Tenant Passing Away w/ 13 months left in a 2 year lease

Investor · Queens, NY · Member since 2016 · 13 posts · 2 votes

Good Morning Fellow BPer's!

I have a situation that has come up recently with a rental unit that I have and wanted to see what the communities thoughts are. My tenant recently passed away 11 months into a 2 yr lease in which his daughter guaranteed the lease payments. The daughters have since asked to be released from the lease early which I do not have an issue with although I do not feel that I should be subject to a loss in my income stream due to this unfortunate event. How do you craft such a response without sounding harsh? Has anyone else ever had this issue? The daughter's have agreed to pay my expenses but I think they are under the impression that its soley the broker's fee and any fees payable to the HOA.

Thank you in advance for your replies!

Mike

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Roshan K.Pro Member

Oklahoma City, OK · Member since 2017 · 258 posts · 215 votes

Someone died and you're thinking about collecting money from the dead guy's daughter? ........ I'm not sure I'd want to be your tenant. Charge them until they take the stuff out, take an extra month payment if you must, then break the lease. Treat your tenants how you'd want to be treated. They just lost their father. You might lose a couple months income stream until you fill the vacancy. I think asking for the rest of the lease rent is harsh

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Michael Hajduk
Investor · Omaha, NE · Member since 2016 · 51 posts · 32 votes
9y
How long would the projected vacancy last? Is that lost income worth the reputation hit? You will never win over any public opinion should the daughter choose to make a fuss. Show a good will gesture, and end the lease whenever she gets all his belongings out.
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Account Closed
Los Angeles, CA · Member since 2016 · 156 posts · 113 votes
9y
Hello Mike, I'm sorry to hear about the loss of your tenant and the additional stress this might bring. Although the tenant's daughter said they'd cover the remaining portion of the tenants lease, I don't believe they should be held to that responsibility unless it is a signed written agreement and they've already began making payments. Going through a loss of a parent is difficult and can be emotionally draining and in her situation, she may not have been completely cognizant of the financial responsibilities she's committing herself to cover her deceased mother's payments. If possible, maybe you could negotiate with the tenants daughter to cover one month's rent while you clean and advertise the unit so you can get a new tenant. It seems like being empathetic and compassionate would be the right thing to do in this situation especially since no one is at fault for wrongdoing. Best of luck!
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Corby GoadeBusiness Member
Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
9y
Boy, that's a tough one. I don't know your situation, but I'd kindly ask the daughters to get everything cleaned up asap- maybe you agree to a relatively aggressive date, and tell them that if they do so and hire a professional cleaning company, or cover your costs to do that, you'll release them from their liability. I'd hate to put MORE stress on these girls who just lost their mom. I think that would earn you some good karma.
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Account Closed
Johnson City, TN · Member since 2014 · 586 posts · 705 votes
9y
i dont think i should write what i really feel about this situation.
6 Reply
Kim Meredith HamptonBusiness Member
Real Estate Broker · St Petersburg · Member since 2014 · 2k+ posts · 2k+ votes
9y
@Mike K. I know it's hard to have this unexpected situation, but try and work out an amicable situation. Maybe you could ask for this months rent and a release fee to the brokerage, and then move on....
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Timothy Winfield
Rental Property Investor · Baton Rouge, LA · Member since 2017 · 78 posts · 26 votes
9y
I second Kysha McNeal Therom
1 Reply
Roshan K.Pro Member
Oklahoma City, OK · Member since 2017 · 258 posts · 215 votes
9y
Someone died and you're thinking about collecting money from the dead guy's daughter? ........ I'm not sure I'd want to be your tenant. Charge them until they take the stuff out, take an extra month payment if you must, then break the lease. Treat your tenants how you'd want to be treated. They just lost their father. You might lose a couple months income stream until you fill the vacancy. I think asking for the rest of the lease rent is harsh
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Charlie MacPherson
China, ME · Member since 2014 · 3k+ posts · 4k+ votes
9y
@Mike K. Having a tenant passing away is a risk of doing business.
The spirit of the daughter's guarantee was almost certainly as a backup in case her dad couldn't pay, but I'll bet that it wasn't intended to indemnify you against his death.
@Roshan K. is exactly right - treat the daughter exactly like you would want to be treated - or to drill down even more, threat her exactly the way you would want YOUR daughter treated in the same situation.
In addition to the PR hit you'll take if you enforce the guarantee, you'll have to figure out how to keep your own conscience from screaming bloody murder at you in the middle of the night.
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Deanna McCormick
Minneapolis, MN · Member since 2013 · 2k+ posts · 1k+ votes
9y
Who's name is on the lease? Only that person is liable for the rent payment. The daughters may have co-signed as financially being responsible but if they were not listed as a tenant then that responsibility is limited as to the date the tenant died.
In my experience it would be where the estate of the decease is now responsible and the daughters are no longer liable. you would contact his emergency contacts and figure out who is the estate representative and then make arrangements as to how soon the apartment can be vacated, rent would be paid by the estate and usually a 30 day notice is all that's required. You can check your state landlord laws but you can't hold anyone responsible for the rest of the lease term that's not listed as tenant on the lease.
I've dealt with at least 7 dead tenants and best thing is to get the rent paid up thru the next month and the apartment emptied so you can rerent and be done with it.
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Matthew Olszak
Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes
9y
@Mike K. If this were a business that went under and was personally guaranteed by someone then yea, I'd hold them to the lease.
But come on, someone just lost their parent. I'd personally give them a month to move and not even charge them for that time. Part of being a business owner is having compassion and making decisions not based on what you can do but what you should do. Its the same as factories being socially responsible and paying their workers a fair wage, installing landscaping to limit noise, reducing emissions, etc. They don't (all) do it because they have to, they do it because its right.
I'd hope your rental numbers aren't so tight that you can't afford a single month of vacancy due to factors outside anyone's control.
3 Reply
Mike K.
OP
Investor · Queens, NY · Member since 2016 · 13 posts · 2 votes
9y
Thank you all for your responses. I guess I should have clarified my initial thoughts in my posting although I appreciate the insight/advice from all.
My initial reaction was to end the lease at the date they had requested which would give them approximately one month to clear things out at while making repairs that may be necessary and/or marketing the apartment. My only request was the covering of the brokers fee which is equal to one months rent unless they were able to find me a qualified tenant in which case no fee would need to be paid and if no repairs needed to be done then they obviously would get the security deposit back as well. If they were able to get moved out earlier than they expected, I would also refund them the additional days of rent that was already paid.
I wasn't thinking of asking them to cover loss income until someone that I spoke to mentioned it to me. After speaking to a few landlords, attorneys and friend's that I know in which some had similar thoughts to those above but more than one mentioned the loss of income. While the rational was to take the emotions out of the equation and I can respect that, my gut was telling me exactly what everyone above basically posted.
I lost a very good client of mine the same day that I lost my tenant and while landlording is a business its not my livelihood. A few extra dollars isn't going to change anything on my end. I just wanted to see what the opinions/experience was of fellow BPer's were since I previously heard two different sides of the spectrum. I am fairly new to this industry and have never had an experience like this in the past nor has anyone that I have known.
@Deanna McCormick - How does one deal with the refund of the security deposit if the tenant is deceased and the daughter who co-signed is not on the lease? One daughter had asked me to give it back to the co-signer (different daughter). Is this what is typically done?
Thank you again everyone for the advice.
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Deanna McCormick
Minneapolis, MN · Member since 2013 · 2k+ posts · 1k+ votes
9y
@Mike K. the security deposit would be refunded to the estate the person that passed away.
So check is made payable "To the Estate of John Doe" ....that's how I would make out the refund check.. and mail it to his last address or to the person that is representing the deceased or the attorney for deceased estate.
Don't make it out to any individual family member..
You sound like you are working with the family regarding the matter and that's great.
1 Reply
Aron D.
Rental Property Investor · San Diego, CA · Member since 2008 · 89 posts · 65 votes
9y
Originally posted by @Roshan K.:

Treat your tenants how you'd want to be treated.
2 Reply
JD MartinBusiness Member
Moderator
Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
9y
At the end of the day I don't think this "vacancy" is really going to be any different than if the tenant just up and bolted; as the owner, you have a responsibility to take reasonable steps to mitigate the tenant's damages by breaking the lease early. Thus, it should be cleaned up and put back on the market as soon as possible. If the place was rented for less than market, you may even make out better financially.
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Thomas S.
Member since 2016 · 13k+ posts · 12k+ votes
9y
Sorry for the loss of your tenant.
Now down to business....Tenants die, too bad... first you need to read through your state landlord tenant regulations, most have a clause dealing with the death of tenants.
It would be nice if you could get the estate to pay rent till a new tenant is in place but the chances are the executives will place you at a very low priority. Best option is to force them to remove all his stuff asap and you take the loss till it is rented.
Personally I would try to get someone to pay something but first read your state codes.
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Account Closed
San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
9y
Normally, the death of a party to a contract would nullify the contract - depending. But, basically, my understanding is that you simply end the contract. Check with an attorney, but I think once rent is in default, you can end the contract, like you would if a tenant had just stopped paying, and then deal with abandoned property in whatever way is legal where the property is.
It's my opinion, you can just then tell the relatives they have so many days to remove belongings or they will be considered abandoned. I would not give them a key, which could end up creating a tenancy, and then you'd have to evict them, too. I'd meet them and open the door for them.
And if they wanted more time, they'd have to pay rent, etc., as a tenant.
It's not about being nice or not. Think about what would happen with any other debt he had - if he was making car payments, would they care about the daughter's "feelings"?
You aren't expected by law to absorb the cost of the daughter's feelings. Not to be harsh, but that would be unreasonable of her to expect.
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Matthew Olszak
Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes
9y
Originally posted by @Account Closed:

It's not about being nice or not. Think about what would happen with any other debt he had - if he was making car payments, would they care about the daughter's "feelings"?
Except that you aren't a bank, nor anywhere near that size. This is a relationship business and a people business, which luckily affords us the opportunity to inject our own understanding and compassion into a situation, much like an airline with bereavement fares. Its not that, "I feel sorry for my tenant supposedly having his bank account hacked so I'll forgive the rent". Its "My tenant just died so I'll make the considerate decision to terminate the lease effective immediately and allow the family to grieve".
As to the security deposit, yes, I agree, make it out to the estate. Family members can be like hawks on roadkill when someone passes away, so rather then get involved just cut a check to the estate and let them fight over it.
1 Reply
Account Closed
San Jose, CA · Member since 2015 · 4k+ posts · 3k+ votes
9y
Originally posted by @Matthew Olszak:

Originally posted by @Account Closed:
It's not about being nice or not. Think about what would happen with any other debt he had - if he was making car payments, would they care about the daughter's "feelings"?
Except that you aren't a bank, nor anywhere near that size. This is a relationship business and a people business, which luckily affords us the opportunity to inject our own understanding and compassion into a situation, much like an airline with bereavement fares. Its not that, "I feel sorry for my tenant supposedly having his bank account hacked so I'll forgive the rent". Its "My tenant just died so I'll make the considerate decision to terminate the lease effective immediately and allow the family to grieve".
As to the security deposit, yes, I agree, make it out to the estate. Family members can be like hawks on roadkill when someone passes away, so rather then get involved just cut a check to the estate and let them fight over it.
Sure, cut the security deposit check - AFTER deducting any rent owed.
The reason most landlord can't afford to forgive rent payments is precisely because they are not the size of a bank.
And I disagree that this is a "relationship" business. Landlords are not counselors. And, even then, try getting a counseling appointment if you're not willing to pay for it.
Or at least, if your definition of "relationship" business equals charity, then why charge rent at all?
And when a party to a contract dies, it's not a matter of being nice to let that dead person out of the contract - it's that the contract becomes as dead as the dead party, so there is no more contract.
Here's an article about how it's handled, at least in CA:
http://homeguides.sfgate.com/landlord-rights-event...
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Matthew Olszak
Real Estate Broker · Chicago, IL · Member since 2015 · 1k+ posts · 2k+ votes
9y
@Account Closed We'll have to agree to disagree I guess. Difference of opinion in how to run a business. I value my long-term name over immediate profits and based upon experience feel I earn more by embracing these moments of compassion. You on the other hand feel there isn't room for such. Touche, to each their own.
2 Reply
Matt M.
Dallas, TX · Member since 2017 · 16 posts · 7 votes
9y
Put yourself in their shoes. They are dealing with funeral expenses, having a parent pass, etc. Life is short, I don't see any reason you should try to collect anything from them. But each person has to make their own decisions.
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Ralph R.
Investor · Bethel, AK · Member since 2013 · 1k+ posts · 852 votes
9y
Mike Konstantas It's about Karma. Treat them like you would want to be treated. "You don't get big by acting Small". RR
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David S.
Investor · Prairieville, LA · Member since 2015 · 311 posts · 424 votes
9y
Yes, I have been in this situation.
Real estate is not just a number's business, it is a people business.
Your reputation is reflected in your actions.
Trying to collect rent from a dead tenant's daughter is just plain cold.
Just let it go.....and put your efforts into finding a new tenant.
If your reserves are adequate, this shouldn't run you out of business.
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