It sounds unpalatable, and certainly no one would wish for it, however if a tenant dies in your rental property, there are a number of implications that you should be prepared for.
While landlord insurance can cover you in the event of a tenant’s death, different policies offer varying levels of cover, explains EBM Insurance Brokers’ RentCover division general manager, Sharon Fox-Slater.
“The financial costs vary depending on the situation. There can be direct costs, in terms of lost rent and clean-ups, and indirect costs if a property is slower to re-lease because of the associated stigma. Most landlord insurance provides some cover if a tenant dies, although the extent varies depending on your insurer,” Fox-Slater explained.
She cites the example of a pay out they made to one investor, in the tragic event of a murder suicide, where a $50,000 repair bill and further $22,000 of lost rent over a 10-month period were funded by ther policy.
New carpet, tiling and repainting was required. Other claims included a $17,000 loss of rent over 11 months due to a tenant passing and the real estate agent’s difficulty in tracking down next of kin to recover their goods.
Another case mentioned by Fox-Slater included a tenant who committed suicide and had no next of kin. In this case, the State Trustee becomes responsible and the landlord was unable to access the premises until the possessions were auctioned and a funeral had been held. The lost rent paid out in this case was $11,000.
Frequently, for tenants living alone, the landlord or the property manager can be the person making the discovery of a death when looking to find out why rent has not been paid.
“Dealing with a family that is grieving can make negotiations around issues like clearing out possessions quite difficult. However, many property investors aren’t in a position where they can afford to lose money indefinitely,” she said.
10 tips to bear in mind in the event that a death may occur:
- Be tactful, sensitive and compassionate in all dealings with the tenant’s family and friends.
- Contact the next of kin and pay your respects.
- Ask the next of kin who they would like you to deal with regarding the property.
- Contact your insurer to ask about your cover and what paperwork is required to make a claim, for example a death certificate or published funeral notice.
- If police are involved, liaise with the officer in charge of the investigation as to when access can be expected.
- Organise a meeting with the person nominated by the next of kin about plans for vacating the property. Approach the conversation tactfully.
- Offer the person contacts for firms who might be able to help pack, sort and store possessions until the family is ready to deal with them.
- Be sensitive about the timing of any open for inspections or other contact – being mindful of events such as the funeral.
- When the property is vacated, clean it, using specialist assistance if necessary, and re-advertise it for lease.
- Keep all receipts and records to assist in your landlord insurance claim.
Source: Property Observer