Dealing with tenants: Costly mistakes for probate executors | Austin TX | San Antonio TX
How to Manage Tenants in a Probate Situation
Managing a property in probate can feel overwhelming, especially when tenants are involved. You may be wondering: What are my legal responsibilities? How do I handle rent payments? Can I sell the property while protecting the estate’s value? If you’re facing these questions, this guide will provide clarity and actionable steps to help you navigate this complex situation.
As a real estate broker specializing in probate properties, I’ve worked with many estate representatives to resolve these challenges successfully. Let’s break down the key points you need to know.
1. Locate and Review the Lease Agreement
The first step in managing tenants in a probate property is to locate and review the lease agreement. This document outlines the rights and responsibilities of both the landlord and tenant, which are critical to understand during probate.
If Letters of Testamentary or Administration haven’t been issued yet, you still need to honor the lease terms as they stand. In situations where no written lease exists, consult an attorney immediately to avoid disputes. Without proper documentation, disagreements can arise, potentially leading to costly legal battles.
2. Honor Existing Lease Agreements
As the estate’s representative, you’re legally required to honor active lease agreements. Tenants have the right to remain in the property under the same terms until the lease expires. Review the lease carefully with your attorney to understand the estate’s obligations, such as maintenance and rent collection.
3. Avoid Informal Deals with Tenants
It’s natural to feel compassion for tenants, especially if they had a close relationship with the deceased. However, informal arrangements—such as reducing rent in exchange for property maintenance—can lead to legal complications.
I’ve seen executors make these types of deals for convenience, particularly when managing the property from afar. Unfortunately, informal agreements can backfire, creating ambiguity and increasing the risk of disputes. Keep all arrangements professional and aligned with the lease agreement, or consult legal counsel if no lease exists.
4. Handle Rent Payments Properly
Until the property is officially transferred to a new owner, rent payments should go to the deceased landlord's estate. Ideally, these payments would be deposited into the estate’s trust account. However, that account cannot be opened until Letters of Testamentary and an EIN (Employer Identification Number) are obtained.
In the interim, consult your probate attorney for guidance on managing rent payments to ensure everything is handled properly.
5. Selling the Property with Tenants in Place
Selling a probate property with tenants requires careful evaluation. Ideally, selling the property vacant after the tenant has moved out will attract more buyers and maximize the sale price. However, this is not always feasible.
You can sell the property with tenants in place by making the lease assumable by the buyer. This approach typically appeals to investors but narrows the buyer pool, which could impact the sale price. A cooperative tenant who allows property showings can make this process smoother, while an uncooperative tenant may make it more challenging to attract buyers.
If you’re considering selling with tenants in place, consult a real estate professional. They can provide valuable insight into market conditions and help determine the best course of action for the estate.
6. Document All Tenant Communication
Keeping detailed records of tenant communication is critical. Follow up verbal conversations with written summaries via email to confirm what was discussed. Whenever possible, keep all communication in written form to avoid misunderstandings and protect the estate from potential disputes.
Final Thoughts
Managing tenants in a probate situation requires a thoughtful and informed approach. Every situation is unique, and additional factors may need to be considered based on the property and tenant circumstances. By staying organized and seeking professional guidance, you can navigate these complexities while safeguarding the estate’s value.
Need Help Managing a Probate Property?
Handling tenants in an inherited property can be challenging, but you don’t have to do it alone. At Kritt Real Estate, I specialize in helping estate representatives manage these complexities and protect the estate’s value.
If you have questions or need assistance, reach out for a no-obligation consultation. I’m here to help.
Legal Disclaimer
This blog post is for informational purposes only and does not constitute legal advice. Always consult a licensed attorney for guidance specific to your situation.
