Where does rent arrears sit in the order of paying creditors?

reg091

Yes Silvercar that is exactly the "risk" I have to factor in order to get the family heirlooms etc that I want. Yes we are arranging a funeral and are looking at about 2K for that, yes there will be rent to pay from the time he died up until we vacate the flat, (his rent is still being paid by Housing Benefit until we notify them so we won't owe that rent - but will have to pay back HB of course). Beyond that there is not much further likely debt we can see. He has no credit cards or loans. His bills are paid up via DD.

We will have to pay back pension overpayment and pay for removal of "junk" from the flat and cleaning.

He has about £3K in cash plus whatever we can get for a few antiques etc.

konark

Even a modest funeral could wipe out the 3 grand so effectively the estate has virtually no assets.

getmore4less

reg091 wrote: »

Thanks getmore4less. The info in rent is useful, although it is rent owed now post death and before the flat is handed back to the HA.

The complication arises post death as any rent due under contract falls on the estate but If someone says I need longer to clear the place then that may fall out side the estate if the estate can't pay.

Where the estate can't pay the contractual payments it is in usually better to get the stuff out* and let landlords know they can have it back as no one will taking on administration and contesting an early termination of the tenancy.

*Remember assets removed are for safe keeping.
(read the reg091 link it covers it well enough)

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As you have realised where the total costs of a tidy estate are not too high then it can go a lot smother with less rush and less hassle from creditors over small amounts.

As benefits/pensions are involved getting them sorted might take a bit of time if overpayments are involved.

reg091

UPDATE: so it turns out my uncle was not so destitute as we were led to believe! I have now identified approx £40K in bank/investment assets and what is possibly a treasure trove of antiques. Debts are looking to be a few hundred £ at most.

Questions: I now have to register for LoA (as the investment portfolio people won't release without that). It looks like the PA1 needs a full value of the assets so I have to get all the antiques valued. But do I have to wait until I have the LoA before I can do anything (like sell the antiques, pay the creditors)? Or can I get on with everything leaving the redemption of the investment portfolio until I have the LoA?

It seems that I will have finished the whole process of winding up the estate (minus the redemption of the investments) long before I will have even received the LoA giving me authority to wind up the estate. Is that normally how it works out?

Yorkshireman99

reg091 wrote: »

UPDATE: so it turns out my uncle was not so destitute as we were led to believe! I have now identified approx £40K in bank/investment assets and what is possibly a treasure trove of antiques. Debts are looking to be a few hundred £ at most.

Questions: I now have to register for LoA (as the investment portfolio people won't release without that). It looks like the PA1 needs a full value of the assets so I have to get all the antiques valued. But do I have to wait until I have the LoA before I can do anything (like sell the antiques, pay the creditors)? Or can I get on with everything leaving the redemption of the investment portfolio until I have the LoA?

It seems that I will have finished the whole process of winding up the estate (minus the redemption of the investments) long before I will have even received the LoA giving me authority to wind up the estate. Is that normally how it works out?

Until the LOA grant is made strictly speaking you have no authority to do anything by way of disposing of the assets, No need to get professional valuations of the assets as not IHT will be payable,

SevenOfNine

3 times we've done this & I've always thought it was a bit "chicken & egg". You have to do things that could be classed as intermeddling, yet you can't necessarily sit about waiting several weeks for the LoA/Probate process to complete before getting started - not with a rental flat!

In each case we've been confident the estates would definitely NOT be insolvent, so went ahead (as executors & beneficiaries) with funeral arrangements (bills to the deceased's bank a/c's for 2 of them), freezing/closing bank a/c's (paid out by those on sight of death cert when under each organisations 'limit' for doing so - with a disclaimer signed). It's quite amazing exactly how much you can achieve with nothing more than a death cert actually.

So for us, I'd say yes, that is how it "normally works out" - & we had no problems. We even put houses on the market "subject to probate" so buyers were lined up to complete as soon as that came through.

Housing Assoc was a different story. They let us keep the flat for 1 week rent free from date of death. We needed a 2nd week to sort through it & had to pay rent for that.....but in exchange they were so desperate to get it back for other tenants they offered to clear it of absolutely everything we did not, or had not, taken by the end of the 2nd week.

TBH we considered that more than fair, there were many, many years of furnishings and skip loads of tat/junk to be disposed of. Flat located in the London Borough of Kensington & Chelsea & I dread to think of the cost to the estate for that if we'd had to get it done. There was also overpayment of rent in the HA pot, so they took the extra week we used out of that.

You should probably speak with Uncle's HA (& look at his contract), as GM4L's post #24. Someone will be liable for the rent since DoD, most likely the estate now you know it's not insolvent (& you if it were once you've intermeddled). To be fair, you can't just take your own time with it leaving them losing money. I don't see any HA letting that happen.

reg091

Thanks SevenofNine. That is all very similar to the position we are in. HA flat is in LB of Westminster so not sure about clearance costs. The HA want me to sign a form saying when we will be handing back the keys and as my answer is "as soon as possible" then I haven't signed it yet (it also makes clear that once signed I am responsible for rent since DoD not the estate). I also see from the tenancy agreement that I potentially have a right to inherit the tenancy! Tempting - a flat in St John's Wood for £107 PW rent!!

Tenancy also says it has to be kept decorated by the tenant and he certainly never did that! So, I expect them to charge us for that.

TBH I am concentrating on clearing out the flat asap as I know that we will owe them some rent. As soon as I am in a position to hand back the keys then I will find out how much. I am tempted to leave behind the junk and let them bill me for the removal as it will be less hassle (I am about 40 miles from London and my sister lives in Devon!).

Yorkshireman99

reg091 wrote: »

Thanks SevenofNine. That is all very similar to the position we are in. HA flat is in LB of Westminster so not sure about clearance costs. The HA want me to sign a form saying when we will be handing back the keys and as my answer is "as soon as possible" then I haven't signed it yet (it also makes clear that once signed I am responsible for rent since DoD not the estate). I also see from the tenancy agreement that I potentially have a right to inherit the tenancy! Tempting - a flat in St John's Wood for £107 PW rent!!

Tenancy also says it has to be kept decorated by the tenant and he certainly never did that! So, I expect them to charge us for that.

TBH I am concentrating on clearing out the flat asap as I know that we will owe them some rent. As soon as I am in a position to hand back the keys then I will find out how much. I am tempted to leave behind the junk and let them bill me for the removal as it will be less hassle (I am about 40 miles from London and my sister lives in Devon!).

I can understand your inclination to leave stuff but the landlord is likely to try and exact a heavy price. A house clearance company will be cheaper than the landlord will add a percentage on top of the cost. You need to play hard ball with them.

reg091

Thanks Yorkshireman I know that you are right! I will investigate house clearance costs!

getmore4less

Executor powers come from a will, so they can get on with the job without a grant.

Technically an administrator(LOA) is not an executor they should value the estate, apply for the grant, then deal with the estate/assets.

In practice they can also get on with the job if they are reasonably happy there won't be complications that result in them not getting the grant.

Where the beneficiaries are also on side with getting on with the job that helps as less thing to worry about and potentially help.

Where IHT may be liable it can be a good idea to be careful with assets that may have valuations that HMRC might want to query.