# Death halfway through a lease/security deposits - what happens?



## the J-Man (Jul 31, 2009)

What happens if the lease is terminated halfway due to a death? Specifically if there were multiple security deposits placed on the order? Are the security deposits lost - dealership did not know the answer today, and they called BMWFS - still didn't get a straight answer. 

BMWFS "thought" that the car would be taken back, sold at auction, and the multiple security deposits would be applied towards covering any leftover balance on the lease. 

This isn't discussed often, but this would make a compelling case against MSD's if true.


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## beewang (Dec 18, 2001)

My guess is that if you really care... you need to read the find print.

I suppose most here are like me... who really don't give a schitt what happens to things after we are dead.


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## the J-Man (Jul 31, 2009)

beewang said:


> My guess is that if you really care... you need to read the find print.
> 
> I suppose most here are like me... who really don't give a schitt what happens to things after we are dead.


 It's not in the fine print on the lease agreement, and the supervisor at BMWFS couldn't find it either. I suspect it varies by state. I am with you in that I don't really care, but my father is buying an X5 and raised the point that he would rather leave the $5K to his children than give it to BMW.


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## kyfdx (Aug 4, 2003)

the J-Man said:


> It's not in the fine print on the lease agreement, and the supervisor at BMWFS couldn't find it either. I suspect it varies by state. I am with you in that I don't really care, but my father is buying an X5 and raised the point that he would rather leave the $5K to his children than give it to BMW.


Is there a clause allowing termination upon death?

If not, then the estate would most likely be the lessee.... and, once the lease is over, the security deposits would revert to the estate...

If the estate decides to terminate the lease in mid-term, then there would likely be a shortfall... If the deposits cover that shortfall, the remainder would be returned to the estate.... if shortage still exists, it would be a debt to the estate..


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## TGray5 (Jan 22, 2002)

kyfdx said:


> Is there a clause allowing termination upon death?
> 
> If not, then the estate would most likely be the lessee.... and, once the lease is over, the security deposits would revert to the estate...
> 
> If the estate decides to terminate the lease in mid-term, then there would likely be a shortfall... If the deposits cover that shortfall, the remainder would be returned to the estate.... if shortage still exists, it would be a debt to the estate..


Yes, lease can be terminated and car returned at no cost upon death. My guess is that deposit is returned.


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## e30_for_life (Mar 6, 2009)

I am a bit confused, if you father's death in the next 3 years is a possibility then don't put down MSDs... how much are you really saving in your monthly payments?

I am in no way trying to be insensitive or rude.


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## JasonF (Jul 12, 2006)

I don't know about MSD's, but when my father passed away I had a hilarious conversation with a VW FS rep about canceling his lease:

Me: Hi, my father leased a Passat through VW FS. He just passed away and I need to cancel the lease and make arrangements for someone to pick up the car. The lease was in his name only.

Rep: Sorry to hear that. Unfortunately, someone will have to assume the payments. After all, it was a binding contract that your dad signed and someone will have to honor it.

Me: I'm actually an attorney, and since he was the only person that signed the contract you cannot compel someone else (including his estate) to assume the lease. You may be able to sue the estate for the lost payments, but do you really want to hire an attorney who will charge you $7,500 to recover $4,000 of payments?

Rep: I'm sorry you are taking that position. We will be forced to mark the account as delinquent/non-performing and have a repo company come pick up the car. As you are aware, this will ruin your father's credit rating.

Me: I don't think he cares.


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## the J-Man (Jul 31, 2009)

e30_for_life said:


> I am a bit confused, if you father's death in the next 3 years is a possibility then don't put down MSDs... how much are you really saving in your monthly payments?
> 
> I am in no way trying to be insensitive or rude.


 His death isn't a possibility, but he does raise a good point for all of us putting $4-8K down in MSD's. That's a lot of money, and as far as I can tell, that person's family will lose that money upon the responsible person's death.

I would guess that a spouse or somebody else could continue to fulfill the lease, and at lease end the deposits would revert back to the estate. However, if the car is returned to BMW early, those deposits would be lost.

The disconcerting thing is that nobody at BMW has a real answer, and there is nothing in writing.

$8K in security deposits is a decent financial asset. Every other financial asset a person own's has a named beneficiary and a relatively clear cut procedure for disbursement of those assets upon death.


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## chrischeung (Sep 1, 2002)

I'm not sure there needs to be any special consideration for circumstances in terms of death. Because this would be covered by the estate taking over the responsibilities and obligations as per any similar business or financial situation.

In this scenario, the estate can contact BMW to see what the termination options are - likely similar to early termination by a living person. Or the estate can choose to transfer the lease to someone else - $500 transfer fee. Any credits would revert to the estate.

Why does there need to be a special treatment of someone who passes? If that's the case, how about we have special treatment for those who lose their jobs? Get divorced? Go into bankruptcy? Like the other posters, I'm not trying to be unsympathetic. I just want to point out that it is impossible to define polices for every possible scenario - in which case, common legal procedings would follow, and the estate's assets would be protected by law. I have seen BMW/BMWFS be flexibile in difficult and individual situations, and I doubt they want to get involved in legal wrangling over a few thousand dollars - perhaps a free transfer to a credit worthy relative? We just shouldn't expect them to lay this down as public policy, since it may be taken advantage of by the less scrupulous.

Bottom line - if the SD is too big a risk in your minds, don't put it down. The concept "risk and reward" definitely applies in this situation.


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## erdoran (Feb 29, 2008)

There are lots of attorneys on this board--I see one above, in fact. Is there any law that might address this, in the absence of contractual terms? When someone enters into a contract and then dies before the end of the contract term what does the law say about it? I'm NOT an attorney but my GUESS is that the lease would be a debt against the estate, the same way the unpaid balance on a car loan would be. 

Is there precedent in things like apartment leases? How are they handled, absent any specific death clauses? Does the Estate have to satisfy the lease payments if there is no death clause?

This is an interesting (albeit morbid!) discussion!


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## lovebmw (Mar 24, 2007)

I am not sure about a leased car. I financed my X5 through Credit Union. The Credit Union offered me insurance for a small amount (about $8 a month). In case my death, the insurance will pay the loan and the car will be loan free. There might be some kind of insurance for "leased car" insurance.


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## chasz17 (May 4, 2007)

The rules are governed by the state and how it handles the probate of the estate. However, the lessor might be able to help: Ford, for example, will, as a courtesy, take the leased vehicle back and forgive the balance of the lease.


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## TGray5 (Jan 22, 2002)

BMWs contract says upon death the lease can be terminated with no further obligation....so that debate is over. Not sure why people keep bringing it up. 

The only open question now is, can BMW keep the deposit which could range from zero to 7x the monthly payment in the case of death. Frankly I see no argument for BMW retaining 7x deposit in some cases and zero in other cases.


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## the J-Man (Jul 31, 2009)

TGray5 said:


> BMWs contract says upon death the lease can be terminated with no further obligation....so that debate is over. Not sure why people keep bringing it up.
> 
> The only open question now is, can BMW keep the deposit which could range from zero to 7x the monthly payment in the case of death. Frankly I see no argument for BMW retaining 7x deposit in some cases and zero in other cases.


Where do you see the death issue specifically addressed? I just signed a lease yesterday and can't find it. Although, I could be missing it as this piece of paper is about 36 inches long.


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## TGray5 (Jan 22, 2002)

the J-Man said:


> Where do you see the death issue specifically addressed? I just signed a lease yesterday and can't find it. Although, I could be missing it as this piece of paper is about 36 inches long.


 I don't have mine handy...probably in a termination section?


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## the J-Man (Jul 31, 2009)

TGray5 said:


> I don't have mine handy...probably in a termination section?


 It lists death as a circumstance for default, in which case the car will be repossessed and security deposits will apply to cover any liabilities above the adjusted basis of the vehicle.


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## TGray5 (Jan 22, 2002)

the J-Man said:


> It lists death as a circumstance for default, in which case the car will be repossessed and security deposits will apply to cover any liabilities above the adjusted basis of the vehicle.


 That's not what mine said...post a copy of it. I'll find my contract and do the same.


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## kyfdx (Aug 4, 2003)

the J-Man said:


> It lists death as a circumstance for default, in which case the car will be repossessed and security deposits will apply to cover any liabilities above the adjusted basis of the vehicle.


In other words... Just like any other early termination of the lease..

And, if the security deposits don't cover the shortfall, then the debt would pass on to the estate...

With all due respect to the attorney above... The estate is responsible for contracts that the deceased signs.. Would you welch on your father's debt, just because you don't care about his credit rating? (not to mention, that the executor has a legal responsibility to properly handle the estate).

DISCLAIMER: Not an attorney, just an expert in common sense.

regards,
kyfdx
(fee free advice)


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## erdoran (Feb 29, 2008)

I think it kinda sucks to automatically default a lease in the event of death--at a minimum they could offer someone in the family the FREE (no transfer fee) to assume the lease, assuming that person passes their credit screen. The MSDs would be an asset of the estate, but the family member could pay the lease & benefit from the reduced payments due to MSDs. win-win


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## carnuts3 (Dec 23, 2005)

the J-Man said:


> It's not in the fine print on the lease agreement, and the supervisor at BMWFS couldn't find it either. I suspect it varies by state. I am with you in that I don't really care, but my father is buying an X5 and raised the point that he would rather leave the $5K to his children than give it to BMW.


+1:thumbup:


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