Assuming an existing auto lease
I have worked out a deal with an existing lessee to take over the remainder of his lease. It does involve the lessee paying a cash incentive to me.
At this point I have obtained credit approval from the finance company that has the existing lease and the paperwork is being processed to take him off the lease and to make me the new lessee. In the process, I realize that I will be taking on all of the obligations relating to the existing lease.
Here is my issue: the current lessee said that the payment of the cash incentive would not occur until I had assumed the lease - a position that I can certainly understand and I had no issue with it. He obviously did not want to be scammed and then have me not take over the lease obligations.
But I am concerned about taking on the lease obligation and then not being paid the agreed amount. After all, once I sign the paperwork assuming the remainder of the contract, there is no incentive for the current lessee to live up to his side of the bargain.
I could have a formal agreement with him which would safeguard my legal position but I don't want to have to go to court to enforce it if he does live up to his side of the deal.
BTW, this is not through one of the sites that specialize in such lease transfers but was as a result of an ad on CL.
I am sure this situation is not unique and others have had to deal with it. What is the best way of protecting our respective interests in this transaction? I have met the guy and he seems a decent person. I have no reason to believe that he would do anything underhanded but OTOH, I don't know him from Adam.
Any advice would be appreciated.
Comments
It's definitely a matter between you two.. the bank will not get involved with it.
He may not have an "incentive", other than being honest and paying his bills, but if you've had an amicable negotiation, it will most likely work out. You say you have a formal agreement. In writing?
It's hard to find people to assume leases. Most people are grateful to be rid of the lease. But, it's hard to do this without trusting the other party, to some extent. I'm sure there are escrow services that can take the money and hold it, until the lease contract has changed hands, and everyone is happy, but the cost may not be worth it.
You know where he lives, right? ;-)
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I have approached this in stages. We checked out the car and were happy with it .... also met the current owner and he seems like a nice guy. Wanted to clear the credit check and that has now happened. I now want a written agreement which I have requested. I doubt there will be a problem since it is pretty straightforward.
Would you bother with getting it inspected by a MB dealer given that it is still under warranty? I lean in favor of doing so but as long as it has been serviced as required, I would think that any issues that come up will be covered by the warranty. We will turn in the car before the warranty expires.
Assuming the inspection goes off fine, the only remaining issue is the cash incentive and the timing of when and how it should be paid.
I wouldn't worry about it on a lease... The only risk is shoddy body work, that isn't up to standards, but that might be obvious from your own inspection.
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I've had great luck doing deals with people I've meet on craigslist, but the biggest ticket item was around $800 and I was able to exchange the title for the cash in hand. Craigslist posts always do raise red flags, but it sounds like you've done your due diligence.
And you may know where he lives, but what if he leaves town before you get paid? You may be able to keep track of him on LinkedIn or some other social media site, just in case. Collecting a "bad debt" is another issue, but like Kyfdx says, it'll most likely work out.
We recommend all of our new lessees to do some sort of inspection. Warranty issues will be covered but scratches, dents & dings etc. are typically not covered beyond the normal allowance. Not sure if you have already completed the assumption but one idea if you and the seller live close to each other; you could have the docs. signed and sealed and meet with the seller and give it to them when you have received your incentive. That ways he/she sees the transfer documents have been sent. When the leasing company receives those legal docs. there is no going back for you.
We recommend all of our new lessees to do some sort of inspection. Warranty issues will be covered but scratches, dents & dings etc. are typically not covered beyond the normal allowance. Not sure if you have already completed the assumption but one idea if you and the seller live close to each other; you could have the docs. signed and sealed and meet with the seller and give it to them when you have received your incentive. That ways he/she sees the transfer documents have been sent. When the leasing company receives those legal docs. there is no going back for you.