Inheritance of Tenancies

When a Tenant dies, they cease to occupy the property as their only or principle home. While the tenancy does not cease upon the Tenant’s death, it becomes stripped of its statutory protection by reason of the Tenant’s non-occupation, becoming a mere contractual tenancy.

Where there is nobody entitled to succeed to the tenancy and the Landlord wishes to obtain possession of the property, the underlying contractual tenancy must first be determined. Generally, a contractual tenancy is capable of being determined by service of a Notice to Quit (NTQ). However, in the case of an assured tenancy, it is crucial that a Landlord first looks to whether or not the tenancy has been inherited.

An assured tenancy is an estate in land capable of being inherited and, upon the death of the assured Tenant, forms part of their estate. Where such deceased Tenant leaves a will, their estate vests with the executors of the estate and the assured tenancy may pass accordingly. However, the position is rather more complex in the case of an assured Tenant who dies intestate.

Where the Tenant dies intestate, their estate (including the tenancy) vests in the Public Trustee until such time as letters of administration are taken out, pursuant to Section 9 of the Administration of Estates Act 1925, as substituted by Law of Property (Miscellaneous Provisions) Act 1994. It is upon letters of administration being taken out that the next of kin becomes entitled to the assured tenancy beneficially under a statutory trust pursuant to Section 46(1) (ii) of the Administration of Estates Act 1925.

The point at which the next of kin becomes entitled to the beneficial interest in the assured tenancy is of particular importance for Landlords seeking to terminate the assured tenancy following the death of a Tenant because an assured tenancy cannot be ended by serving NTQ. To terminate an assured tenancy that has been inherited by a deceased Tenant’s next of kin, a Landlord is instead required to serve a Notice of Seeking Possession (NOSP) on the inheritor under Ground 7 Schedule 2 to the Housing Act 1988.

The recent case of Clarion v Carter serves as a useful reminder on this point (among other matters). In his judgment on appeal, Mr Justice Kerr disagreed with Louise Carter’s submissions that as her mother died intestate, she immediately was the beneficiary under a trust arising from the rules of intestacy on the basis of her inchoate right to establish title to the tenancy pending her appointment as a personal representative of her mother.

While on the facts of this particular case Louise Carter was found to have a contractual right to succeed to the property, Mr Justice Kerr set out that Louise Carter should not be considered an assured Tenant in equity under the law of intestacy, and that any inchoate right to establish title to the tenancy is too weak to be considered a tenancy in equity.

The judgement helpfully reiterates the position that while the Public Trustee holds the intestate’s property on trust for those entitled to inherit under intestacy rules, a person entitled on intestacy does not acquire an immediate equitable interest in the estate’s property and therefore does not immediately become a beneficial assured Tenant. Any right to inherit will not crystallise unless letters of administration have been taken out.

A Landlord seeking to obtain possession of a property following the death of an assured Tenant must therefore establish the position in relation to the deceased’s estate in order to determine whether or not the interest in the tenancy has been inherited, to ensure that the appropriate notice is served.

For more information, please contact Kerri Harrison or Georgia Goddard.

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