What to do when a tenant passes away
The death of a tenant can not only be emotionally challenging, it can have serious financial ramifications for the landlord. Most property investors cannot afford to be without rental income indefinitely, making it important to understand protocols and procedures to follow when dealing with tenant death.
What are the obligations and requirements when a tenant pass?
Agents must follow the NSW RESIDENTIAL TENANCIES ACT 2010 - SECT 108 for appropriately handling tenant deaths at rentals including serving notices, terminating leases, returning bonds, disposing of tenant possessions and disclosures. Failing to do so, could pose legal issues.
When a tenant dies, the lease does not automatically terminate, nor does the landlord have the right to immediately take possession of the property or remove the tenant’s belongings.
The landlord is entitled to rent, paid from the bond, the deceased estate or form a co-tenant, until the lease ends and to regain the property in the same state it was in at the start of the lease (with fair wear and tear expected).
What to do if a sole tenant passes?
If a sole tenant passes (the only tenant on the lease), you must follow NSW state procedure for ending the lease and returning the bond. The deceased tenant’s property, debt and contracts transfer to the estate or next-of-kin, including the rental agreement.
What to do If a co-tenant passes?
If a co-tenant dies (joint tenant) this does not automatically end the lease either. The remaining tenant can stay on and their rights and responsibilities continue under the tenancy agreement. However, if the co-tenant wish to leave, you can negotiate with them to end the lease early and take vacant possession.
NSW State procedure for ending the lease and returning the bond
NSW RESIDENTIAL TENANCIES ACT 2010 - SECT 108
Death of tenant
(3) The Tribunal may, on application by a landlord or the legal personal representative of the deceased tenant, make a termination order if it is satisfied that a termination notice was given in accordance with this section and that vacant possession of the residential premises has not been given as required by the notice.
(4) The legal personal representative of a deceased tenant who is given a termination notice by the landlord may give vacant possession of the residential premises at any time before the termination date specified in the termination notice.
(5) The estate of the deceased tenant is not liable to pay any rent for any period after the legal personal representative gives vacant possession of the residential premises and before the termination date. (1).
Who is responsible for vacant possession and cleaning?
The next-of-kin/executor is responsible for the deceased’s rent and for proving vacant possession. They need to deal with the tenant’s possessions and arrange cleaning of the property, including any specialist cleaning if required.
How landlord insurance can respond?
Most landlord insurance policies will respond to claims relating to tenant death, but there are varying levels of cover, inclusions and exclusions. It pays for landlords and agents to check the policy or contact their insurer to see what is and isn’t covered.
Landlord insurance may respond to loss of rental income in circumstance where the sole tenant passes and landlords face prolonged periods without rent due to time required to re-instate the premises, track down next-of-kin, or if the state trustee is made responsible.
Landlord insurance may respond to repair costs of the next-of-kin or executor fails to cover the bills. If a co-tenant fails to continue paying the rent, an insurance claim may be possible under a different section of the policy, such as rent default, to cover the rental losses.
How to assist your landlord with an insurance claim?
You should also:
This article originally appeared in Elite Agent, by Sharon Fox-Slater.
Australasian Legal Information Institute. (n.d.). RESIDENTIAL TENANCIES ACT 2010 - SECT 108Death of tenant.