over. That’s on your dime, but I will say this. You could easily get that from the estate by simply saying, “Hey, if you help me with marketing costs, if you do this now and pay that little extra, you’re probably going to pay less in the long run,” and they will gladly just do that or they may come back to you and say, “Hey, how about I just give you five grand and we’ll call it even.” You do whatever you can negotiate. It’s certainly not a place for you to try to take advantage of them or get more money out of it than it’s worth, but just know that it’s really up to you and it’s really up to how you negotiate, but you do have a responsibility to notify the estate and to try to mitigate the damages to them and to do your best to find a new tenant. I hope that helps. Good luck to you. Again, I’m so sorry. Thanks again. Take care.
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