Life can throw you for a loop. And the death of a family member– whether sudden or expected, can upend things in unpredictable ways. When someone in a family dies, other family members may find themselves needing to change plans and take on new roles.
Going through the grieving process after a death involves complex emotions and a timeline that’s different for everyone. But going through the death of someone close to you can also involve lots of practical issues that just have to be dealt with– paperwork and taxes, funeral arrangements, debts and sorting out estate planning matters. A lease can be part of this. When there is a family death, what does it mean for a lease that’s in place? Keep reading to learn more about how a death impacts an active lease and who may be held liable for it.
Types of Leases
First, let’s look at a few types of leases. A lease is a legal agreement between a landlord and a tenant(s) where the landlord provides the use of real estate, and often some associated services, to the tenant in exchange for a set amount of rent. Leases can be simple or complex, but they typically outline:
The name of the tenant or tenants
The location of the property
The amount of rent due
When the rent is due
Payment of utilities
Terms and conditions of renting the property
Commercial – A commercial lease deals with buildings used for business and other non-residential uses.
Residential – A residential lease provides a home, townhome, apartment, condo or other residentially-zoned building for a tenant to live in.
Month-to Month – A monthly lease lasts for a month and can be renewed every thirty days.
Short Term – Short-term leases can be weekly, monthly, for three months, six months, or any period less than a full year.
1 Year – Year leases last for one year/12 months.
Long-Term – Long-term leases can be for one year or more. Any lease that’s for more than twelve months– 15 months, 18 months, two years or five years, for instance– would be considered a long-term lease.
Verbal/No Written Lease – Verbal lease agreements that are not in writing are still valid but will typically follow similar terms as a 30-day/one month lease.
Leases can offer security to both landlords and tenants. Since they are legally-binding documents, both the landlord and the tenant are expected to uphold terms of the lease, including honoring its duration. That means if a tenant signs a year lease that begins on January 1, both they and the landlord can expect that the tenant will be renting the property for the entire year. But sometimes there are exceptions. Certain circumstances can be used to end a lease before it runs out.
When Can You Break a Lease?
There are times when breaking a lease is completely valid and the best or most necessary option for either the tenant or the landlord. Normally, a lease agreement is entered into with the assumption that the landlord will provide that space for the tenant, and the tenant will pay rent for the entire term of the lease. Breaking a lease means ending it sometime before its original end date.
Each state has its own landlord-tenant laws. Questions about breaking a lease can be state-specific. But generally, if one or more terms of the lease has been violated by either the landlord or the tenant, or there is a habitability issue with the property that the landlord has not fixed in the standard amount of time, the lease may be broken. Some leases will have stipulations that if they are broken early, the tenant will have to pay a penalty. Sometimes, the landlord and tenant will come to an agreement and end the lease amicably. In other words, it depends on the situation.
Can You Break a Lease due to a Family Death?
If a family death occurs, this may be one of those times you will want to break a lease. Again, it will partially depend on the rules in your state, the terms of the lease, the length of the lease, and – perhaps – the relationship of the parties involved.
If someone close to you has died and you need to get out of your lease for any reason, say to move closer to family, check your lease for a hardship clause. In the event of a difficult life change – death, divorce, job loss – you may be able to terminate the lease at minimal cost.
If a family member has died and they were renting with a lease, that lease becomes part of their estate and future rent payments for the duration of the lease may be owed. If the deceased person had a month-to-month lease, a month’s rent may be owed; if the person had a year lease with ten months left to go when they passed, their Estate may owe a larger amount.
So, yes, leases can be broken. And sometimes a landlord may decide to end the lease without going after the money, but there will typically be some sort of early termination fee for breaking a lease, regardless of why a lease needs to be broken.
Who is Liable for the Lease?
When someone dies, they leave behind what’s known as an Estate. A person’s Estate is what belonged to the deceased at the time of their death. Money, property, investments and holdings, and any other valuables that a person owned – also known as their assets, are part of their Estate. When that person dies, any debts or payments that they owed may be collected out of their Estate. If an amount of money is owed on a lease when someone dies, the landlord may attempt to collect this payment out of the person’s Estate.
What about a Car Lease?
Like a residential or commercial property lease, a car lease promises the use of a vehicle for a set amount of time, in exchange for regular payments. Often, cars are leased for several years. If a person dies with a leased car, payment for the amount of time left on their lease can become a debt that will have to be settled by that person’s Estate.
Estate Planning Now Can Help in the Future
You can’t predict what will happen in life, but you can be prepared. Setting up an Estate Plan and encouraging your loved ones to do the same can make things a lot easier in the future. Creating a customized online Estate Plan can help minimize fees and taxes owed by an Estate, protect real estate and other assets from creditors, ensure that there will be enough money in an account to cover unexpected debts after a death, and much more.
At Trust & Will, we make online Estate Planning quick and easy. Take our quiz to see where you should start. Get the customized Will or Trust document you need online today.