3

Let's say hypothetically someone rents a vehicle to another person. They sign a contract and the other individual agrees to pay $300 to the person at the start of every month. The contract also states that if they are two months late on rent the car will be reported stolen. Both parties sign this contract.

Now let's say the individual does not pay after 2 months. Can the car be reported as stolen to the authorities?

If the police find the car and the individual would the individual be charged with grand theft auto? Or would the police be angry at the person reporting the crime because they had a contract to rent the car the other individual was just not paying?

Let's say hypothetically this is in the United States and New Jersey

Improve this question
4
  • 3
    Rental companies routinely do this. Sometimes the bureaucracy gets it wrong. theguardian.com/us-news/2022/dec/17/…
    – Paul Johnson
    Sep 27 at 10:23
  • 1
    Needs a country tag.
    – Freiheit
    Sep 27 at 12:35
  • The problem with this question/contract is that it does not specify what remedy is available to the renter if they cannot pay. There has to be some remedy, in the contract or in law for the possibility of financial incapacity that is not a criminal offense. Presumably they should be able to just return the vehicle, but this is not stated.
    – RBarryYoung
    Sep 27 at 13:27
  • I think this is exactly why repo professionals exist. I'm also a little dubious that such a contract is legal/meaningful in most places i.e.: the part about 'reporting it stolen'.
    – JimmyJames
    Sep 27 at 14:46

1 Answer 1

Reset to default
12

In Colorado, the relevant statute states:

(1) A person commits theft when he or she knowingly . . . retains, or exercises control over anything of value of another without authorization . . . and: . . .

(e) Knowingly retains the thing of value more than seventy-two hours after the agreed-upon time of return in any lease or hire agreement[.]

Colo. Rev. Stat. Ann. § 18-4-401.

The law in this fact pattern is not entirely uniform across the United States, so other states may have a criminal statute that leads to a different outcome.

Improve this answer
15
  • This is not a direct match to OP's scenario. The person renting the car didn't necessarily miss a "time of return". Say the contract was to rent the car for 6 months and there was no provision to shorten this (i.e., no right to return the car early and stop paying). Then after not paying for 2 months, the renter has failed to meet their financial obligation, but this doesn't necessarily make the car stolen. Early return of the car might be sought as a civil remedy (much as one can evict a non-paying residential tenant partway through a lease), but that would be via lawsuit rather than police.
    – nanoman
    Sep 27 at 11:41
  • 2
    @nanoman The question states "The contract also states that if they are two months late on rent the car will be reported stolen." It is reasonable to infer that this implies that the lease includes an obligation to return the car prior to that date. I interpret the language about "would the police be angry" (which indeed doesn't have a well-defined legal meaning) to refer to whether the owner was justified in reporting the car as stolen under the applicable law.
    – ohwilleke
    Sep 27 at 13:41
  • 2
    @Barmar: Except it's not "just" a breach of contract. ohwilleke has cited a criminal statute prohibiting the conduct in question, so it is a criminal offense (at least in Colorado, anyway). Whether the local police are willing to enforce criminal statutes is, of course, not a legal question.
    – Kevin
    Sep 27 at 18:14
  • 1
    @Barmar In a car or home loan, the lender doesn't have ownership, they have a lien on the property. There are specific procedures to exercise their rights under the lien, that is foreclosure.
    – user71659
    Sep 27 at 20:52
  • 1
    @Barmar It preserves the car/homeowner's rights. The bank can't one day say "as 80% owner, I want to sell the house now and take a profit" and you get stuck without a place to live. It also avoids liability for accidents or the bank having to maintain the house as expected from an owner. In a lease, the owner is the finance company. Also, Jewish/Islamic loans are structured as a partial ownership to avoid religious prohibitions on interest.
    – user71659
    Sep 27 at 21:16

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .