You are a tenant in a commercial real estate lease and the landlord is an individual, not a legal entity such as a corporation or an LLC (limited liability company). You learn the landlord has died. What should you do to protect your investment and make certain your future actions are within the context of the lease agreement?
To protect your interests as the tenant in your commercial real estate lease, it is important to recognize that you will be dealing with a new person when the landlord is deceased. It is a good idea to be proactive, identifying who is that new person in charge and spelling out the future actions between you, as the tenant, and the deceased landlord’s legal representative.
When you have a commercial real estate lease and your landlord has passed away, you should consult a real estate attorney. Howard Stross is Board Certified in Real Estate Law by the Florida Bar Association. He can help guide you through the process. Call for a free consultation: (813) 852-6500. Here are the basic steps to be taken to help protect a tenant’s interest in a commercial real estate lease:
- Read the commercial real estate lease. Note any critical dates and terms, such as when and how the tenant must give notice to the landlord of the tenant’s intention to renew or terminate the lease, extend the lease term, and pay real estate taxes or insurance premiums.
- Pay rent on time. Pay rent exactly as required by the lease. There may have been variations while the landlord was alive. Strictly speaking, the tenant must pay rent according to the lease now that the landlord is no longer making decisions. Make rent checks or any check to the landlord payable to the landlord according to the landlord’s name on the lease. If Frank Sample is the person you consider to be landlord, but the lease states Frank Sample Corporation is the landlord, the rent check should be made payable to Frank Sample Corporation.
- Find out the process that will be used to settle the landlord’s estate; probate administration, trust administration, or both. The deceased landlord will likely have some or all of his or her estate subject to probate. If no probate can be identified, it may mean a trust established by the deceased landlord owns the real estate. A Notice of Trust must be filed with the Clerk of the Florida County where the landlord resided to inform all about the deceased landlord’s trust. The Notice of Trust must include the name and contact information of the successor trustee. Ask the Clerk of the County if a Notice of Trust was filed.
- Provide notice in probate or trust administration or both. Discuss with your attorney whether or not a written notice of the lease agreement should be recorded in the public records of the Florida County where the real estate is located.
- Pay third parties on time. Any money the tenant must pay to third parties for such things as real estate taxes, insurance premiums, maintenance or repairs bills, etc., should be paid by check.
- Determine requirements for notices. For example, if the tenant wishes to vacate or not renew the lease, it is the tenant’s responsibility to provide notices of intent according to the lease terms.
- Identify and work directly with the lawful representative of the deceased landlord. If you intend to vacate the leased space, try to have an exit walk-through with the lawful representative of the landlord to obtain a written statement that the space was left in the condition called for under the lease. If a walk-through is not possible, take photos of the interior and exterior of the space with a witness present. Dates of the photos are important. Include a copy of that day’s newspaper in the photos to prove when the photos were taken.
- Return keys and provide a forwarding address to the deceased landlord’s representative. This is important if a deposit is held that the tenant expects to have refunded. To avoid delays, read and fulfill what the lease requires of the tenant.
- Do all you can early on to increase the chance of receiving a security deposit refund. If the landlord’s estate is being probated, a tenant may file a claim with the Clerk of Court, Probate Division, in the county where the landlord resided. If there is a trust administration, a written notice of the request for the return of the deposit may be submitted to the successor trustee. Such a claim is time sensitive and should be filed or notice given, even if time remains before the expiration of the commercial real estate lease term.
- Document actions required by the lease, whether required of the landlord or tenant. If there is some action required by the lease, give written notice to the legal representative of the deceased landlord describing the required action and when it should happen. Both parties should agree on the details of the required action and the date of completion.
The above is not an exhaustive list of everything a tenant should consider when its commercial real estate landlord passes away. We encourage a tenant to be proactive with the deceased landlord’s legal representative. Tenants are encouraged to seek the advice of legal counsel before taking any step. We can help. Howard Stross is Board Certified in Real Estate Law by the Florida Bar Association. He can help guide you through the process. Call for a free consultation: (813) 852-6500.