As unsettling as the prospect may be, the simple fact is that more than a few agents, during the course of their property management careers, will find themselves having to deal with the death of a tenant.
With an ever-increasing number of single person households, the odds of an agent having to face the grim reality of sole tenant death are narrowing.
So it pays to be prepared – this means making sure you’re up-to-date with the tenancy legislation in your state or territory as it applies to tenant death, and also knowing what to do to assist your landlords.
While the death of a tenant can be incredibly challenging emotionally, it can also have serious financial ramifications for the landlord.
That is why having a landlord insurance policy that covers death of a tenant is important.
There are often costs involved that may not be able to be recouped from the bond or estate.
But, depending on the insurance, a claim may be able to be lodged to cover lost rental income, property damage, repairs, forensic cleaning and costs associated with re-letting.
While I can’t provide any advice on how to handle the personal aspects of dealing with a tenant death, I can offer some practical tips that might help from an insurance perspective.
Secure the premises
Whether you discover a tenant has passed away first-hand or are told by a member of the tenant’s family (or an executor), the first thing an agent should do is work to secure the premise.
This helps with insurance as basically all policies state that once an incident has occurred, the policyholder must work to reduce further loss.
So, once the police say the property can be accessed, attend the property and make sure it is properly secured:
- Use your smartphone to video your entry, actions around the property and exit (this can help with evidence of your insurance claim).
- Document tenant possessions and the condition of the premises.
- Do not remove anything that belonged to the deceased tenant. The only things you should consider removing are items like spoiled food or things that pose a risk to the integrity of the property.
- Lock the doors and windows and generally secure the property.
- If urgent repairs are needed, check with the landlord’s insurance provider as many will need to authorise repairs before they are made.
- Do not attempt to clean up or arrange for any specialist/trauma cleaning – this is the responsibility of the tenant’s legal representative.
- Do not allow anyone to enter the property or remove any items.
- You should only provide access for the tenant’s legal representative (sight proof) – give them a set of keys, as it is their responsibility to take charge of the tenant’s personal property and restore the property to the state it was in at the start of the tenancy (fair wear and tear excepted).
If the police are involved, the officer-in-charge will advise you of any actions you are required to take in respect of the property.
Otherwise, when appropriate, open lines of communication with the deceased’s legal representative.
While it may be difficult to negotiate things like clearing out possessions or ending the lease, it needs to be done so that financial losses can be minimised (as mentioned, there is a condition in most landlord insurance policies that requires the policyholder to act to prevent further loss and failing to do so could impact a claim).
Most property investors cannot afford to be without rental income for an indefinite period and they will rely on you to manage the process and legalities.
Speaking of legalities, it is important that you act within the applicable laws.
Remember that just because a sole tenant has died, it does not automatically end the tenancy agreement or give the agent or landlord authority to do as they please at the rental (e.g. to take immediate possession of the property or clear out tenant possessions).
If the agent or landlord doesn’t act within the law, it can affect an insurance claim.
All the rules and responsibilities outlined in the tenancy agreement and dictated by law, still apply.
Those of the tenant pass to their legal representative (the deceased tenant’s property, debts and contracts – including their lease agreement – transfer to their estate or legal representative).
Both parties need to know their obligations in respect to paying rent, entering the premises and inspections, maintenance and repairs, disposing of tenant possessions, cleaning (any cleaning required, including bio hazard/trauma, is the responsibility of the legal representative – not the landlord, nor the police even if it is a crime scene), issuing notices, use of bond monies, returning the bond, disclosures, and so forth.
You will need to liaise with the tenant’s legal representative about ending the lease and having vacant possession returned.
Most landlord insurance policies will respond to claims relating to tenant death, but there are varying levels of cover, inclusions and exclusions.
For example, unlike EBM RentCover, some insurers do not cover damage and others do not cover rental losses.
You should check with the landlord’s insurance provider about what is covered, and under what circumstances it applies.
Once the property has been re-let, an insurance claim can be lodged. You can assist the landlord with their claim by:
- Checking with the insurance provider about what costs may be covered by the landlord’s particular policy and what paperwork is required.
- Ensuring that a copy of the death certificate (or alternative documentation agreed by the insurer) has been received – it is needed for the insurance claim.
- Undertaking a final inspection and documenting the condition of the premises – this needs to be provided to the insurer.
- Arranging for repairs and cleaning if the tenant’s legal representative has failed to do so.
- Keeping all tax invoices and receipts for expenses incurred.
- Documenting all contact with the deceased’s legal representative and keeping excellent records about any actions you took regarding the property.
- Keeping written evidence of re-letting advertising activity including dates listed, costs and commencement date of the new agreement.
- Supplying all supporting documentation, including lease agreement, rent ledger, inspection reports and so on.
- Submitting the claim on behalf of the landlord.
Unfortunately, dealing with the death of a tenant is a harsh reality that many agents will be confronted by at some point.
It can be incredibly challenging on both personal and professional levels as you try to juggle the conflicting needs of your landlord client and the deceased’s family or representative.
EBM RentCover’s team of compassionate claims specialists can guide you through the process.
Their expertise can help to minimise the emotional and financial stress associated with an insurance claim, especially in such distressing circumstances.
Want to partner with EBM RentCover? Email firstname.lastname@example.org.