What Happens When a Leaseholder Dies?
(Last Updated: 29/05/2024)
09/08/2019
166
5 min read
The Leasehold and Freehold Reform Act 2024 was passed on the 24th May 2024, but is not yet in effect and the date for this is not yet clear. We will update our content as and when the finalised legislation is published. Read more - Expected changes
If you find yourself in a situation when a fellow leaseholder dies, 'can I get a lease extension?' is one of many questions which might occur to you, which are needing attention at a sensitive time. After all, your troubles would grow greatly if you found yourself homeless in this situation while simultaneously grieving over a much-loved friend or loved one.
Can you inherit a leasehold property?
Yes. When the sole leaseholder dies, the remainder of their lease will be inherited by the benefactors of their Will. Read more on this in in depth legal provisions, below.
What happens to a leasehold property when you die?
The lease passes to the co-leaseholder, or the executors and then beneficiaries of the Will. They can extend the lease, although as always there are aspects of eligibility for extending the leasehold of the property that the deceased leaseholder lived in.
This article examines this topic and though you should note that the focus here is on extending the lease of a flat, there is considerable crossover in the formal rules governing lease extensions of leasehold houses in common with leasehold flats, as you can read elsewhere in SAM Conveyancing.
This article also only looks at formal approaches i.e. those directly underpinned by relevant legislation. Informal lease extensions are always possible in theory but the flip sides are obvious in terms of lack of any guarantees or limits to costs etc.
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Free initial leasehold advice
Arrange a free consultation with one of our experienced conveyancing executives on:
- Lease extension.
- Purchasing the leasehold, freehold or share of freehold.
- Selling a leasehold property with a short lease.
- Extending the lease at the same time as you sell.
We specialise in lease extensions and have RICS valuers for the premium/negotiation and solicitors for the section 42 notice and formal or informal extension. Request a tailored quote for:
- RICS Lease Extension Valuation or L2 Homebuyers Survey.
- Serving of the section 42 notice or section 13 notice on the freeholder.
- Negotiation with the freeholder (with the support of your RICS valuer).
- Completion of the legal work, including deed of variation.
- Application to Tribunal to determine the premium.
- Vesting order for absent landlords.
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What are the normal eligibility conditions for extending the lease on a flat (summary only)?
These are governed by the Leasehold Reform Act 1993 as amended, but you can equally refer to our Lease Extension Process article, which is our 'hub' article on this general subject, explains things concisely and has many relevant links.
Essentially, the eligibility conditions are:
- The original lease granted for the property has to have been for at least 21 years (a so-called 'long lease').
- You need to have bought the lease for at least 2 years before you can apply.
- There can't be an overriding reason why the property's lease can't be extended (this might be because the lease must always revert back in relation to conditions of a charity or the National Trust or the Crown Estates.
- The freeholder can't have put in an application to demolish or redevelop.
- You'll need to have paid off any rent arrears etc.
To avoid repetition, this is just a 'bare bones' eligibility list and you're strongly recommended to read the more comprehensive article as directed.
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What must you do if you want to extend the flat's lease when your co-leaseholder - or donor - dies?
Broadly, if a lease becomes 'short' in terms of 80 years long or less left on its term (this can create difficulties e.g. in remortgaging or reselling) the leaseholder can follow the formal Section 42 process mentioned in the Act above as long as they have lived in the property for more than 2 years.
If that leaseholder dies, then their executors (if there is a legal Will in place (click to find out more) or their administrators can look to extend the lease under the same Act with the same rights that the deceased held and, most importantly, the same time frames.
The eligible executors/beneficiaries (whom are advised firstly - and most strongly - to get a RICS Lease Extension Valuation (click to find out more)) essentially serve a Section 42 Notice to the freeholder involved. The freeholder must then respond, normally by around 2 months after receiving the notice, and agree (with varied terms possibly), disagree, saying why (redevelopment or ineligibility being two reasons).
If there's no agreement ultimately, the matter can go to Tribunal and if the freeholder cannot be found, the executors/beneficiaries can seek a Vesting Order. NB Up to the point of the Tribunal, assuming there is a freeholder in communication, the executors/beneficiaries must pay the freeholder's reasonable costs (valuation, legal etc.)
In-depth legal provisions
The personal representatives of a tenant who satisfied the two-year ownership requirement at the date of death are entitled to exercise the right to a new lease on behalf of the estate, as long as the claim is made within two years from the grant of probate or letters of administration (section 39(3A) and section 42(4A), LRHUDA 1993).
It has been held that a section 42 notice given by a tenant's executors was valid even though the notice was given more than two years after the date of the grant of probate.
In that case, the executors were qualifying tenants who had owned the lease for more than two years and they did not need to rely on the provision in section 39(3A) of the LRHUDA 1993 which conferred a special right on personal representatives of a deceased tenant to bring a claim in reliance on the deceased's period of ownership (Villarosa v Ryan [2018] EWHC 1914 (Ch) (Chancery Division) (25th July 2018)).
Additionally, just as the person who died had the right to take matters as far as the First-tier Tribunal (Property Chamber), so do the executor/s if appointed validly by will.
"If the owner died leaving a valid will in which there is an effective appointment of executors, the executors have authority to act in the estate immediately following death. The executors' authority stems from the will, and the grant of probate (for which the executors are authorised to apply) merely confirms that authority (Johnson v Warwick (1856) 17 CB 516)."
Written by:
Andrew Boast
Andrew started his career in 2000 working within conveyancing solicitor firms and grew hands-on knowledge of a wide variety of conveyancing challenges and solutions. After helping in excess of 50,000 clients in his career, he uses all this experience within his article writing for SAM, mainstream media and his self published book How to Buy a House Without Killing Anyone.
Reviewed by:
Caragh Bailey
Caragh is an excellent writer and copy editor of books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey, property law and mortgage-related articles.
