When the lessee on a car lease dies in Canada, the lease does not simply disappear. The responsibility for the vehicle typically falls to the deceased's estate. The executor of the estate must contact the leasing company immediately to inform them of the situation. The options available generally include transferring the lease to a qualified co-signer (if one exists), having the estate assume and continue the payments, or most commonly, terminating the lease early by returning the vehicle.
Early termination usually involves fees. The estate is responsible for paying any outstanding payments up to the return date, plus disposition fees, excess mileage charges, and any wear-and-tear costs outlined in the lease agreement. It's crucial to understand that the estate is liable for these costs, not the family members personally, unless they were co-signers on the lease. Some lease agreements may include a death clause that outlines specific procedures or potential waivers, so reviewing the original contract is the essential first step. The executor should negotiate with the leasing company, as many are willing to work with estates to find a manageable solution and avoid repossession.
| Key Consideration | Details & Potential Costs |
|---|
| Executor's First Step | Locate the lease agreement and contact the leasing company in writing. |
| Early Termination Fee | Often a calculated amount based on remaining payments, plus a disposition fee (e.g., $300-$800). |
| Excess Mileage Charge | Typically $0.10 to $0.25 per kilometer over the agreed-upon limit. |
| Wear-and-Tear Costs | Charges for damage beyond "normal" wear, as defined by the company's guidelines. |
| Possible Waiver | Some lenders may waive certain fees upon proof of death; this is not guaranteed. |
| Liability | The debt is settled from the estate's assets. Heirs are not personally liable unless they co-signed. |
The process can vary by province, as laws governing estates differ. Consulting with the estate's lawyer is highly recommended to ensure all actions comply with provincial probate laws and protect the beneficiaries.
