It is always upsetting when someone you know dies, but if a tenant dies while they are leasing your commercial property, it can add another layer of legal stress to the situation.
From knowing who to contact and who is responsible for the lease to what to do if a tenant dies without leaving a will, the process of reclaiming your commercial property after the death of a tenant is wrought with uncomfortable questions.
Fortunately, our team of compassionate commercial property solicitors is familiar with the struggle faced by landlords in this situation and is here to provide assistance. In this post, we will offer some practical advice about what to do if your tenant dies, identifying some important points of contact and explaining how to communicate with each of them to ensure the process is as smooth as possible.
What Happens if the Main Tenant Dies?
When a landlord generates a business lease with their tenant, they may choose to include a clause that allows the lease to be automatically surrendered in the event that the tenant dies. If you included such a clause in your commercial lease agreement, then if your tenant dies, you can begin to search for a new tenant sooner than might otherwise be the case.
If your commercial lease agreement does not include such a clause, then you cannot assume that the death of your tenant marks the end of their tenancy. In most cases, if a tenant dies, their tenancy becomes part of their estate and is the responsibility of the executor of their will until probate has been granted.
What Does a Landlord Need to Do if a Tenant Dies?
The first thing you need to do if your tenant dies is contact their next of kin to request a copy of their Letters of Administration. This document will confirm the identity of the executor, who will henceforth be your main point of contact.
Once you have their details, you may wish to contact the executor to let them know you would be willing to accept an early release of the deceased tenant from their lease. This should be outlined clearly in a letter to the executor, along with your terms for the surrender of tenancy and the date you propose the tenancy should end.
If the executor agrees to your terms, the letter needs to be signed and then returned to you such that you can begin the process of early release.
What Happens if You Agree to End the Tenancy?
After you have received the signed letter of early release, you should request that the estate of the deceased tenant remove any remaining property and arrange for the premises to be cleaned before returning the keys. Once you have regained access to the property, you may complete a check-out report to assess its general condition, although your next actions will depend on what your representatives feel is necessary.
When the check-out report is complete, send it to the executor along with the details of any outstanding rental payments and dilapidation claims. If your tenant dies and they have not been paying their rent, any money owed to you can be paid out of their estate. If the deceased tenant did not leave enough money to repay their rent, then their personal assets can be sold to cover the remainder of their commercial lease.
What Is the Succession of a Tenancy After Death?
There are certain situations where relatives or associates of the deceased tenant will have the right of succession, which means the commercial lease is passed onto someone else if a tenant dies, rather than become the responsibility of their executor.
For example, if your tenant dies and leaves behind a husband or wife, their spouse may have the right of succession to the tenancy.
Similarly, your tenant could have left their business to their next of kin in their will, in which case the commercial lease could be transferred to them if your tenant dies. Unlike a spouse, however, next of kin would not necessarily have the right of succession, and you may not be under any legal obligation to offer them tenancy.
What Do You Do When One Tenant in Common Dies?
In the event that a deceased tenant had a business partner whose name is already on the lease, their business partner may be able to continue with the tenant covenants of the lease. If your tenant belonged to a larger company, which they ran alongside multiple other directors, it is possible that their executor could appoint one of the other directors as a successor. Those appointed would similarly assume the responsibility for rental payments if your tenant dies.
It is important to note that an executor will not have the authority to appoint a new director unless stated in the company’s articles of association. Without this authority, the company may need to apply to Court in order to make the necessary structural changes. Until these changes can be made, the executor will maintain their responsibility for the tenancy.
What to Do if a Tenant Dies Without an Executor or Will
Reclaiming your commercial property if a tenant dies without an executor or a will is slightly more complicated. In the absence of a will, or if the tenant has a will but no named executor, the tenancy may be temporarily transferred to the Public Trustee.
Our colleagues in the Private Client team will be able to further advise you on the next steps.
How Can a Solicitor Help if My Tenant Dies?
Communicating with grieving relatives can be sensitive, and it is only natural to feel uncomfortable bringing up outstanding rent or dilapidation claims to the family of someone who has recently died.
If your tenant dies under particularly upsetting circumstances, you may feel inclined to waive certain financial obligations to avoid an awkward conversation to the detriment of your own best interests.
By contacting our team of commercial property solicitors, we can help you navigate the process as sensitively as possible, remaining respectful of your deceased tenant’s family while ensuring your interests are suitably and sensitively protected.