Of all the reasons for non-payment of service charges or ground rent, the death of a leaseholder is one of the most challenging situations for managing agents. Not only are you dealing with unpaid sums, but you are also navigating a sensitive time for the family and those handling the deceased’s affairs.
This blog explains what happens to service charge arrears when a leaseholder dies and the steps managing agents should take to recover outstanding amounts while maintaining professionalism and being empathetic.
What happens to the property when the leaseholder dies?
When a leaseholder passes away, their estate must be “administered.” This is the legal process of paying debts and distributing assets. Where property is involved, a grant of representation is required. There are two types:
- Grant of probate – applied for by an executor named in the will.
- Grant of letters of administration – used when there is no will.
Under the Administration of Estates Act 1925, the leasehold interest passes either to the executors named in the will or, in cases of intestacy (where there is no will), to the Public Trustee until the rightful beneficiaries are identified. Typically, this will be a spouse or children, but where there are no relatives, the estate passes to the Crown as bona vacantia.
What happens to any outstanding service charge debt?
The debt remains payable by the deceased leaseholder’s estate. This means any claim for service charge or ground rent must be issued against the estate, not the individual.
Occasionally, a family member may settle the debt before probate is granted and reclaim the payment later from the estate, but this is rare. More often, recovery requires formal proceedings.
Who should proceedings be issued against?
The Civil Procedure Rules provide guidance:
- If probate or administration has been granted, proceedings should be issued against the personal representatives named in the grant.
- If no grant has been made, proceedings should be issued against “the estate of [name of the deceased]” and an application made to appoint someone to represent the estate in the claim.
There is a helpful provision that allows a claim to be issued before a representative is appointed, although further applications may be needed later.
Practical steps for managing agents
- Update your internal systems to mark the account as “leaseholder deceased” to avoid insensitive correspondence.
- Address all letters to “the estate of [name of former leaseholder] deceased.”
- Be prepared for additional complexity and cost in recovery proceedings.
- Seek legal advice early to confirm whether probate or administration has been granted and who the claim should be issued against.
Recovering arrears from the estate of a deceased leaseholder requires sensitivity and a clear understanding of both leasehold law and probate administration.
At Brady Solicitors, we regularly advise managing agents on complex arrears recovery, including cases involving deceased leaseholders. Our team ensures that the process is handled professionally, lawfully, and with the appropriate sensitivity.
