Can an individual legally gift a leased item they do not own?

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Can an individual legally gift a leased item they do not own?

Approximately 6 months ago, I took out a lease on an ATV’ that was intended as a present for my ex-girlfriends child. Shortly after signing the lease, it was no longer affordable. Our relationship ended and a month later I received an email from her stating that her child is entitled to the atv as it was gifted to the child. Throughout our relationship I stated multiple times to her that the atv was under lease and I did not own it. If I did want to own it, I would have to pay another amount at the end of the lease term to take ownership of the atv. Now she is threatening to sue me stating that the ATV is her child’s property and they have legal right to that property and I must give it to her immediately to avoid legal proceedings. I disagree with her in this statement because it is my understanding that I am not the legal owner of the ATV and therefore had no legal right to transfer ownership of the atv through gifting or any other means. So does she or her child have any legal right to the property? I stated to her while we sere stil in a relationship that the lease was not affordable and I would likely have to give the ATV back to the leasing company. Now I am in the process of returning the atv to the leasing company due to the fact that I could not make payments. What risks do I have in this situation?

Asked on October 12, 2016 under Business Law, Alaska

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 4 years ago | Contributor

The issue is, did you tell them you leased it *for yourself* and that the child could use it, or that you leased it *for the child*?
In neither case can you transfer ownership: the lessor can get their property back at the end of the lease or when payments not made. If you told them that you had leased it for yourself but would let the child basically borrow it, you could sue them to get it back in the meantime (so you could, for example, turn it in early, if that is an option; or at least turn in at lease end); you could possibly also sue for monetary compensation, for any monthly payments you have had to make after you told them to give it back but they refused. This is because in this case, since you were just loaning your leased property to them temporarily, they had no right to keep it once you wanted it back. 
(Note: the only way to recover property in the possession of another, if you're not a lender or dealership with the legal and contractually right to repossess, is to sue and have a court order its return.)
However, if you said you giving the child the gift of leasing the ATV for him, you likely obligated yourself to pay for the ATV for him for the entirety of the lease term, since that is the gift you gave--a whole lease term--and a gift, once given, cannot be ungiven. In this case, you could sue to get it back at the end of the term, but not before.
And if you were unclear and it seemed that you were giving him an ATV outright, then you'd have to buy him one if you or the dealer take this one way: once you give something to someone to keep, if due to your actions (including not explaining that it was only a lease) they lose it, you have to make good the gift. 
If there is nothing in writing about the nature of thie "gift," it may come down to your word vs. hers: if she can convince a court that you told her you were giving her child an ATV to keep, she may be able to force you to buy it for them.


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