On occasion, a tenant or shareholder dies owing arrears to the landlord. When this occurs, a landlord can preserve its rights to be paid from the assets of the deceased tenant’s Estate. Preserving this claim is commonly referred to as filing a Claim Against the Estate.
There are three important conditions which must exist for the landlord to preserve its claim. First, an estate must exist and either an administrator or executor must be appointed for that estate. If the estate has not been created and a representative has not been appointed for that estate, the landlord has the right to formerly create that estate and request the Public Administrator, be appointed to the estate.
Second, there must be assets in the estate to pay the arrears. When a will is filed or a proceeding to appoint an administrator is commenced in Surrogates’ Court, the estimated value of the estate is usually filed as well. That estimated value becomes public record. The landlord can inexpensively evaluate whether it is worthwhile to preserve the claim by a simple review of the Surrogates’ Court records.
Third, the landlord must serve a Claim Against the Estate. The Notice of Claim is a simple document which summarizes the amount of the claim and its basis. However, simple as it is, if not prepared and served correctly, the landlord’s claim can be rejected by the estate. If the rejection is valid, the landlord will not receive payment of the arrears.
Once a Claim Against the Estate is properly served, the estate has ninety (90) days to allow or reject the claim. If neither occurs in that time frame, a claim is deemed to have been rejected. If the claim is allowed, it may be paid by the estate before the estate’s account is settled, provided there are assets to pay the claim and another creditor of the estate is not required to be paid before the landlord.
If a claim is rejected, the Surrogates’ Court will make a determination on the validity of the claim. This prevents beneficiaries of the estate from receiving the assets of the estate before a valid debt of the estate is paid.