Acting as a personal representative (“PR”) will at the best of times be a demanding task. That is particularly so where the deceased owns or has interests in properties which are subject to tenancies and or occupation contracts (as residential tenancies and licences are now called in Wales).

Following a recent case in which I represented an executrix in an action against a tenant of a property forming part of the deceased’s estate, the distinct difficulties of the crossover between the administration of estates and issues of landlord and tenant were highlighted to me.

The issues in each case will depend on the particular facts, given the myriad of ways property can be held, leased, and then passed through wills or the under the rules of intestacy.  There are however some common factors which can be discussed in the hope that some pitfalls can be avoided.

Ownership of the Property In Question

One of the key factors as to how a PR ought to proceed will depend on how the property in question is owned. If the property was owned by the deceased and another as joint tenants, then there will be no role for the personal representatives; due to the principle of survivorship both the legal and equitable title will pass on to the survivor. That is so regardless of whether the Will purports to pass the property on to any beneficiaries.

Where a property is owned solely by the deceased prior to death the legal and equitable title will vest in the PR under the Administration of Estates Act 1925.

Should the property have been owned as tenants in common under the Law of Property Act 1925 and the deceased is the first of the joint legal owners to pass only the equitable title will pass to the estate and therefore vest in the PR. This is of particular significance where the property is rented.

Who is the Landlord?

As noted above given the myriad of ways properties can be owned, leased, and bequeathed this is not necessarily a straightforward question and not one which a generic answer can be relied upon. However, a few general principles and or categories may well provide a  good starting point.

Where the property was owned solely, by virtue of the property vesting in the personal representatives, they will almost certainly become the landlord in relation to any existing tenancy/ lease.

The more interesting and often missed point in all of this is who becomes the landlord where a tenant in common dies. As stated above only the beneficial interest passes to the estate. The PR will not thus have legal title. The legal title becomes solely owned by the surviving tenant in common.

The definition of landlord differs from statute to statute and is not as easy to define as it may first appear. Section 45 of The Housing Act 1988 defines landlord as follows:

‘“landlord” includes any person from time to time deriving title under the original landlord and also includes, in relation to a dwelling-house, any person other than a tenant who is, or but for the existence of an assured tenancy would be, entitled to possession of the dwelling-house’

The case of Barrow and Amey v Kazim and others (2018) EWCA Civ 2414 discusses this definition as well as definitions under other statutes and provides some illumination on the how the court may define landlord.

What is apparent, from the above is that, a mere beneficiary cannot be a landlord. That is so as a beneficiary cannot be the original landlord because no other person could derive title from them, the beneficiary having no legal title. Moreover, whilst a beneficiary under the Trusts of Land and Appointment of Trustees Act 1996 might be entitled to occupation of a property in which they have an interest, they are not entitled to possession. The beneficiary cannot therefore be “any person other than a tenant who is, or but for the existence of an assured tenancy would be, entitled to possession of the dwelling-house.”

It follows from the above that a PR in the case of joint ownership whether as joint tenants or as tenants in common will never be a landlord upon the vesting of the property.

What does it mean for personal representatives who become landlords?

This could be a scary and perhaps unanticipated outcome particularly for those who are not legal professionals. The consequences for failure to act appropriately can also be significant. The PR will be personally liable for the contracts to which they are a party and that includes any tenancy agreements. Whilst they may in most situations be able to recover costs from the estate that will not be the case if they are negligent in their administration of the estate, or their liability outweighs the value of the estate.

A failure to recognise the consequential effects of the vesting of the estate’s property could therefore leave a PR in hot water. A PR must take responsibility for all those matters which a landlord does, including the collection of rent, maintenance of the property, ensuring deposits are properly protected and/or returned etc. This could be a substantial task with costly and time-consuming consequences if mismanaged. It may, therefore, be appropriate to engage the services of a property management company and/or letting agent.

The PR may also be obliged to seek possession of the property. Possession will only be granted where proof of title can be shown. In respect of a PR that is shown by a grant of probate and as such proceedings should not be brought until this is obtained; see Pinney v Hunt (1877) 6 Ch D 98.

 And in situations where the PR is not a landlord?

Where the property was owned jointly, and the PR is not a landlord the considerations are different. The PR will not have any duties as a landlord but will still have duties to administer the estate and act in the estate’s interests. That means collecting all monies due to the estate.

The PR in this situation will have a beneficial interest in the property and as such be entitled to a share of the rental profits on behalf of the estate. Any profits are thus held by the sole remaining landlord on trust for the estate.

If the landlord refuses to release the estates’ share of the profits, is mismanaging the property, or otherwise interfering with the proper administration of the estate an application under ToLATA 1996 may be necessary. Of course, careful consideration must be given prior to instituting proceedings given the potential cost consequences for the estate.

 Who is entitled to the rental payments made after death but prior to any bequests?

Where the rental property is the subject of a specific gift to a beneficiary the question may arise as to who is entitled to the rental income. Up until the property is transferred to the beneficiary, they have no interest in it. That is so regardless of whether the bequest is of legal and equitable title or merely an equitable interest. Given they have no interest they have no right to any profits generated from the property. The profits must therefore go to the residual estate and be distributed accordingly.

Conclusion

The administration of rental properties upon death of an owner is a potential minefield. Dependent on the circumstances there are potential legal issues under several distinct and complex areas of law including probate, landlord and tenant, and trusts. The overlapping nature of the legal issues creates significant difficulties for personal representatives which must be carefully navigated to ensure the interests of the estate are upheld.

Joshua Haran, Barrister,  9 Park Place Chambers