Landlord and Tenant law: Picking up the pieces when you pick up a tenant
In this real-life case study we look at the issue of tenancy complications following the owner’s death.
Our Client’s father had died 11 years ago. Prior to his death, he had purchased a property that he allowed his brother (“U”) to live in, the terms being that U would pay the mortgage repayments plus the utilities. There wasn’t a written tenancy agreement and he died without leaving a Will.
Our Client (“C”) did not realise that she had any obligations, either to obtain Letters of Administration, pay any Inheritance tax or any Income Tax either. The property continued to remain in her father’s name with U in occupation.
In addition to not knowing what to do about the Estate, she was not aware of any obligations she had as a landlord. In being her father’s next of kin and beneficiary (as well as Administrator of his estate), she was liable for complying with the legal requirements of a landlord that had been introduced in the intervening period.
C came to see us as U had stopped paying the mortgage repayments and she did not know what to do.
As with all such matters, when we provide our client’s with legal advice we also try to give practical advice as well. We advised her on negotiations with the mortgage company; and explained to her that the mortgage payments paid by U were considered “rent” or “income” to the Estate for which she had to pay Income Tax in her capacity as Administrator.
Ultimately – and armed with our recommendations – C decided to discuss matters with her uncle. It was agreed to formalise the relationship with a written tenancy agreement with an increased rental payment, part of which he would be entitled to receive benefits for. C would also attempt to remortgage the property to raise additional capital to pay off the Income Tax and Inheritance Tax.
C was worried when she came to us and she realised that, having not addressed matters for 11 years, it was going to be a difficult situation to remedy. However, she left with a plan of action of what to do and in the full knowledge that we would only be a phone call away if she needed more advice.
If you encounter tenancy complications following the owner’s death then contact our Landlord and Tenant team for expert guidance. Call us on 0333 888 0404. Alternatively send an email to us at [email protected].
