# Does Model 3 lease expire upon your death?



## FriendEJ666 (2 mo ago)

My apologies if this is not the right forum to ask this question, but I am trying to help the widow of a good friend of mine who recently died. He had a lease on a Model 3 that expires in May.
One of her relatives, who is a lawyer, told her that the lease ends with his death, and that no further payments are required. But everything I have read on the web, generally speaking (not specific to Tesla) says that a car lease stays in force after the death of the lessee, meaning all remaining payments will still be owed. So I am a bit confused.
I don't own a Tesla myself, so I am hoping someone can tell me the real answer to this question. Hopefully someone currently leasing a Model 3 can look at their lease. (I assume the leases are all written the same.) He was a resident of New York state, if that helps.
If you can cite me chapter and verse of the clarifying language in the lease, that will be appreciated.
Thanks.


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## JasonF (Oct 26, 2018)

I found a copy of the Tesla lease agreement, and what do you know, the lawyer was right. Kind of.












https://www.sec.gov/Archives/edgar/data/1438901/000116169720000498/ex_6-8.htm


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## FriendEJ666 (2 mo ago)

Thanks, this is very helpful. Definitely "sort of" as you say. I have no idea how Item #28 would be calculated for his particular car. I am guessing that they have engineered it so they will still get most of their money.
I assume at this point his widow would contact Tesla and arrange for the car to be shipped back to the nearest Tesla sales center, at her expense?


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## JasonF (Oct 26, 2018)

FriendEJ666 said:


> I assume at this point his widow would contact Tesla and arrange for the car to be shipped back to the nearest Tesla sales center, at her expense?


Either that or have her estate buy out the lease and then transfer it to whoever inherits the estate. If there are a lot of extra fees with that short a time left on the least, this may or may not be the cheaper option.


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## tivoboy (Mar 24, 2017)

I don’t think this is accurate.. the lease is a contract and debt obligation of the party who has died. That doesn’t’ just expire/terminate at death. Now it MAY be that Tesla would allow it to be terminated with no future payments required and taking the car back, but unless that is specifically clear in the contract (which I don’t think the above text shows) then it’s not something one could count on.

IF one did want to keep the car and the lease, I doubt that the lease holder would allow the payments to be just taken over without changes to the lease, which usually requires a NEW lease or lease transfer. Some lessors will do that easily, lease transfer while others may not. 

But I do not think you can just count on this contract obligation being unwound with minimal cost. 

What is your best case, what are you trying to achieve?


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## tivoboy (Mar 24, 2017)

JasonF said:


> Either that or have her estate buy out the lease and then transfer it to whoever inherits the estate. If there are a lot of extra fees with that short a time left on the least, this may or may not be the cheaper option.


Any prior to death power of attorney would have died at death of the owner.. not sure if that was a case. Only IF there was a named executor/s for the estate prior to death would they have the power to take new obligations for the estate. IF there was a clear WILL/TRUST prior that would have had to be defined. IF there was not much of a clear will/trust with named executors, then only a probate court could make this allowance and approve that type of increase liability or obligation for the “estate”. My experience would be that path, paying off the future lease payments, then the residual value buyout and title transfer would be quite hard to get a probate court to administer and depending on where one lives in the USA, could take many many months.


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## JasonF (Oct 26, 2018)

tivoboy said:


> I don’t think this is accurate.. the lease is a contract and debt obligation of the party who has died. That doesn’t’ just expire/terminate at death. Now it MAY be that Tesla would allow it to be terminated with no future payments required and taking the car back, but unless that is specifically clear in the contract (which I don’t think the above text shows) then it’s not something one could count on.


Click the link I added to the end of it, it's definitely a Tesla lease agreement. Whether or not it's a current one is another matter. It's for a Model S, but I doubt they have a different lease agreement for other models.

Am I surprised they even have terms for death? Yes, I've seen other company's dealer leases that just place death in the "early termination" clause, requiring all remaining payments to be made as a lump sum.


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## tivoboy (Mar 24, 2017)

JasonF said:


> Click the link I added to the end of it, it's definitely a Tesla lease agreement. Whether or not it's a current one is another matter. It's for a Model S, but I doubt they have a different lease agreement for other models.
> 
> Am I surprised they even have terms for death? Yes, I've seen other company's dealer leases that just place death in the "early termination" clause, requiring all remaining payments to be made as a lump sum.


I wasn’t disputing the legitimacy of the Tesla clauses posted.. only that I don’t think the assessment up thread was accurate.

There is still a liability / contract in place and it doesn’t just expire. Certainly, they lease CAN be terminated because of death of the lessee, but as the terms indicate that MAY mean a full accelerated payment of the full terms of the lease, meaning all future payments while giving the car back. That seems a bad outcome unless just getting out of all contracts and obligations for the deceased is the only priority.

The problem with work like IF and MAY and lessee OR lessor means it’s written often for the benefit of the lessor, but also allows room for adjustment and optionality if not interpretation.

That’s why I asked, what is the objective of the OP, best case, worst case (I think we know worst case)


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## JasonF (Oct 26, 2018)

tivoboy said:


> There is still a liability / contract in place and it doesn’t just expire. Certainly, they lease CAN be terminated because of death of the lessee, but as the terms indicate that MAY mean a full accelerated payment of the full terms of the lease, meaning all future payments while giving the car back. That seems a bad outcome unless just getting out of all contracts and obligations for the deceased is the only priority.


Fair warning that I'm not a lawyer, but I can still read!

Check the "Realized Value" section, as that's the one most likely to be invoked in the case of the lessee's death in the current market because even used Teslas are selling quickly. It basically says they will either sell or auction off the car, and the estate will be responsible for the gap between the money obtained from the sale/auction and the lease balance plus the residual value of the car.

The "Adjusted Lease Balance" method seems like it would be used if they anticipate a ton of depreciation with the car, or if they don't think they will be able to sell it or auction it quickly. Then they use an estimated value to bill the estate for any gap between what they think the car will sell for and the value of the car plus the value of the lease.

So basically, if they use the first method, it's likely the estate won't owe anything more. If the market has gone into a downturn more than we think, though, or the car is in really bad shape, the estate might owe something. And then you need to consider whether it's cheaper to pay the lease company off, or buy out the lease and then sell the car.


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