Death and rental properties: what you need to know

While it isn’t something most want to think about, the reality is that many landlords and property managers will need to deal with a death that affects a rental property. Here’s what you need to know.

Dealing with someone passing away is never pleasant, but the reality is that there are practicalities to be handled when the death has implications for a rental. There can be an awful lot of confusion about what needs to happen, who is responsible for what and the legalities involved. So, let’s look at three scenarios – death of a sole tenant, death of a co-tenant, and death of the landlord – and what you need to know. TIP: Scroll down to find the scenario you are looking for.  

Scenario one: Death of a sole tenant 

Finding out that your tenant has passed can put you into a spin, especially if it’s never happened before. You have some key responsibilities and that can be daunting.  

Notification/discovery 

Chances are you will find out in one of two ways that your tenant has passed. You may be notified, for example, by the police or the tenant’s legal representative (such as an executor or next-of-kin), of the death. Alternatively, you may be the one that discovers the deceased.     

Landlords and property managers may discover the tenant is deceased when they are chasing up unpaid rent, unanswered messages or responding to calls from concerned neighbours. If you suspect that something has happened to the tenant, you can contact the police and request they undertake a welfare check. If you enter the premises and discover the body, leave immediately and call the police. The police will handle formalities like contacting next-of-kin and removing the deceased from the premises. 

Secure the premises 

Once the police return the premises to you, or after you’re notified of the tenant’s passing (assuming the deceased is no longer there), attend the property and make sure it’s properly secured. Take a video of the property and its condition upon your entrance. You should only provide a key or access to the deceased’s legal representative and not allow anyone else to enter the property or remove anything. 

Contact your insurer 

You should contact your landlord insurer to advise them of what has happened. They will be able to provide guidance in respect to your insurance obligations, what cover may be applicable, and the claims process. 

Liaise with the executor 

When appropriate, open lines of communication with the deceased’s legal representative. While it may be difficult to negotiate issues like clearing out possessions or ending the lease, it needs to be done so that financial losses can be minimised. 

Understand your legal obligations 

Your actions need to be in keeping with the legal requirements in your state or territory, making it imperative to understand the protocols and procedures to follow when dealing with tenant death. Refer to the applicable tenancy authority in your jurisdiction or relevant tenancy law. Be sure to follow the rules around handling tenant deaths at rentals such as serving notices, terminating leases, returning bonds, disposing of tenant possessions and disclosures.  

Possession 

You do not have the right to immediately take possession of the property. The deceased’s executor takes on their rights and responsibilities, so they must be provided with access to the premises. The executor is responsible for returning vacant possession to you. 

Tenancy agreement 

Contrary to popular belief, a tenancy agreement doesn’t end when the tenant dies. The tenancy agreement, like other legal/contractual obligations, passes to the deceased’s executor. This means that they are responsible for the tenant’s obligations under the lease such as paying the rent. If the executor does not want to continue renting the property, or (in some states) the owner wishes to end the tenancy due to tenant death, you need to follow your state’s procedure for terminating the lease and returning the bond. 

Rent payments 

Even though the tenant is deceased, you remain entitled to collect rent. The tenant’s estate is liable for rent until such time as the lease agreement is terminated and possession is returned to you. 

Tenant possessions 

The executor is responsible for dealing with the tenant’s possessions and arranging cleaning of the property (including any specialist cleaning required). If the executor does not make good on their obligation, the bond can be used to pay for repairs and cleaning to return the property to its original condition, but the usual bond rules apply. 

Re-letting 

Once vacant possession is returned, the property can be advertised for rent. It’s important to keep written evidence of the advertising activity including dates listed, costs and commencement date of the new agreement, as this will be needed when it comes time to submit an insurance claim. 

Scenario two: Death of a co-tenant 

When a tenant passes but there are other tenants at the rental, you need to understand the rules in your state or territory so that all parties know where they stand. The rules differ, so be sure to check what is required in your jurisdiction. 

Notification and liaison 

Once you are notified that a co-tenant has passed, you will need to liaise with the deceased’s legal representative (which may or may not be a co-tenant such as a spouse) and any (other) co-tenants when appropriate. 

Tenancy agreement 

The deceased’s legal representative takes on their responsibilities under the tenancy agreement. Any co-tenants remain responsible for their contractual obligations under the lease. If the deceased’s executor does not want to continue renting the property, you need to follow your state’s procedure for ending the deceased’s lease. If the co-tenants wish to remain at the rental, they can carry on with the tenancy agreement but will be responsible for paying the full amount of the rent. If another co-tenant wishes to live at the premises, a new tenancy agreement is required. You need to follow the requirements in your jurisdiction when it comes to the bond. If the co-tenants do not wish to remain at the property, you can negotiate ending the tenancy agreement. The usual requirements for terminating a lease would apply including in respect to returning the bond. In some jurisdictions, there is no penalty for a co-tenant to break a lease when a co-tenant has passed away. 

Rent payments 

Until the deceased’s tenancy agreement is terminated, their estate remains responsible for their share of the rent. Any co-tenants continue to be responsible for their share also. 

Death of a tenant and landlord insurance 

Aside from the emotional toll that dealing with a deceased tenant can cause, there are often costs involved, which can stretch into the thousands of dollars and might not be able to be recouped from the bond or estate. Depending on the policy, landlords may be able to claim on their insurance to cover lost rental income, damage/repairs/cleaning and costs associated with re-letting the property. Talk to your landlord insurance provider about what cover is available. 

Scenario three: Death of the landlord 

Sometimes a death that impacts a rental is not that of a tenant, but of the landlord. In these cases, the landlord’s legal representative and property manager need to know what happens next. As the rules may differ, always refer to applicable tenancy law and authority. 

Notification and liaison 

When the landlord passes, the property manager will likely be notified by the landlord’s legal representative.  

The property manager will need to liaise with the landlord’s executor. They may also need to advise the tenants of the landlord’s death and what will happen in respect to the rental. 

Things may get a bit complicated if there are co-owners, so always refer to the applicable tenancy authority for guidance. 

Tenancy matters 

In the same way that a tenant’s death does not automatically end a lease, nor does the death of the landlord. The landlord’s executor becomes responsible for the landlord’s contractual obligations including the lease agreement and the property management contract.  

This can get complicated, depending on whether it was a sole landlord or co-landlord. Rules around what happens when a landlord dies, including what happened to the bond, vary between jurisdictions, so always refer to the appropriate tenancy authority for details. 

Death of a landlord and their insurance policy 

The death of a landlord can be a complex and sensitive time, and as an insurance provider, we understand that each situation is different. While we don’t get involved in legal or estate matters, our role is to help ensure the property remains protected while things are being worked through. Here’s how we typically manage the policy:  

• Policy updates: In many cases, once we’re notified and receive supporting documentation, we may update the policyholder’s name to “The Estate of the Late [Landlord's Name]”. This helps ensure continuity of cover while the estate is being settled. However, this may not apply in all cases. For example, if the policy is held in the name of a company or a superannuation fund, different steps may be needed. Talk to your insurer for more info.    

• After probate: Once probate is granted (via documents such as a grant of probate or letters of administration), the insurer will usually cancel the existing policy. The person or entity who inherits the property can then take out a new policy in their own name if they choose.  

For legal or estate-related questions, it’s always best to speak with a solicitor or legal adviser.  

While dealing with a death that affects a rental property can be difficult, EBM RentCover’s Expert Care team is on hand to help minimise the emotional and financial stress associated fulfilling your obligations and with making an insurance claim. If you need assistance, please reach out – 1800 661 662.

*While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you need us we are here, contact 1800 661 662 if you have any questions.