If a borrower does not make loan or lease payments, the lender or lessor may choose to repossess the vehicle as collateral in Ohio. However, Ohio laws do not specifically address repossession of a vehicle if the person named in the loan or lease dies. Repossessing a deceased person's car in Ohio may create difficulties with payment of a deficiency and the right of redemption.
Right to Repossession
In Ohio, a lender may opt for repossession at any time following the default of a loan secured by collateral. This means that it can repossess the vehicle if the loan becomes even one day past due, even if the spouse is deceased. The lender, or its repossession agent, can repossess the vehicle at any time or location; however, it must not engage in an act that breaches the peace, such as entering a closed garage or storage unit to gain access to the vehicle.
Joint Ownership
If the deceased person and her spouse are both listed on the loan or lease, the surviving spouse may opt to bring the account current to avoid repossession. If the lender repossesses a vehicle under a defaulted loan listing both spouses, the surviving spouse can exercise her right of redemption by paying the full balance of the loan, plus repossession, storage and administrative costs, within 20 days after repossession.
Transfer to Probate
When an Ohio resident dies without a will, his estate, which includes property not jointly owned with a spouse, is transferred to probate to settle outstanding debts before his assets can be transferred to his heirs. The probate court appoints an administrator, who is responsible for paying the deceased person's debts. Ordinarily, the full payment of the vehicle loan would be made to the lender before the remainder of the deceased person's assets are distributed. However, repossession of a vehicle may not give the probate administrator an opportunity to pay the balance of the loan. The lender would be entitled to the full balance of the loan, plus associated costs, from the decedent's estate.
Deficiency Collection
After a lender repossesses a vehicle, it typically sells it at an auction to recover a portion of the balance of the loan. Although the vehicle must be sold in a commercially reasonable manner, the auction sale price may not be enough to cover the balance of the loan. The lender then looks to the borrower to pay the deficiency, which is the difference between the loan balance and the auction sale price. If the borrower dies without a joint holder on the loan, and the lender chooses to repossess the vehicle, it must file a claim with the probate administrator against the decedent's estate within six months after the date of death.
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