Lease Purchase Tenant passed away. Can daughter take over?

Question

Hi,

I own a Mobile Home in which I was offering a Lease Purchase to the tenant.  She was on a 10 year Lease Purchase plan.  I actually just purchased it in Dec 18’ and we signed a new contract for the remainder of the note, which was 3.5 years left at the time.  She made payments by just depositing so I hardly ever saw her.

I received a phone call from her daughter yesterday stating that her Mom had passed away a year ago and that she’s been making the deposited payments.

I know she is not the only sibling and to my knowledge, the daughter didn’t live there before her passing (but I don’t know for sure).

Anyway, the only person in the lease is The Mother.  The is no mention in the lease about this circumstance.  It does say that the tenant cannot sublease without written permission.  Again, I had no idea about any of this until yesterday.

My questions are:

A) Does the daughter have the legal rights to the Mobile Home and the right to take over the remainder of the term, which is about 2 years?

B) If not, how would you as a landlord handle this situation?

Thanks in advance :)

Mary E Copas · Answer

Interesting situation.  To what degree, if any, did the mother invest a deposit before signing the contract? To what extent, if any is it an inheritable interest?

Rachel H. · Answer

@Kim LeJeune Definitely consult with an attorney who specializes in this area before moving forward. If you decide to work with the daughter, keep in mind she'll probably have to pass the park's application process if the mobile home is located in a mobile home community. Good luck!

John Brinkos · Answer

Legally the probate/heirs process may prevent that depending on the structure of the contract depending on the way the purchase process was progressing. Seems to me like it is definitely safer with legal consult.

Tim Winter · Answer

What's preventing you from ammending the contract to replace previous resident with the daughter? If she has been making payments for the past year, wouldn't having a paying resident be preferable to not? If it's a lease purchase and it's currently just a rental contract with an eventual sale, assuming there has been no equity paydown yet?

if you go to probate that will lengthen your costs and time to resolution, and not be as simple.

Tom Gimer · Answer

There is no reference to where this property is located, so I'll just make a couple general points that may help with the analysis.

First, does the lease option agreement indicate that it is binding upon the parties' heirs, successors and assigns (or similar language)?  If yes, then the rights under the lease option agreement would pass to the dead tenant's personal representatives and heirs. Even if not, most jurisdictions would see this real property transaction as an impersonal contract that would NOT be terminated by a death... so even without that specific language the odds are quite high that the contract survived the death and can be enforced by the heirs.

The next question would be who is/are the heirs? In most places if someone dies without a will, the heir is the spouse (if any), and if no spouse the children (if any), and if no children the parents... and so on. So if the tenant died without a will, no husband and only one child, you may have everything you need to know in front of you. You'd want to review local law on "intestate succession" to confirm who you should be dealing with. Similarly, if the tenant died with a will and the will named the daughter currently living in the house as the beneficiary of this asset, that also answers things.

Of course you could now tell us that the house is in Germany, in which case everything I wrote is probably wrong. Hope this helps! Good luck.

Marc Winter · Answer

Three reasons you need an attorney:  1.  Probate laws  2.  The decedent's will, if any.  3.  Your business acumen as to whether you want to allow the heir to take over.

Good luck.

David Clay · Answer

This is interesting. You should definitely review your contract in more detail and consult an attorney. The easy way would be to simply allow the daughter to establish a new contract with the remaining term of the original contract. Since it was a lease-option (you said purchase, but this is how I refer to these things) I think she has lost the option. However, if you're holding a mortgage then things are different and the house would need probate I suppose. It all depends on your contract. Consult an attorney for clarity, but I would think that a simple option to purchase would be voided with her passing. The daughter's negligence in telling you about this issue is her own problem and she would need to deal with any consequences. It doesn't sound like you're dealing with a woman who is on top of things so this is something to consider. I would worry about someone who didn't have enough wherewithal to tell me that her mother, my tenant, passed away. This is a simple task that most all adults fully understand. Either way, good luck.