Tenant passed away in one of my units. What should I expect?

Question

A tenant passed away.  He was older and it was of natural causes.  I don't know of any close family or friends. What are your experiences in how you dealt with a similar situation?

Randall Alan · Answer

I've totally 'been there and done that'!!  It's a mess!

Every state is probably different... but in Florida you have to give the family 60 days to collect the  items out of the house.  This gets tricky when rent is still due and owing.  We were (somewhat) fortunate that a friend discovered that he had passed, and by the time we were notified, the medical personnel had taken his body and the friend took the cats that were in the house.

What followed was a whirlwind of issues.  First - the sole remaining relative lived out of state and said, "I'm not coming down to collect his things... you do what you have to do" (Obviously not a very close relationship).  We had purchased the house out of foreclosure, so the tenant had lived there for 20+ years.  He was in bad health when we notified him of purchasing his house, but we offered him the option to rent it back from us.  Because we paid more at the foreclosure auction than was owed on the mortgage, the tenant was able to collect those excess funds from the county and afford to pay rent - which was considerably more than what his previous mortgage was.

Just to set the scene - the tenant had 5 cats, and 10 litter boxes that had not been changed in years.  It literally burned our eyes and lungs to walk into the property.  We wore respirators when entering the property.  You just never know what you are getting when you buy a foreclosure property!  The cats had quit using the litter boxes and pretty much just made the house their own.  We brought in a dumpster and had to rip out all the flooring throughout the house, and it still reeked of cat urine, along with destroyed furniture, bedding, etc!

So we were now left with a house full of 20 years of junk, and no one was coming to clear it out!

We also knew the tenant should have had money from where we bought the house 6 months earlier (he netted $45,000 from our purchase of the property).  We ultimately probated his estate ourselves (it's called a creditor probate) so that we could receive the rents we were owed, and to cover the expenses it took to clean out and repair the property.  This took going to a lawyer, explaining the situation, fronting the money it took to do the probate, and following the probate rules on disposition of property.  As a fiduciary to the process, we had to go find his bank accounts, open a probate bank account, and go through all those typical steps to close out someone's estate.  We sold higher value items such as cars and guns individually, and held multiple garage sales to clear out the rest.   Hopefully you don't have to go there...but for us there were significant expenses involved with having to clear out the house... I think our total expenses after 6 months were close to $27,000 including back rent (rent continued to accrue while we cleared the house), damages to the house,  lawyer's fees associated with the probate, and weeks of time spent trying to clean up the house and sell the stuff to dispose of it and earn money for the estate, etc.. The remainder of the funds were distributed to his out of state heir.

What you absolutely can't due is just go in and remove all the stuff (at least in Florida).  There is a clause you can put in your lease that says that if you are the sole remaining occupant and rent is owing that the property can be considered abandoned if rent is not paid within 3 days (again this is in Florida).  We didn't have that clause at the time... (but we do now!)... but this would let you take the stuff out of the house, and move it into storage I would think.

In your situation, if you are asking "How do I find a relative?"... I would go to an attorney.  They have access to a software suite called "Lexis Nexis".  This is the software that industry uses to find relationships to people.  It is basically a huge database that connects one person to another... lenders use it to verify customers, etc.  Lawyers can use it to find relationships to other people.  The software will basically show you all the names & addresses a person has used, as well as other family relationships by cross linking one person to another.  Lexis Nexis buys account information from places like telephone companies, utility companies, state governments, creditors, etc.  You should be able to find out their relatives and their contact information by having someone do that type of search.

Be sure to keep track of everything you do, expenses you incur, etc.  Really good notes and receipts are important. Keep track of your time as well, as you are usually allowed to bill a reasonable rate for the time it takes related to dealing with all the issues.

Happy to answer other specific questions.

Randy