Landlord died - what rights his tenants have?

dragonfruit

Sadly, landlord passed away, but the rent has been paid in advance for a year. How his death would influence the tenancy agreement?
The landlord was paying off mortgage on the property, as well as he had at least one loan secured on the property.
What are tenants rights in such situation? Would they be allowed to live in the property for the period they paid rent in advance (still 11 month to go). If not, how could they recover the rent money? Can they purchase the property avoiding paying any loans secured on it by the late landlord (assuming that they would get mortgage being disabled and unfit to work, which is probably unlikely)?

silvercar

Property is part of landlord's estate and as such is inherited by his beneficiaries. IMHO the beneficiary has inhertied a tenanted property with tenants having a right to live there according to their AST.

Purchasing would require the beneficiary to want to sell the property and the tenants (as buyers) being able to raise a mortgage or the purchase price. The loans will be cleared as part of the executors function in accordance with the rules on dealing with an estate.

kunekune

If you've paid 12 months rent, I assume you have a 12 month tenancy. That can only be terminated if there is something in the contract that allows it to be terminated.

So far as buying the property is concerned, generally the executors want to sell the property. You don't also buy any loans he has secured on it, although if the executors can't pay off those, they might have difficulty selling it at all.

Don't worry: your tenancy will be on the same terms it was before, but do keep in mind it is unlikely that the executors/beneficiaries under the will want to go into the letting business, so the house is bound to be sold at some point.

dragonfruit

kunekune wrote: »

If you've paid 12 months rent, I assume you have a 12 month tenancy. That can only be terminated if there is something in the contract that allows it to be terminated.

It used to be 12 months (fixed period) tenancy agreement during the first year of renting, but after that it was from month to month. The reason the rent was paid in advance for a year now was that the landlord insisted on that kind of payment, and made a reduction in order to persuade tenants to agree.

mark55man

I would make sure you had all your paperwork ready for when the executor/beneficiary comes calling.

If we expect house value to fall in the coming year (and that is a common feeling) then he will feel obliged to realise the benefit as soon as possible

(Not an expert, I would think proof of intent is king)

franklee

Are you guys sure it's that straightforward?

As there was a mortgage and loans secured on the property and as presumably there will be inheritance tax to pay it may be that the estate can't afford to keep the property on for another year. Also the landlord's earnings will have been lost but presumably life insurance gained, so it's hard to tell.

The tenant's position may at a guess be more like in a repossession situation and thus a tenant's rights may depend on if the lender gave consent to let? I'd guess it all depends on how bad the debts are and if they were insured under life insurance.

Essentially without consent to let the tenant has no rights to stay should the lender wish to act unless they were there before the mortgage was taken out.

dragonfruit

mark88man wrote: »

I would make sure you had all your paperwork ready for when the executor/beneficiary comes calling.

If we expect house value to fall in the coming year (and that is a common feeling) then he will feel obliged to realise the benefit as soon as possible

(Not an expert, I would think proof of intent is king)

I wonder if the mortgage lender and loan lender would not first (before the executor/beneficiary comes calling) want to repossess the property and evict everyone if nobody would be paying off their instalments now. Can they do it, and what then?

BTW, the mortgage lender is apparently Rooftop, and I can see in internet that they have been closed for new business.

clutton_2

""If you've paid 12 months rent, I assume you have a 12 month tenancy. That can only be terminated if there is something in the contract that allows it to be terminated.""

i'm sorry to rain on your parade - but that simply is not true. If the owner/estate of the property in which you live are no longer paying the mortgage, the Lender can apply for a Possession Order from the courts and you could be evicted within a relatively short amount of time. If the late owner paid the mortgage a year in advance (most unlikely) you will certainly have security until the end of the AST.

Lenders tend to be less draconian if it is a Probate sale and if they can see that regular progress is being made towards a sale.

if i were you i would write to the lender immediately, telling them you live there.

find a good complete-market mortgage broker and see if you can raise a mortgage or not.

if you can put in an offer to the Executor of the estate - they may prefer a swifter sale to you than hanging around for months waiting to evict you and looking for another tenant

dragonfruit

franklee wrote: »

Are you guys sure it's that straightforward?

As there was a mortgage and loans secured on the property and as presumably there will be inheritance tax to pay it may be that the estate can't afford to keep the property on for another year. Also the landlord's earnings will have been lost but presumably life insurance gained, so it's hard to tell.

The tenant's position may at a guess be more like in a repossession situation and thus a tenant's rights may depend on if the lender gave consent to let? I'd guess it all depends on how bad the debts are and if they were insured under life insurance.

I believe he fell into one or two months arrears (but it is rather a guess). No idea how big the loan was. Don't know about life insurance, but I doubt he had it.

franklee wrote: »

Essentially without consent to let the tenant has no rights to stay should the lender wish to act unless they were there before the mortgage was taken out.

How can tenants recover their rent then? Where, when and how to apply?

silvercar

franklee wrote:

As there was a mortgage and loans secured on the property and as presumably there will be inheritance tax to pay it may be that the estate can't afford to keep the property on for another year. Also the landlord's earnings will have been lost but presumably life insurance gained, so it's hard to tell.

dragonfruit wrote:

I wonder if the mortgage lender and loan lender would not first (before the executor/beneficiary comes calling) want to repossess the property and evict everyone if nobody would be paying off their instalments now. Can they do it, and what then?

The mortgage and loans would be as much part of the estate as any savings, life insurance payout and equity. It is the sum total that decides if inheritance tax is due.

Most lenders accept that there will be a gap between a death and the mortgage being redeemed. Any payments owed are added to the repayment statement. You don't hear of people being repossessed after death, so I doubt this would be a big issue.

If (worst case) you were evicted before the end of the advance rent period, you would have a claim against the estate for the return of the rent.

I would be interested to know who is going to perform landlord duties like arranging maintenance from now on?

franklee

silvercar wrote: »

Most lenders accept that there will be a gap between a death and the mortgage being redeemed. Any payments owed are added to the repayment statement. You don't hear of people being repossessed after death, so I doubt this would be a big issue.

It seems you missed my main point, it isn't the landlord's home that's at risk of repossession, it's the issue of the tenant's home depending on if there was consent to let or not. If there was no consent then the tenant is more at risk as it's hard to know what the lender would do about it and any decision would depend of details the tenant isn't going to know anything about.

silvercar wrote: »

If (worst case) you were evicted before the end of the advance rent period, you would have a claim against the estate for the return of the rent.

So what I'd do is see if the lender would talk to the tenant, it's unlikely but I'd write and ask if they knew I was there. Even so if the tenant is not signed up to a fixed term then they have no guarantees anyway as they can be served notice. Paying rent up front on a periodic tenancy is just very risky. What assurances were the tenants given?