Landlord dies: what happens to tenancy and rent

Baby01032012

Not sure if specifically an A&P question however I’ll give it a go..

A relative with a number of investment properties passed away Over Christmas...as I may be the executor I’m curious as to what may happen..

Say landlord passed away. Grant of probate I hear can take up to six months. As landlord is sole trader with business bank account should the account be frozen? What happens to rental payments that tenants attempt to make or direct debits or standing orders for example apartment management fees. Or is it a case that the executor can take control...and manage until properties are passed to beneficiaries.

the_syco

I'd say talk to a solicitor. Also, if the bank account were the rent went into was her personal account, or a business account; this may matter.

Baby01032012

Thanks I’ll talk to solicitor in January. As they are sole trader it’s set up as business account but it was their only account so personal too. I’d imagine this has to be frozen. So will be interesting what solicitor has to say, maybe account remains active until probate and assets are passed.

xper

I was in this position twice as tenant.

On the first occasion, I was soon asked to change my direct debit rent payment to a new bank account that had been set up for the executor and a few months later, presumably after probate was complete, to change it again to an account of one of the landlord's sons who was then taking over ownership of the apartment and was thus my new landlord. In this instance, the landlord who died was already widowed so I presume the original account was personal to her and was quickly frozen, thus the set up of the interim account for the executor.

Second time round, I was renting off an elderly couple when the husband, who was the person I always dealt with, died. However, the account I was paying into and the signature on the initial tenancy agreement was the wife's so, legal and financial arrangements did not change, I just began dealing with their daughter for practical stuff.

So, the first instance above sounds like the scenario described by the OP but it illustrates that the answer to the OP's question is "it depends" and it is up to the executor to get good legal advice on how to establish standings of the deceased person's estate. For example is it being presumed that he/she was operating as a sole trader or, given there are a number of properties, is there in fact a limited company in existence?

Baby01032012

Thanks Xper that’s very helpful...I appreciate you sharing your relevant experiences

dennyk

I've also been through this as a tenant; for a few months my rent just went to the deceased landlord's original account (presumably being held and managed by her estate's executor at that point). Not long after, I was asked by the executor to switch my payments to another bank account which was a trust held by her heirs. My landlord wasn't a professional, though; she just owned a couple rental apartments which passed down to her two sons, and there was no mortgage on either, so the situation wasn't particularly complicated.

You should definitely check with your solicitor for advice in your own case; they should be able to advise you exactly how to handle all of the estate's finances (both incoming and outgoing; you need to be careful with the latter especially, as there are specific rules about how creditors must be paid from an estate and doing it wrong could cause headaches at best or could potentially leave you personally liable for losses due to making improper payments at worst...).

In general, any existing tenancies and all of their terms, including Part 4 rights, would survive the passing of the landlord and would become the responsibility of the estate (in the short term) and eventually whichever heir (or lien-holder) the ownership of the property itself passes to. The estate and the eventual inheritor would still be responsible for fulfilling a landlord's ordinary duties and responsibilities (making necessary repairs, etc.) just like any other landlord, and if the property must be sold in order to settle the estate and vacant possession is required for the sale, you'd need to issue proper notice according to the RTA. Again, ask your solicitor for advice on the proper procedures if you aren't familiar with them; getting it wrong could add months or years to the whole process.

mrslancaster

Just curious - if the executor is acting for the deceased's estate, can they issue a notice of termination immediately if they know the property will have to be sold

dennyk

mrslancaster wrote: »

Just curious - if the executor is acting for the deceased's estate, can they issue a notice of termination immediately if they know the property will have to be sold

They'd have the same rights as any landlord to issue notice for an allowable Part 4 reason, generally. Of course they'd need to include the required statutory declaration regarding the planned sale of the property, so it would probably be wise for them to make certain a sale would actually be necessary in order to settle the estate before issuing a notice, as if the sale of the property isn't necessary after all and so doesn't happen, the former tenant could seek compensation from the estate via the RTB for costs they incurred due to the improper notice (and the executor could potentially be personally liable if they didn't do something correctly on their end). The notice period requirements based on the length of the tenancy would of course still apply as well; the fact that it's being sold during probate doesn't affect the tenant's rights regarding notice.

garhjw

dennyk wrote: »

They'd have the same rights as any landlord to issue notice for an allowable Part 4 reason, generally. Of course they'd need to include the required statutory declaration regarding the planned sale of the property, so it would probably be wise for them to make certain a sale would actually be necessary in order to settle the estate before issuing a notice, as if the sale of the property isn't necessary after all and so doesn't happen, the former tenant could seek compensation from the estate via the RTB for costs they incurred due to the improper notice (and the executor could potentially be personally liable if they didn't do something correctly on their end). The notice period requirements based on the length of the tenancy would of course still apply as well; the fact that it's being sold during probate doesn't affect the tenant's rights regarding notice.

This is correct. I was executor of my fathers estate and had to sell property in order to settle tax bill. I had all same rights as landlord etc....

beauf

Note that if you need to deal with the PRTB they'll expect the tenancy registration to have been switched to the new landlord . If you need to lodge a complaint with them, they won't deal with it unless the details of the landlord, match the details of the current registered tenancy. You might to dig out these details from the estates paper work. My experience with the PRTB is they struggle to find records, even when you have all the details. Don't rely on the online records either.

Chris_5339762

Theoretical: What happens if the landlord dies and you're paying into a new account that is now in the UK, meaning the tenant has to now withhold tax from the rent? How would that work and how do you stop that going tits up?

beauf

Same thing the tenant would be given a new account that the executor or administrator has access to.

The previous account would come back into the estate eventually.

No?