When you enter into a property lease agreement, you typically plan to stay until its term is up. Not many people go into a lease planning on breaking it, and there aren't many ways to break a lease, that is, not without incurring considerable legal costs. Breaking a lease, which is a legally binding contract, can even negatively impact your credit score and future financial plans. But some circumstances are too extenuating to avoid, like when there is a death in the family.
Here are the steps you should take when you need to break a lease due to a death in the family:
When a Co-Tenant Dies
If you live with someone, whether they are your spouse, a family member, or roommate, and they unexpectedly die, you may opt to take over the lease. For the remainder of its term, you can go on living in your apartment without interruption, under the same rules that you always have. Then, when the lease is up, you can renegotiate a new one in your name only.
If the co-tenant paid half of the rent, unfortunately, their death leaves you responsible for the full monthly payment. In some cases, you may receive compensation from their Estate to cover their half of the bills. You may also be entitled to funds if you continue storing their belongings rather than having them picked up by their family or next of kin.
Depending on the landlord, you may be allowed to break your lease if a co-tenant dies. However, this is completely at the landlord's discretion. In most cases, the law protects a landlord's right to collect rent from someone who signed a lease, even in the event of their death. Read on for more on that.
When a Sole Tenant Dies
When someone who lives alone passes away, breaking their lease can be a little more complicated.
In most states, the law dictates that a landlord can collect unpaid rent throughout the lease's term. If someone signs a lease for one year, the landlord is entitled to collect one years' worth of rent from them, even in extenuating circumstances, even if they die while their lease is still in effect.
Most standard rental agreements include a provision that protects the landlord's financial interests. This provision dictates that if a tenant should die before their lease is up, their Estate or next of kin could be accountable for the balance. For instance, if a tenant has three months left in their lease when they die, their Estate - or next of kin, is responsible for paying that remaining sum. If they are unable to, a landlord could take them to court or hold the settlement of your Will up in Probate Court.
Many landlords rely on their rental income to pay the mortgage and taxes on their properties. Leaving them without that rental income doesn't just put them in a tough spot financially, it could potentially put the homes of everyone who lives there in jeopardy.
If You Must Break a Lease Due to Family Death
While the law may protect a landlord's financial interests, tenants still have rights. Some states have moved to limit the number of months a landlord can legally charge rent after a tenant has died. In Pennsylvania, for example, a landlord can only charge rent for two months after a tenant dies and their Executor, or next of kin, sends a written notification of death to the landlord. The state of Colorado, however, has outlawed these lease provisions.
If there is a death in the family and you need to break their lease, here are the steps you can take:
Send Written Notification of Death to the landlord
When someone dies, the Executor of their Estate, lawyer, or another representative will send a Written Notification of Death to their creditors, including their landlord. This acts as a formal notice of a person's death and is the first step in alerting a landlord that they need to begin thinking about new plans for leasing their rental property.
Know what you're financially responsible for
Each state has its own regulations for when and how to break a lease and what considerations the landlord is entitled to when you do. In some states, a tenant's Estate will need to pay rent for the remainder of the lease's term, while in others, an Estate will only be responsible for a portion of the remaining rent owed.
Aside from rent, a tenant's Estate or family can also be responsible for fees associated with storage or cleaning services. Knowing exactly what an Estate is responsible for will help protect it from predatory landlords who may be trying to get more than they are entitled to by law.
Collect your family member's belongings
Once a landlord receives a Written Notification of Death, they have the right to secure the property to protect themselves from liability if any property is lost or broken. For this reason, it's important to contact the landlord once they have received the Written Notification of Death to arrange an appropriate time to clean out the apartment and collect your family member's belongings.
Sign a Release to the Rights of Possession
Once the unit is clean and all belongings are removed from the premises, a Decedent's next of kin will sign a Release to the Rights of Possession, officially ending the lease and their rights to the space.
A Release to the Rights of Possession is a standard form stating that the tenant who has been living there is no longer occupying the unit and that all their personal items have been removed, effectively ending the Decedent's lease.
Breaking a lease can be expensive and stressful, but in some cases, like a death in the family, there's just no way to avoid it. By knowing the tenant's rights in your state and following these steps, you can rest assured that your deceased family member's lease has been closed and that their landlord or property manager won't be coming after you for unpaid rent.
Estate Planning is one of those things that people tend to put off. It's easy to think that you have all the time in the world and will get around to it eventually. But as this time of year reminds us, accidents happen, and your time may be up before you've planned for it.
Here at Trust & Will, we make it easy to get started. Through our website, you can complete your Trust-Based Estate Plan, Will, and Nomination of Guardian documents all from the comfort of your own home. Get started today to set yourself on the path for success and financial wellness!
Not sure where to start? We offer a free online quiz to point you in the right direction of where to begin.