Tenant's Estate Sues Landlord for Buyout Payment- Contracts and Agreements Are Assets

Estate planning is a discipline that requires periodic consideration and reconsideration of your circumstances as they change. When the estate plan involves a trust or other entity, contracts and agreements that are assets of your estate, should work within the estate plan.  Oil and gas leases, land installment contracts, rental agreements, installment sales, notes, security interests that you take in other's property, and the like, should be crafted in order to ensure that these assets remain viable assets of your estate after your death, and are marshaled and disposed in accordance with your wishes.  Sometimes, this is a simple task of assigning or conveying the rights to your trust, company, or other entity. These are too often overlooked, though, leading to unnecessary loss, risk, and legal dispute.  

A recent example resulted in a New York City landlord and the estate of one of the landlord's tenants fighting over whether the landlord is required to continue paying on a buyout of the tenant now that the tenant is deceased.

Walter Blomeyer, a black-cab driver, lived for decades in a single-room apartment in a building owned by Icon Realty Management, according to a recent article in the New York Post.  When Icon decided to convert the building into luxury condominiums, it offered to pay Mr. Blomeyer $525,000 to  induce him to move. Mr. Blomeyer accepted the deal, which required Icon to pay Mr. Blomeyer an initial sum of $300,000, allow him to live rent-free in another one of their buildings for a year, and make a final $225,000 payment.

Unfortunately, Mr. Blomeyer died in February of a heart attack before the final payment was made.  Icon has refused to make the payment to Mr. Blomeyer's estate. Mr. Blomeyer's estate was forced to file suit against Icon for $225,000. According to the Post, Icon's attorney argues it doesn't have to pay the estate because there was nothing in the agreement about the estate benefiting from the agreement.  "His estate is entitled to nothing," the lawyer said.

If the agreement had been reviewed by the estate planning attorney prior to execution, the agreement could have been easily modified to remove any doubt that the obligation was owed to Mr. Blomeyer, "his heirs and/or assigns" and that payments could be made to him, "his estate, his personal representative, or the trustee of his trust." Simple language, and as my niece would say, "mischief managed."

For the article about this case from the New York Post, click here.