The Landlord Lens - Unforeseen Tragedy: What to Do When Your Tenant Dies

Episode Date: February 21, 2024

Krista and Seamus discuss how landlords can navigate different scenarios following the death of a tenant.

Hi, I'm Seamus, joined by Krista, and we're here to make you a better landlord. Krista, our topic today is a bit of a morbid one. We're talking death. Yep. Death is inevitable, which means that there's a possibility a tenant could either die in your rental or you will have to deal with a tenant's death after they've passed. Absolutely, and our experienced landlords out there know that this will happen at some point. So could you walk us through if you find someone that has died within your rental? Steps to take. Absolutely.

So a couple things to keep in mind. If they've died in your rental, let's assume for the sake of this conversation, it's a peaceful death, natural causes, and you find them. First thing you're going to want to do is make sure that you contact emergency services. Likely, you're going to call the police. You need someone to go in, validate the scene, and otherwise make sure that things are as okay as possible before moving through the actual process of dealing with the tenant's death in regards to your lease. What's going to happen after the authorities show up and they move the individual? So at that point, they'll probably give you some information regarding what to do next.

So ideally, you're going to contact either the person's emergency contact or if they have a next of kin, whoever you can reach out to for that individual should be contacted as soon as possible once the authorities give the all clear. When they do that, you set up the line of communication with them. Remember to be very compassionate. They are going through something tough, right? It's your tenant, but that's their brother, sister, best friend, et cetera. And they're going to have to make a lot of difficult decisions in a short time frame.

So having empathy and compassion is the way to go. Yeah. And while dealing with this situation is top of your priority as a landlord, it's definitely not going to be the next of kin's top of priority in terms of dealing with their outstanding. lease. Exactly. It's also a really good reminder to make sure that you know who that emergency contact is. It's something that you should collect from an application standpoint, but it's also if you're doing a lease renewal worth just bringing back up, make sure that you know who you would contact in this sort of situation. Because once you're in the situation, you don't want to have to be

scrambling around trying to find details because you want to get things taken care of as soon as possible. So once you've established the next of kin, you want to be sure that you get some kind of official documentation regarding the tenant's death. Even if you laid eyes on them, yourself, you'll want something for your records to indicate that they've passed. So a certificate of death in conjunction with an obituary, but you really want something official so you can put it in your documentation just in case anything comes up down the line. Because it's that official document that'll actually serve as proof that lease is being terminated. Exactly. And whether they have a

month-to-month lease or a longer-term lease, that certificate of death is where things kick off and start to transition into the next phase of taking care of the situation. So if it's a month-to-month- lease, typically the death notice serves as the 30-day notice. Okay. Meaning at that point they'll be absolved from the lease. If it's a longer-term lease, it gets a little bit more complicated because you'll have to work with the next of kin, which I'll tell you about as we move through this process.

So you've gotten your death certificate. At this point, the tenant's property is still in the unit. What do you do? That's a great question. Yeah. Are you able to touch it, move it? And then obviously there's the aspect of how do you take back control of this unit and secure the property. So what are those steps that you should take? So first what you're going to want to do,

assess the situation, right? So let's say that this tenant lived alone. That means that you could go ahead and change the locks. I would recommend doing so just so that you keep everything as secure as possible because you are still in charge of that tenant's belongings more or less until you get them over to the next of kin. So typically what that looks like, the next of kin or the estate will go through the actual unit and remove everything. They should be taking everything, not just the thing, that they want. If there are items left behind, check your local state laws. After a certain period of time, that will be considered abandoned property and you can then dispose of it, sell it, et cetera. But there are specific rules regarding keeping the money from abandoned property sales. So really make sure you do

your research before you put anything out on the market. Is it worth having the next to kin if they come in and take things they want and then there's some things they leave behind to have them just sign a statement saying that they've already gone through the process and everything else can be disposed of? I would say yes. Documentation is always going to be your friend as a landlord, so anything you can do to prove that you had a conversation that everybody was on the same page is worthwhile. What if their belongings outside of the property, like a car or within maybe an external storage unit that you also own, right, was part of the lease, or even like pets? Yeah, so definitely gets more complicated the more items that are in the mix. But I would say when you first talk to the next of kin and they're coming to reclaim property, give them a full list of all of the storage options or anything that you know the tenant has outside of the property.

So, for example, you can look at the lease and see what kind of cars they put on there. You can then give them that information. It's a Toyota whatever with this, S Y's name. Same thing with pets. You want to let them know, here's who was on the lease. Please take care of them, whatever that might look like for you guys. But by doing that and listing it out, you give them the best chance to address every single point and not discover years down the line

that they had missed something they would have liked to have. But at that point, you can get the tenant's belongings out, go through, clean, do whatever you need to make sure that the unit is habitable again. You are able to use a security deposit in these cases, but remember that you would use it in the same way that you would use a security deposit in any other circumstance. Okay.

Keep itemized receipts. If there's damage that needs to be addressed, address that. If there's unpaid rent, you can use the security deposit to fulfill those needs. and you'll want to make sure that you send out a notice applying with the same time frame that you normally would of what was deducted from the security deposit to the next of kin or the estate, because technically that is still the tenant's money, even if they've passed.

If there's more damages outside of what the security deposit covered, it's going to be a sticky situation. You'll most likely have to pursue the estate. Again, this is a situation where compassion and empathy are going to be everything. So if there's something that you can do to ease that transit, if you know contractors or other folks who can give you a good deal on the work that needs to be done without sacrificing the quality, highly, highly recommend getting them in the mix, so you're not trying to chase down someone who's just lost a person in their life who's important to them for this money. Yeah, and I think that just to highlight the importance of quickly establishing a good compassion, as you said,

respectful relationship with the next of kin is going to give you the best opportunity to get over some of these speed bumps that you're going to hit along the way. that individual is going to have a lot to worry about and a lot on their plate. And so if they trust you as the landlord and you're acting according to not only the law, but in an empathetic manner, there's a good chance they'll just say, hey, whatever you need, take care of it, right? Which is fantastic. It doesn't mean you don't have to document it. Yes.

But it'll give you the opportunity to move forward quickly because like any vacancy situation, this is a very unique vacancy situation, but you want your property to be vacant as short a period of time as possible. Exactly. And there are going to be other situations that will factor into how long this process takes. So, for example, let's say that your tenant lived with roommates and they're not related, they're not the next of kin. Then you'll want to be sure you have a conversation with them. They might need some time to figure out how to make sure that the rent is paid every month. You know, if they were all splitting it, that might be a conversation amongst themselves. And be sure to let them know not to touch the deceased person's things until the next of kin or their estate can come in and clear it out. But they will still be responsible for paying the rent because they are all still on the lease. So tread carefully, be compassionate, but be sure you let them know the expectations as you move through this event. That makes sense. And I think the big takeaway there, right, is that if there are roommates, just because they're roommates and they're all on the lease together, it doesn't mean any of those roommates are next of kin. Yes. So while they're responsible for paying the rent, they're not to go

through the property of your deceased tenant, right? Yes, absolutely. In fact, that could lead to a lawsuit, which is a further complication in an already sad and complicated situation. If you can lock up that room, for example, that might be a nice way to just further secure the property. Now, there's also the possibility that the next of kin actually was on the lease. It's a couple, let's say, and one of them is passed.

In that case, you will be working directly with the next of kin, and they might not want to live in your property anymore, too many bad memories, in which case you can transition and the lease, you could choose to have them pay a fee or use the security deposit to end the lease early. If you have the flexibility in your business,

maybe I'm too soft-hearted, but I would recommend not doing that because they've just lost someone and have a lot of other fees to pay. But don't take it personally if they can't stay in your rental anymore. Yeah, that makes sense. And if they don't want to stay in your rental

or they can't, as in the income to actually afford the rental was a combined income, you're really better off. In my opinion, letting them out at least so you can find a tenant and go through the screening process again to find tenants for a lease that can actually afford the rent. It's not valuable to have anyone living

in the property. They can't afford to pay rent, right? It just creates complications. Absolutely. Okay, so we kick this off saying we're going to talk about the peaceful situation where someone dies. What happens if there's actually an investigation at the property? So that is going to be pretty different, at least in the beginning stages. So you'll want to make sure that you're working with authorities. They might need to quarantine the property off. They might need access to the there could be damages caused by the police. So really be mindful and pay attention as you move through, but let them do their investigation, let it run its course.

Once they give you the go ahead, that the property is clear that either the next of kin can come in or you can have folks start to move the property out if a proper amount of time has passed where it's a banded property, then you can move on to the next steps. Gotcha. But really the main thing you need to do is cooperate with whatever investigation is going on. Don't interfere, don't break in, because you're going to, because you're just going to make things worse. In the case, a situation like this happened,

are there insurances, like landlord insurance? Is that something that you can lean on to help cover some of these funds? Yeah, you know, I think depending on your policy, you could have some stuff in there that helps. From what I know about landlord insurance, there aren't specific clauses regarding tenant death, but there are often clauses about recovering rent that's unpaid.

Where I might suggest looking is, is that your renters insurance policy. If you mandate that tenants have to have renters insurance in order to live on your property, there could be a clause in their policy that helps out in the case that they pass and there's damage or there's other things going on, which could help the situation.

So be really mindful of everybody's insurance policies at play when you move through this kind of situation. Yeah, and there's lots that you'll actually kind of be waiting on as the landlord in this situation, whether it's the authorities, whether it's the next of kin. Things that you can do, though, like you said, check those policies, make sure you're up to date on what your lease says and what opportunities or options you may have from an insurance standpoint. Exactly. Now, one thing I want to ask you is a pop

quiz. Yes. What is something that people don't have enough of in their lease when it comes to their tenants' dying? They don't have enough of? Not enough of it. Probably clarity and language. You're so right. So really, when you have your lease agreement, you want to be thinking of all the worst-case scenarios, everything that you can to make sure it's a beefy document that serves you and your tenant equally. With that, you can have language in there dictating that should a tenant pass away while the lease is in play, it ends with their passing, meaning that that would absolve their next of kin or estate from continuing to pay for the rent after the person passes. That's a really kind thing to do if you can swing it. Additionally, you can outline kind of what

a communication timeline would be to reach out to the next kin. And it's a good spot to also make sure you're getting that information for their emergency contact. So, have language in your lease speaking to this kind of situation, and it will really help if you ever actually end up suffering through it. Yeah, and I think not only does it help in terms of absolving the lease for that next of kin, but it also helps you in having a clear path to getting to your next vacancy, and therefore your next tenant, because at the end of the day, that is priority for your business specifically, right, to get to the point where you can rent it out again and start reaping the rewards of this investment that you've made.

Exactly. Well, thank you very much. I know it's a morbid topic, but being prepared and educated going to it will help our landlords a ton. If you've gone through experiences like this with tenants or have additional questions, please leave us a comment.

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