UNIFORM CONSUMER LEASES ACT *
Copyright © 2001
By
NATIONAL CONFERENCE OF COMMISSIONERS
ON UNIFORM STATE LAWS
SECTION 101. SHORT TITLE. This [Act] may be cited as the Uniform Consumer Leases Act.
SECTION 102. DEFINITIONS.
(a) In this [Act]:
(1) "Conspicuous," with reference to a term, means so written, displayed, or presented that a reasonable person against which it is to operate ought to have noticed it. Whether a term is "conspicuous" or not is a decision for the court. Conspicuous terms include the following:
(A) a heading in capitals equal to or greater in size than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same or lesser size; and
(B) language in the body of a record or display in larger type than the surrounding text, or in contrasting type, font, or color to the surrounding text of the same size, or set off from surrounding text of the same size by symbols or other marks that call attention to the language.
(2) "Consumer lease" means a lease in which:
(A) the lessee is obligated for a term of more than four months and for a total contractual obligation of $150,000 or less, excluding residual value, payments for options to renew or purchase, and payments to persons other than the holder, whether or not the lessee has the option to purchase or otherwise become the owner of the goods at the expiration of the lease; and
(B) when the lease is consummated, the goods are intended by the lessee primarily for personal, family, or household purposes.
(3) "Federal Consumer Leasing Act" means Chapter 5 of Title I of the Consumer Credit Protection Act, 15 U.S.C. Sections 1667-1667f [, as amended,] and includes regulations issued by the Board of Governors of the Federal Reserve System pursuant to that Act, Regulation M, 12 C.F.R. Part 213 [, as amended].
(4) "Good faith" means honesty in fact and the observance of reasonable commercial standards of fair dealing.
(5) "Goods" means all things that are movable at the time of identification to a consumer lease, or are fixtures. The term does not include money, documents, letters of credit, letter-of-credit rights, instruments, investment property, accounts, chattel paper, deposit accounts, general intangibles, or minerals or the like, including oil and gas, before extraction.
(6) "Holder" means a lessor or, if the lessor's interest is assigned, the assignee for the period of the assignee's ownership of the interest.
(7) "Lease" means a transfer of the right to possession and use of goods for a period in return for consideration. The term does not include a sale on approval, a sale or return, or another sale, or the retention or creation of a security interest. Unless the context clearly indicates otherwise, the term includes a sublease.
(8) "Lessee" means an individual who acquires, applies for, or is offered the right to possession and use of goods under a consumer lease. The term includes a legal representative of, fiduciary for, or successor in interest to, an individual who is a lessee, but does not include a guarantor on a consumer lease.
(9) "Lessor" means a person who transfers the right to possession and use of goods under a consumer lease.
(10) "Motor vehicle" means a vehicle required by law to be registered under [insert citation to definition of vehicles covered by appropriate vehicle registration laws of the State].
(11) "Open-end consumer lease" means a consumer lease in which the lessee's liability at the expiration of the lease is based on the difference between the residual value and the realized value of the leased goods.
(12) "Realized value" means a valuation of the goods at the time the holder assesses liability on the lessee in connection with termination of the lease, as determined under Section 404.
(13) "Record" means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
(14) "Sign" means:
(A) to execute or adopt a tangible symbol with the present intent to authenticate a record; or
(B) to attach or logically associate an electronic symbol, sound, or process to or with a record with the present intent to authenticate a record.
(15) "State" means a State of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.
(b) The following terms used in this [Act] have the meanings ascribed in [the Uniform Commercial Code]:
(1) "Accession" [UCC] § 9-102(a)(1);
(2) "Agreement" [UCC] § 1-201(b)(3);
(3) "Contract" [UCC] § 1-201(b)(11);
(4) "Investment property" [UCC] § 9-102(a)(49);
(5) "Lien" [UCC] § 2A-102(a)(32);
(6) "Money" [UCC] § 1-201(b)(24);
(7) "Person" [UCC] § 1-201(b)(30);
(8) "Person related to" [UCC] § 9-102(a)(63);
(9) "Security interest" [UCC] § 1-201(b)(37); and
(10) "Send" [UCC] § 1-201(b)(38).
(c) The following terms used in this [Act] have the meanings ascribed in the federal Consumer Leasing Act:
(1) "Adjusted capitalized cost";
(2) "Capitalized cost reduction";
(3) "Gross capitalized cost";
(4) "Rent charge"; and
(5) "Residual value".
SECTION 103. TIME OF CONSUMMATION, EXPIRATION, AND TERMINATION.
(a) Consummation of a consumer lease occurs when the lessee signs a record evidencing the lessee's contractual obligation under the lease. A lessee may consummate a consumer lease even if it is subject to subsequent credit or other approval by the lessor or an assignee of the lessor.
(b) Expiration of a consumer lease occurs at the scheduled end of the period covered by the lease.
(c) Termination of a consumer lease occurs when the lessee's right to continued possession and use of the goods ends by virtue of:
(1) expiration of the lease;
(2) election by one of the parties to terminate before expiration, as provided in the lease; or
(3) agreement of the parties.
SECTION 104. SCOPE; EXCLUSIONS; SALE INCIDENT TO LEASE.
(a) Except as otherwise provided in subsections (b) to (e), inclusive, this [Act] applies to a consumer lease.
(b) This [Act] does not apply to a consumer lease if the lessor has not leased goods under a consumer lease more than five times in the preceding calendar year or more than five times in the current calendar year.
(c) This [Act] does not apply to a lease of:
(1) a safe-deposit box;
(2) goods incidental to a lease of real property under which the lessee:
(A) has no liability for the value of the goods at the end of the lease period except for abnormal wear and use; and
(B) has no option to purchase the goods; and
(3) goods incidental to a contract for the sale of goods or services.
(d) If a transaction that is predominantly a consumer lease includes an incidental sale of goods, services, or other benefits, including accessories, insurance, an extended warranty, a maintenance agreement, or a service contract, the incidental sale is not subject to [insert citations to state credit sales laws].
(e) A provision in a consumer lease for payment of governmental, license, or registration fees; taxes related to the lease; or an amount necessary to discharge a security interest in, a lien on, or a debt with respect to, property traded in, or to satisfy an obligation owed on a previous lease, does not make the payment subject to [insert citations to laws of this State governing small loans or other forms of consumer financing].
SECTION 105. CHARACTERIZATION OF LEASE; TRANSACTION SUBJECT TO [ACT] BY AGREEMENT.
(a) A consumer lease may not be deemed a credit sale, loan, or security interest to make the transaction subject to coverage by other law of this State.
(b) The parties to a lease that is not subject to this [Act] may agree in the lease, or in a contemporaneous record, that this [Act] applies to the lease.
(c) The parties to a consumer lease may not agree that the transaction is governed by other law in lieu of this [Act].
SECTION 106. SUPPLEMENTAL PROVISIONS AND PRINCIPLES OF LAW APPLICABLE. The provisions of this [Act] are supplemented by other applicable statutory provisions and by general principles of law and equity, including but not limited to the law merchant and the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, or other validating or invalidating cause, unless those provisions or principles are displaced by or inconsistent with the provisions of this [Act].
SECTION 107. WAIVER; AGREEMENT TO FORGO RIGHTS IN SETTLEMENT OF CLAIM.
(a) Except as otherwise permitted by this [Act], a lessee may waive or agree to forgo rights, benefits, or remedies under this [Act] only in settling a dispute or collection claim.
(b) A settlement in which a lessee agrees to forgo a right, benefit, or remedy under this [Act] is invalid if the court finds that the settlement was unconscionable when made.
SECTION 108. LIMITATION ON CHOICE OF LAW AND FORUM.
(a) The parties to a consumer lease may not choose the law of a jurisdiction unless it is a jurisdiction in which:
(1) the lessee principally resides when the lease is consummated;
(2) the lessee will principally reside within 30 days after the lease is consummated;
(3) the leased goods are to be used; or
(4) subject to subsection (b), the leased goods are received by the lessee.
(b) If the law chosen by the parties to a consumer lease under subsection (a)(4) is a jurisdiction other than this State and the holder takes an act or initiates an action in this State to enforce rights arising from the lease against a lessee who is a resident of this State, the following rules apply:
(1) The holder's act or action is subject to Sections 105, 106,107, 109, and 110, and, except for a disclosure that would have been required by this [Act] to be made prior to the holder's act or action, to Sections 302 to 309, inclusive, and Sections 402 to 407, inclusive.
(2) The holder's act or action is subject to Article 5 if the holder's act or action violates a provision of this [Act] made applicable by this subsection.
(c) Notwithstanding any provision in a consumer lease, an action by a holder against a lessee to enforce the holder's rights under the lease must be brought in the judicial forum and venue of the lessee's residence.
(d) A lessee may maintain an action against a holder in any judicial forum that otherwise has jurisdiction over the holder.
SECTION 109. OBLIGATION OF GOOD FAITH. Every contract subject to, or duty imposed by, this [Act] imposes an obligation of good faith in its performance or enforcement.
SECTION 110. UNCONSCIONABILITY.
(a) If the court as a matter of law finds that a consumer lease or any term of the lease was unconscionable when the lease was consummated, the court may refuse to enforce the lease, enforce the remainder of the lease without the unconscionable term, or so limit the application of an unconscionable term as to avoid an unconscionable result.
(b) If the court as a matter of law finds that a consumer lease or any provision of a consumer lease was induced by unconscionable conduct or that unconscionable conduct has occurred in the collection of a claim arising from the lease, the court may grant appropriate relief.
(c) Before making a finding of unconscionability under subsection (a) or (b), the court shall afford the parties a reasonable opportunity to present evidence as to the setting, purpose, and effect of the consumer lease, the provision, or the conduct.
(d) In an action in which the lessee claims unconscionability with respect to a consumer lease, the following rules apply:
(1) If the court finds unconscionability under subsection (a) or (b), the court shall award reasonable attorney's fees to the lessee.
(2) If the court does not find unconscionability under subsection (a) or (b) and finds that the lessee knew the lessee's claim of unconscionability to be groundless, the court shall award reasonable attorney's fees to the party against whom the claim of unconscionability was made.
(3) In determining the reasonableness of attorney's fees, the amount of the recovery on behalf of the claimant under subsection (a) or (b) is not controlling.
SECTION 111. RELATION TO ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT. This Act modifies, limits, and supersedes the federal Electronic Signatures in Global and National Commerce Act, 15 U.S.C. Section 7001(c), except that nothing in this Act modifies, limits, or supersedes Section 101(c) of that Act nor authorizes electronic delivery of any of the notices described in Section 103(b) of that Act.
SECTION 201. ADVERTISING.
(a) In this section, "advertisement" means a commercial message in any medium that directly or indirectly promotes a consumer lease.
(b) An advertisement must comply with the requirements of the federal Consumer Leasing Act for advertising, even if the advertised lease is not subject to that Act.
(c) A person may not publish, broadcast, or distribute a false, deceptive, or misleading advertisement.
(d) This section does not apply to a person acting solely as an owner or employee of a medium in which an advertisement appears or through which it is disseminated.
SECTION 202. AVAILABILITY OF SAMPLE LEASE FORM.
(a) Before consummation of a consumer lease, a lessor, on request of an individual, shall promptly give a copy or reproduction of its current consumer lease form to the individual at the lessor's place of business. If a lessor contracts with lessees by mail, the lessor shall promptly send, on request by mail, a copy or reproduction of the form by mail. If a lessor contracts with lessees electronically, the lessor shall promptly make available, on electronic request, a copy or reproduction of the form by mail or electronically.
(b) A lessor shall furnish the first copy or reproduction of the current lease form to an individual without charge, but may impose a reasonable charge for additional copies or reproductions furnished to the same individual.
(c) If a lessor uses more than one consumer lease form, the lessor satisfies this section by furnishing a form the lessor has reason to believe is pertinent to the type of lease about which the individual has inquired.
SECTION 203. DISCLOSURE; FORM OF CONSUMER LEASE; COPY TO LESSEE.
(a) The lessor in a consumer lease shall make the disclosures required by the federal Consumer Leasing Act, even if the lease is not subject to that Act.
(b) Before renegotiation or extension of a consumer lease, the holder shall make such new disclosures as are required by the federal Consumer Leasing Act, even if the lease is not subject to that act. A renegotiation occurs when a consumer lease is satisfied and replaced by a new consumer lease undertaken by the same lessee for the same goods. An extension is an agreement by the holder and the lessee of an existing consumer lease to continue the lease beyond its originally scheduled expiration, except when the continuation is the result of a renegotiation.
(c) At consummation, a consumer lease must be evidenced by a record that:
(1) clearly indicates at the beginning of the record that it is a lease;
(2) contains in a location close to the lessee's signature a notice substantially as follows:
NOTICE TO THE LESSEE: This is a lease. You are not buying the [goods/vehicle]. Do not sign this lease before you read it. You are entitled to a completed copy of this lease when you sign it.;
(3) identifies the place of business of the lessor and the residence of the lessee;
(4) identifies any property traded in or applied as a capitalized cost reduction or similar credit; and
(5) in a lease of a motor vehicle, itemizes the gross capitalized cost by type and amount, unless this itemization is included in a separate record accompanying the lease.
(d) A lessor may not present for the lessee to sign an application for a consumer lease or a consumer lease that contains blank spaces to be filled in after it has been signed by the lessee unless the goods are to be specially ordered for future delivery, in which case the due dates of periodic payments and specific identifying numbers, marks, or similar information concerning the goods may be inserted in the application or lease after the lessee has signed.
(e) Promptly after consummation of a consumer lease, the lessor shall furnish to the lessee without charge a completed written copy of the lease signed by the lessor and lessee and, if not previously furnished, a written copy of all other records that the lessee has signed in connection with the transaction. As against a holder that took the lease without knowledge to the contrary, a lessee's written acknowledgment of receipt of a copy of these records creates a presumption of delivery of the copy.
SECTION 204. INSURANCE; INSURANCE DISCLOSURES.
(a) The lessor in a consumer lease may require that the lessee maintain casualty insurance on the leased goods, or liability insurance against personal injury or property damage caused to others, or both, during the period of the lease. If a lessor requires that the lessee maintain either casualty or liability insurance, or both, unless the insurance is included in the lease for no additional charge, the lessor shall disclose in a record that the lessee may purchase the required insurance from an insurer of the lessee's choice, subject to the lessor's right to reject that insurer for reasonable cause.
(b) If casualty insurance on the leased goods is neither required nor provided in a consumer lease, the lease must contain or be accompanied by a statement in a record substantially as follows:
No insurance coverage for physical damage to the leased goods, or loss of the leased goods, is provided under this lease.
(c) A lessor may not require the lessee to purchase credit life, accident, health, loss-of-income, or similar insurance in connection with a consumer lease. If a lessor provides such insurance in connection with a consumer lease:
(1) the lessor shall disclose in a record that the insurance is not required; and
(2) the lessee's election to purchase the insurance is effective only if after receiving the disclosure the lessee separately signs a record requesting the insurance.
(d) If a lessee becomes obligated to pay an amount for insurance provided by or through the lessor, the lessor shall furnish or arrange to have furnished to the lessee a copy of the policy or certificate of insurance.
SECTION 205. NOTICE TO GUARANTOR.
(a) In this section, "guarantor" means an individual who becomes obligated to perform as an additional obligor under a consumer lease because the original lessee either does not meet the lessor's credit standards or is in default under the lease. The term does not include:
(1) an individual who agrees or requests to become obligated as a co-lessee; or
(2) an assignor of a consumer lease.
(b) The obligation of a guarantor with respect to a consumer lease is not enforceable unless:
(1) before the guarantor signs a record evidencing the obligation, the lessor provides to the guarantor a clear and conspicuous notice in a record which identifies the obligation, the lessor, and the lessee and reasonably informs the guarantor of the nature of the obligation; and
(2) the lessor provides to the guarantor a copy of the signed record evidencing the guarantor's obligation and, if the guarantor requests, a copy of the lease.
(c) A notice in substantially the following form complies with subsection (b)(1):
NAME OF GUARANTOR: ___________________________________________
___________________________________________________________________
You agree to pay the lease obligation identified below although you may not personally receive any goods. You may have to pay this obligation even if the person who receives the goods is able to pay. This notice is not the contract that makes you responsible for the obligation. Read the lease for the exact terms of your obligation.
IDENTIFICATION OF OBLIGATION YOU MAY HAVE TO PAY:
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
___________________________________________________________________
NAME OF LESSEE: _________________________________________________
___________________________________________________________________
NAME OF LESSOR: ________________________________________________
___________________________________________________________________
(d) As against a holder who took the consumer lease without knowledge to the contrary, a guarantor's signed acknowledgment of receipt of the records specified in subsection (b) creates a presumption of delivery of those records to the guarantor.
SECTION 206. INFORMATION DURING TERM OF LEASE; SATISFACTION OF LEASE.
(a) During the period of a consumer lease, the following rules apply:
(1) A person that receives a payment in money from a lessee under a consumer lease shall furnish the lessee a written receipt for the payment.
(2) If a lessee so requests in a record, the holder, within two weeks after receiving the request, shall send the lessee in a record, as applicable, a statement of:
(A) the dates and amounts of the periodic payments that have been received by holders of the lease and the total amount of the remaining periodic payments;
(B) the lessee's total obligation due to satisfy the lease if terminated at a specified date before expiration, and a statement that the amount so due will be reduced by the realized value of the goods, if that is the case; and
(C) if the lease provides for a purchase option that may be exercised at the lessee's request, the purchase option price at the date specified in the request.
(3) In a statement under paragraph (2), an amount that is estimated must be so identified.
(4) A holder may not charge the lessee for furnishing one statement under each subparagraph of paragraph (2) in each 12-month period, but may charge a fee not to exceed $5 for furnishing each additional statement during the same period.
(b) A holder, within two weeks after the lessee has discharged all of the lessee's obligations under the consumer lease, shall send to the lessee at the lessee's last known address a copy of the lease marked "satisfied," "paid in full," or similar term, or a separate record indicating satisfaction of the lease. The record of satisfaction does not release the lessee from liability under the lease for acts or events discovered by the holder after sending the record.
SECTION 301. PAYMENT OR TRADE-IN PENDING APPROVAL OF LEASE; REFUND OR RETURN.
(a) If a lessee's application for a consumer lease is not approved on the terms submitted, the following rules apply:
(1) Except as otherwise provided in paragraphs (2) and (3), the lessor:
(A) within one business day after disapproval of the application, shall tender back to the lessee any property traded in; and
(B) promptly, but in no event more than five business days after disapproval of the application, shall refund any payment received other than an application fee.
(2) If the lessee has taken delivery of the goods before the disapproval of the lessee's application, the lessor shall tender delivery of the property traded in and the refund under paragraph (1)(B) when the lessee tenders back the goods that were delivered to the lessee.
(3) In the case of a consumer lease of a motor vehicle in which the vehicle is delivered to the lessee pending approval of the lessee's application, the lessor shall give the lessee notice in a record of the rights and obligations provided in this section. If the application is not approved, the following rules apply:
(A) except when the specified disclosure is made under paragraph (B), the lessor may not impose on the lessee any charge for the lessee's use of the vehicle.
(B) The lessor may impose a mileage charge for the lessee's use of the vehicle, at an amount not exceeding the mileage rate authorized for deduction under [[state] [federal] tax laws], but only if the fact and amount of that charge are disclosed to, and separately signed by, the lessee in a record at the time of delivery. The lessor may offset the amount of the charge against any refund due the lessee.
(C) The limitations imposed by paragraphs (A) and (B) do not affect a holder's right to recover for damage to or loss of the vehicle while in the lessee's possession attributable to the lessee's tortious act or forfeiture or confiscation of the vehicle under governmental authority.
(b) A lessor may not sell or otherwise dispose of any property traded in until the lessee's application is approved.
(c) If a lessor contracts to purchase property from a prospective lessee separately from a consumer lease, the lessor may not withhold payment pending, or otherwise condition payment upon, consummation of a consumer lease.
SECTION 302. PROHIBITED LEASE TERMS.
(a) A provision of a consumer lease may not:
(1) authorize the holder to accelerate the maturity of all or part of the amount owing on the lease whenever the holder deems itself insecure;
(2) require the lessee to execute an authorization to confess judgment or an assignment of wages; or
(3) authorize the holder or another person to enter upon the lessee's premises or to commit a breach of the peace in the repossession of the goods.
(b) A provision prohibited by this section is unenforceable but does not otherwise affect the validity of the lease.
SECTION 303. SECURITY INTEREST RESTRICTED; SECURITY DEPOSIT.
(a) Except as otherwise provided in subsection (b), a consumer lease or other record signed by the lessee in connection with the lease may not provide for the creation of a security interest in personal or real property of the lessee to secure the payment of obligations arising from the lease. A security interest created in violation of this section is unenforceable, but does not otherwise affect the validity of the lease.
(b) A consumer lease may provide for:
(1) a security deposit, advance lease payment, or other prepayment;
(2) a security interest in unearned insurance premiums or rebates of charges for a contract for services, or a service contract, extended warranty, or maintenance agreement regarding the leased goods;
(3) a security interest in the proceeds or benefits of insurance, or of a contract for services, service contract, extended warranty, or maintenance agreement on the leased goods, except to the extent the proceeds or benefits represent reimbursement to the lessee for expenses incurred; and
(4) a security interest in an accession to the leased goods.
(c) This section does not preclude a holder from making a permissive financing statement filing under [Article 9 of the Uniform Commercial Code].
(d) A holder is not required to pay interest on a security deposit, advance lease payment, or other prepayment, but shall account to the lessee in a record on the application of a security deposit within two weeks after the application.
SECTION 304. LATE FEES; DELINQUENCY AND DEFAULT CHARGES; ATTORNEY'S FEES.
(a) A holder may impose on the lessee a late charge on a periodic payment that is delinquent for 10 days or more in an amount specified in the consumer lease but not exceeding the greater of $10 or five percent of the unpaid portion of the late periodic payment. A late fee is not enforceable to the extent it exceeds this limit.
(b) A holder may not impose a late charge on a current periodic payment if the only delinquency in the current payment is an amount equal to or less than unpaid late charges imposed on earlier periodic payments, but the lease may impose an additional late charge if all or part of a periodic payment remains delinquent through an additional payment period.
(c) Subject to subsection (b) regarding late charges, a consumer lease may provide for imposition on the lessee of charges for the lessee's delinquency or default, including collection, repossession, and court costs, but only at an amount that is reasonable in light of the anticipated or actual harm caused by the delinquency or default, the difficulties of proof of loss, and the inconvenience or unfeasibility of otherwise obtaining an adequate remedy.
(d) A consumer lease may provide for the imposition on the lessee of the holder's reasonable attorney's fees, but the fees are recoverable by the holder only if the holder is represented by an attorney who is not an employee of the holder. If a consumer lease provides for recovery of attorney's fees by the holder, a lessee who successfully defends a collection action is entitled to reasonable attorney's fees from the holder.
SECTION 305. ASSIGNMENT OF LEASE; PRESERVATION OF LESSEE'S CLAIMS AND DEFENSES.
(a) Until 30 days after a lessee receives from the assignor or assignee of the lease a signed notice in a record that the consumer lease has been assigned and containing the name and address of the assignee, the lessee may discharge the lessee's obligation by paying the assignor of the lease, and the following rules apply:
(1) If timely, a payment to the assignor is not subject to a late charge.
(2) Except as otherwise provided in paragraph (3), after the 30-day period, the lessee discharges the lessee's obligation only by paying the assignee.
(3) If requested by the lessee after notice from the assignee under paragraph (2), the assignee shall seasonably furnish reasonable proof that the assignment has been made. Unless the assignee complies, the lessee may discharge the lessee's obligation by paying the assignor, even if the lessee has received a notification under this subsection (a).
(b) Except as otherwise provided in Section 505(b), notwithstanding any provision in a consumer lease, a holder is subject to all claims and defenses arising from the lease which the lessee could assert against (i) a prior holder and, (ii) where the original lessor does not select, manufacture, or supply the goods, the person from whom the lessor bought or leased the goods. A lessee's recovery from a holder under this subsection may not exceed amounts paid by the lessee to all holders under the lease.
SECTION 306. SUBLEASE.
(a) Except as otherwise provided in subsection (b), a lessee under a consumer lease may sublease or assign the lessee's rights and interest.
(b) A consumer lease may contain a specific and conspicuous provision requiring the holder's consent to a sublease or assignment of the lessee's rights and interest, and payment of a reasonable fee. In a lease for a period of more than 12 months, the provision must require the holder to consent unless the holder has a good faith belief that the sublease or assignment will jeopardize the holder's rights or increase the holder's risk.
(c) Unless otherwise agreed by the holder, the obligations of the lessee under a consumer lease are not affected by a sublease or assignment, and the original lessee and the sublessee or assignee are jointly and severally liable under the assigned lease.
SECTION 307. OPEN-END CONSUMER LEASE.
(a) In an open-end consumer lease, the estimated residual value must be a reasonable approximation of the anticipated fair market value of the goods on expiration of the lease. The estimated residual value of the goods is presumed to be unreasonable and not in good faith to the extent that the estimated residual value exceeds the realized value by more than three times the average payment allocable to a monthly period under the lease. The holder may not collect from the lessee the amount presumed to be unreasonable unless the holder brings a successful action with respect to that amount. In all actions, the holder shall pay the lessee's reasonable attorney's fees.
(b) A presumption does not arise under subsection (b) to the extent the excess of estimated residual value over realized value is due to physical damage to the goods beyond reasonable wear and use, or to excessive use, according to standards set in the lease under Section 407.
(c) This section does not preclude a lessee, after expiration of the consumer lease, from agreeing to a final adjustment with respect to residual value.
(d) Upon expiration of an open-end consumer lease, the lessee may obtain at the lessee's expense a professional appraisal of the leased goods by an independent third party agreed to by the lessee and holder. The appraisal is final and binding on the parties.
SECTION 308. LIMIT ON INSURANCE CHARGES; TERMINATION OR REPLACEMENT OF INSURANCE.
(a) A charge for casualty, liability, or credit insurance included in a consumer lease or added under subsection (c) may not exceed the premium imposed by the insurer for the insurance. This subsection does not preclude:
(1) the imposition of rent charges on insurance charges capitalized in the lease; or
(2) the lessor's realization of commissions, experience rebates, or similar compensation from the insurer.
(b) If insurance included in a consumer lease or added under subsection (c) is canceled or terminated, a refund of unearned insurance premiums received by the holder in excess of one dollar, at the holder's option, must be:
(1) refunded to the lessee; or
(2) credited, together with the unearned portion of the rent charge applicable to the refunded premium, to the lessee's current obligation, the final maturing periodic payments, or the lessee's obligation upon termination of the lease.
(c) If a lessee does not maintain insurance required under a consumer lease, the holder may purchase substitute insurance only against substantially the same risks, covering the interests of the lessee and the holder or the interest of either of them.
(d) An amount paid by the holder for substitute insurance under subsection (c) and added to the lessee's obligation under the lease is subject to:
(1) a rent charge as if that amount were part of the adjusted capitalized cost, from the later of the effective date of the insurance or the date on which the holder notifies the lessee of the purchase of substitute insurance, its cost, and the effect on the payment schedule; and
(2) the repayment and default provisions of the lease.
(e) This section does not preclude the holder from pursuing any other remedy for default set forth in the lease or provided by law.
SECTION 309. REBATE OR DISCOUNT FOR REFERRALS. A person may not induce or attempt to induce a lessee to consummate a consumer lease by offering a post-consummation rebate, discount, commission, or other consideration on the condition that the lessee provide information or assistance for the purpose of enabling a lessor or other person to lease or sell goods to another individual.
SECTION 310. LIMITATION ON SUPPLIER'S DISCLAIMER OF IMPLIED WARRANTY.
(a) For purposes of this section:
(1) "Supplier" means any person engaged in the business of making leased goods directly or indirectly available to lessees through consumer leases.
(2) "Written warranty" means:
(A) an affirmation of fact in a record or promise in a record made in connection with a consumer lease of goods by a supplier to a lessee, which relates to the nature of the material or workmanship, affirms or promises that such material or workmanship is defect free or will meet a specified level of performance over a specified period of time, and becomes part of the basis of the bargain between the supplier and the lessee; or
(B) an undertaking in a record in connection with the lease by a supplier of goods to refund, repair, replace, or take other remedial action with respect to the leased goods in the event that the leased goods fail to meet the specifications set forth in the undertaking, which undertaking becomes part of the basis of the bargain between the supplier and the lessee.
(3) "Service contract" means a contract in a record to perform, over a fixed period of time or for a specified duration, services relating to the maintenance or repair, or both, of leased goods.
(4) "Magnuson-Moss Warranty Act" means 15 U.S.C. Sections 2301-2312 [, as amended,] and includes Rules, Regulations, Statements, and Interpretations issued by the Federal Trade Commission under that act.
(b) A supplier may not disclaim or, except as otherwise provided in subsection (c), modify an implied warranty to a lessee with respect to leased goods if:
(1) the supplier makes a written warranty to the lessee with respect to the leased goods; or
(2) at the time of lease, or within 90 days thereafter, the supplier enters into a service contract with the lessee which applies to the leased goods.
(c) Unless a supplier has made a warranty that would qualify as a full warranty under the Magnuson-Moss Warranty Act if made in connection with a sale of goods, the supplier may limit the duration of implied warranties to the duration of a written warranty of reasonable duration, if such limitation is conscionable and is set forth in clear and unmistakable language and prominently displayed on the face of the warranty.
(d) A disclaimer, modification, or limitation made in violation of this section is not enforceable.
SECTION 401. LIABILITY FOR GAP AMOUNT ON TOTAL LOSS OF GOODS.
(a) In this section, "gap amount" means the amount that would be owed by the lessee if a total loss of the goods occasioned by theft, physical damage, or other occurrence were considered an early termination of the lease, less the portion of the cash value of the goods received by the holder from the lessee's insurer or from any other source. The term does not include the deductible amount applicable to a casualty insurance policy on the goods, past due lease payments or any other unpaid amounts owed by the lessee under the lease at the time of the total loss of the goods, or amounts by which the insurance proceeds otherwise payable are reduced on account of past due premiums or the condition of the goods before the total loss occurred.
(b) Except as otherwise provided in subsection (c), a consumer lease may not provide that the lessee is responsible for the gap amount. A provision in violation of this subsection is not enforceable.
(c) If a consumer lease so provides, the holder may recover from the lessee the portion of the gap amount attributable to:
(1) the lessee's failure to maintain in effect casualty insurance required under the lease;
(2) the lessee's fraud, intentional wrongful act, or gross negligence; or
(3) the forfeiture or confiscation of the goods under governmental authority.
SECTION 402. LESSEE'S DEFAULT; RIGHT TO CURE.
(a) A provision of a consumer lease stating events of default by the lessee is enforceable only to the extent that:
(1) the lessee does not make a payment required by the lease; or
(2) the holder establishes that the prospect of payment, performance, or realization of the holder's interest in the goods is significantly impaired.
(b) If a default is solely the lessee's failure to make a payment required under the lease and the lessee has not voluntarily surrendered the leased goods to the holder, a holder may not accelerate, take judicial action to collect, or repossess the leased goods unless the holder initiates a procedure for cure under this section and the lessee does not cure the default in a timely manner.
(c) A holder may initiate a procedure for cure by sending to the lessee, at any time after the lessee has been in default for 10 days, a notice of right to cure the default. The notice must be in a record, contain a conspicuous statement that the lessee is entitled to cure the default, and set forth the monetary amount necessary to cure the default, the date by which the curative payment is due, and the name, address, and telephone number of the holder from which information may be obtained regarding the cure. The date by which payment is due may not be less than 20 days after the notice is sent.
(d) Within the period for cure stated in the notice under subsection (c), the lessee may cure the default by tendering the amount of all unpaid sums due at the time of the tender, including any unpaid delinquency or default charges, but without additional security deposit or prepayment of periodic payments not yet due. Cure restores the rights of holder and lessee under the lease as if the default had not occurred.
(e) A lessee has the right to cure only once in any 12-month period during the period of the lease.
SECTION 403. REPOSSESSION; APPLICATION OF REALIZED VALUE.
(a) Except as otherwise provided in subsection (d) and subject to Section 402 [Lessee's Right to Cure], on a lessee's default, the holder may repossess the goods by judicial process or by self-help without a breach of the peace.
(b) After repossession of the goods on a lessee's default, the holder shall apply the realized value of the goods as provided in the lease or, if the lease contains no such provision, in the following order:
(1) default charges and collection costs imposed under the lease;
(2) obligations of the lessee that are due or in default under the lease; and
(3) the liability of the lessee on early termination of the lease.
(c) Unless otherwise agreed, the lessee is liable for any deficiency after application of the realized value. The holder may apply to the deficiency a security deposit taken under Section 303(b)(1) but shall refund to the lessee any amount of the security deposit remaining after satisfaction of the deficiency.
[(d) The use of electronic means to exercise the holder's rights under subsection (a) is prohibited in connection with a consumer lease.]
SECTION 404. DETERMINING REALIZED VALUE.
(a) Subject to subsection (b), the amount of the realized value, if used to determine the lessee's liability on termination of a consumer lease, is the sum of:
(1) the amount of the rebate of premiums or charges for insurance, extended warranty, or service or maintenance contract to the extent the rebates are received by the holder; and
(2) either:
(A) the price received by the holder on disposition of the leased goods by sale;
(B) if the goods are re-leased, the total of periodic payments plus the residual value under the new lease, reduced to present value; or
(C) if the goods are not disposed of, the higher of:
(i) the best offer for disposition of the goods; or
(ii) the fair market value of the goods.
(b) A lessee and holder of a consumer lease may agree at the time of termination on the realized value of the goods, or may agree in the lease or at the time of termination on a method for determining it, and the value so agreed upon or determined, unless unreasonable, is the realized value. An agreed realized value is not unreasonable if the value is determined by an appraiser agreed to by the holder and lessee, or by reference to a generally accepted reference source for goods of the kind.
(c) If the realized value is determined under subsection (a)(2)(A) or (a)(2) (B), the disposition may be by public or private sale or re-lease, at any time and place, and on any terms. Every aspect of the disposition, including the method, manner, time, place, and terms must be commercially reasonable. Disposition in a wholesale market is not unreasonable.
(d) If a disposition is to a person related to the holder, or a person obligated to the holder under an agreement for recourse, repurchase, or the like, the realized value is not less than the fair market value of the goods.
(e) If a disposition is not commercially reasonable, the realized value shall be established by reference to the retail market value of goods of the kind and condition at issue.
SECTION 405. EARLY TERMINATION LIABILITY.
(a) A consumer lease other than an open-end consumer lease may provide a measure or formula for the lessee's liability on early termination, but only at an amount reasonable in light of the anticipated or actual harm caused by the early termination, the difficulties of proof of loss, and the inconvenience or unfeasibility of otherwise obtaining an adequate remedy. An early termination charge does not include:
(1) unpaid periodic payments, or unpaid late, delinquency, or default charges, accrued through the date of early termination;
(2) charges provided under the lease for excess wear and use or excess mileage, but only to the extent the excess wear and use, or mileage, are not otherwise accounted for in the early termination charge;
(3) other unpaid amounts for which the lessee is responsible under the lease;
(4) official fees and taxes imposed in connection with lease termination; or
(5) the greater of a reasonable disposition fee in a fixed amount disclosed in the lease, or the reasonable costs incurred in retaking, storing, preparing for disposition, and disposing of the goods.
(b) A charge imposed on a lessee for early termination of a consumer lease may not exceed the total of the remaining periodic payments scheduled under the lease.
SECTION 406. REPORTING EARLY TERMINATION TO CONSUMER REPORTING AGENCY. If a consumer lease is terminated before its scheduled expiration by mutual agreement of the holder and lessee, the holder may not report the early termination to a consumer reporting agency as a default by the lessee or guarantor. This section does not preclude the holder from reporting to a consumer reporting agency a previous default by the lessee or guarantor under the lease or a later default under the early termination agreement.
SECTION 407. EXCESS WEAR AND USE; EXCESS MILEAGE.
(a) A consumer lease may prescribe standards and impose liability on the lessee for excess wear and use of the leased goods if the standards and amounts of liability are reasonable and reasonably applied to compensate the holder due to damage, abuse, or lack of maintenance, but not exceeding the estimated or actual cost of repair and refurbishing.
(b) Standards for excess wear and use do not subject the lessee to liability for:
(1) ordinary and expected wear, use, and depreciation of the goods during the period of the lessee's possession and use; or
(2) damage or repair to the extent:
(A) the leased goods are covered by insurance, warranty, or by a repair, service or maintenance agreement issued in connection with the lease;
(B) recovery or repair under the insurance, warranty, or agreement is available to the holder; and
(C) the lessee cooperates as necessary to submit, document, and process a claim under the insurance, warranty, or agreement.
(c) In connection with the expiration of a consumer lease of goods other than a motor vehicle, if the holder charges the lessee for excess wear and use, the holder shall:
(1) send to the lessee notice in a record of the nature and amount of the charges within five business days after the goods are returned to the holder; and
(2) provide reasonable time and access for the lessee or another person designated by the lessee to examine the goods.
(d) The time is reasonable under subsection (c)(2) if it is no less than 12 business days after the holder sends the notice under subsection (c)(1).
(e) In connection with the expiration of a consumer lease of a motor vehicle, if the lease provides for charges for excess wear and use, the following rules apply:
(1) The holder may impose a charge for excess wear and use only if, not more than 90 nor less than 30 days before the expiration of the lease, the holder sends the lessee notice in a record of:
(A) the lessee's rights under paragraphs (2) through (4); and
(B) the identity of one or more persons, or a class of persons, authorized to inspect the vehicle for excess wear and use.
(2) The lessee may have the vehicle inspected for excess wear and use by the holder or holder's authorized inspector, or by an independent inspector agreeable to the holder, at a reasonably accessible site within 20 days before the expiration of the lease.
(3) A report in a record of an inspection under paragraph (2) is binding on the holder if the lessee either pays the excess wear and use charges indicated or has necessary repairs made at the lessee's expense, by the time the vehicle is returned at the expiration of the lease. However, if the holder notifies the lessee in a record within 60 days after return of the vehicle, the lessee remains responsible for excess wear and use that the holder proves was not reasonably detectable by an inspection under paragraph (2), was incurred after the inspection and before return of the vehicle, or was the result of incomplete or improper repairs.
(4) If an inspection under paragraph (2) is not made before expiration of the lease, the holder may not impose excess wear and use charges unless the holder sends to the lessee notice in a record of the nature and amount of the charges within 60 days after return of the vehicle to the holder.
(f) In addition to charges for excess wear and use, a consumer lease of a motor vehicle may provide for the imposition of a reasonable charge for excess mileage.
SECTION 501. PRIVATE REMEDIES.
(a) In this [article], "lessee" includes a successor in interest of a lessee and, with respect to violations of Sections 205 and 406, a guarantor.
(b) A holder that violates this [Act] is liable to the lessee for actual damages. Where actual damages are claimed as a result of an alleged violation of a disclosure requirement under this [Act], the lessee must show reliance on the holder's conduct to the lessee's detriment as a necessary element to recovering the damages.
(c) Whether or not a lessee seeks or is entitled to damages, the lessee may maintain an action for declaratory or injunctive relief.
(d) Except in a class action, and except as otherwise provided in this [article], in addition to actual damages under subsection (b), a holder who violates this [Act] is liable for statutory damages of 25 percent of the amount of payments scheduled under the lease, but no less than $500 and no more than $1,000, for a violation of any of the following provisions: Sections 203(a), (b), (c)(1), (c)(2), (c)(4), (c)(5), and (d); 204; 206; 301; 303(d); 304(b); 308(c); 309; 406; and 407(c).
(e) In a successful action under this [article], a lessee is also entitled to the costs of the action and, except as provided in subsection (f), reasonable attorney's fees as determined by the court. In determining the award of attorney's fees, the amount of the lessee's recovery is not controlling.
(f) In order for a lessee as plaintiff in an action for monetary damages to recover attorney's fees under subsection (e), the following rules apply:
(1) Prior to the commencement of the action, the lessee must send the holder notice in a record of the alleged violation and the damages sought;
(2) If, within twenty days after the lessee's notification is sent, the holder provides the lessee with an offer of settlement in a record agreeing to pay the lessee an amount that equals or exceeds the damages eventually awarded to the lessee in the final judgment entered in the action, then the lessee may not recover attorney's fees incurred after the lessee's receipt of the settlement offer. The lessee may nevertheless recover attorney's fees incurred before the receipt of the settlement offer in an amount determined by the court based on a reasonable hourly rate;
(3) Notification by the lessee under subsection (f)(1) tolls the statute of limitations for a period of sixty days from the date the notification is sent.
SECTION 502. RELIANCE ON LESSEE'S REPRESENTATION. A holder is not liable to any person, and a holder's rights under a lease are not affected, because of any act or omission arising out of the holder's reasonable belief that a transaction is not a consumer lease if the holder's belief is based on its reasonable reliance on a lessee's representation in a record concerning the purpose for which the leased goods were to be used.
SECTION 503. STATUTE OF LIMITATIONS.
(a) Except as otherwise provided in subsections (b), (c), and (d), an action under this [article] may not be commenced more than one year after the termination of the lease that is the subject of the action.
(b) A class action under this [article] may not be commenced more than one year after the occurrence of the violation that is the subject of the action.
(c) An action for a violation of Sections 202, 203, and 204 may not be commenced more than two years from the date of the execution of the lease.
(d) A lessee's claim for actual or statutory damages under this [article] may be raised by way of recoupment in an action by the holder on the lease without regard to these periods of limitations.
SECTION 504. LIMITATIONS ON PRIVATE REMEDIES.
(a) A holder is not liable for statutory damages under Section 501(d) if, within 60 days after discovering a violation of this [Act] and before commencement of an action under Section 501 or the receipt of written notice of the violation from the lessee, the holder notifies the lessee concerned and corrects the violation, including refund, restitution, or crediting of any charges improperly disclosed or imposed.
(b) A holder is not liable for statutory damages under Section 501(d) if the holder proves by a preponderance of the evidence that the violation was unintentional and resulted from a good faith error notwithstanding the maintenance of procedures reasonably adapted to avoid the error. For purposes of this subsection, good faith errors include clerical errors, calculation errors, computer malfunctions and programming errors, but an error of legal judgment with respect to a holder's obligations under this [Act] is not a good faith error.
(c) There may be no more than one recovery of statutory damages under Section 501(d) for a violation of this [article] regardless of the number of lessees in the consumer lease.
(d) Liability does not arise under this [article] with respect to an act or omission in good faith conforming to:
(1) a rule or interpretation of this [Act], or to an approval by the [administrator], even if after the act or omission occurred, the rule, interpretation, or approval is amended, rescinded, or determined by judicial or other authority to be invalid; or
(2) with respect to requirements based on the federal Consumer Leasing Act, a rule, regulation, or interpretation of that Act by the Federal Reserve Board, even if after the act or omission occurred, the rule, regulation, or interpretation is amended, rescinded, or determined by judicial or other authority to be invalid.
(e) Regardless of the number of violations resulting from a holder's multiple failures to comply with the provisions enumerated in Section 501(d) with respect to a single consumer lease, the lessee is entitled to a single recovery of statutory damages under this [article], but continued failure to comply after a recovery has been granted gives rise to rights to additional recoveries.
SECTION 505. CIVIL LIABILITY OF ASSIGNEES.
(a) Except as provided in subsection (b), the liability of a holder for a violation of this [Act] by a previous holder is subject to Section 305(b).
(b) An action for a violation of Section 204(d), 206, or 309, or for a violation of the disclosure requirements of Section 202, 203, or 204(a) to (c), inclusive, may be maintained against a subsequent holder only if the violation is apparent on the face of the record that contains or should contain the disclosure. For purposes of this subsection, a violation is apparent on the face of a record if:
(1) a required disclosure is omitted or can be determined to be incomplete or inaccurate from the face of the record or other documents assigned; or
(2) the record does not contain a notice, legend, or term required to be used by this [Act].
SECTION 506. EFFECT OF VIOLATION ON RIGHTS OF PARTIES; SINGLE RECOVERY.
(a) Except as otherwise provided in this [Act], a violation of this [Act] by a holder does not impair the holder's rights under a consumer lease.
(b) If a holder's act or omission violates this [Act] and also violates other law, the lessee is entitled to the larger of the monetary remedies authorized by this [Act] or the other law.
SECTION 507. ADMINISTRATIVE ENFORCEMENT. The [Attorney General, Credit Code Administrator, or similar public agency] shall enforce this [Act]. For this purpose, the [Attorney General, Credit Code Administrator, or similar public agency] has the power and is entitled to the remedies provided in the [state Unfair or Deceptive Acts or Practices Act, or comparable consumer fraud law].
SECTION 508. ADMINISTRATION.
(a) The [designate public official or office] shall administer this [Act], and may adopt rules, issue interpretations, or give approvals designed to effectuate consumer protection under this [Act]; prevent circumvention or evasion of, and facilitate compliance with, this [Act]; avoid preemption by the federal Consumer Leasing Act; and assure consistent interpretations with those of other States enacting legislation substantially the same as this [Act].
(b) To keep the [administrator's] rules, interpretations, or approvals in harmony with those of administrators in other States that enact legislation substantially the same as this [Act], the [administrator], to the extent consistent with the purposes, policies, and provisions of this [Act], in adopting, amending, and repealing rules, interpretations, or approvals, shall take into consideration the rules, interpretations, or approvals of administrators in other States that enact legislation substantially the same as this [Act].]
SECTION 601. SEVERABILITY. If any provision of this [Act] or its application to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of this [Act] that can be given effect without the invalid provision or application, and to this end the provisions of this [Act] are severable.
SECTION 602. EFFECTIVE DATE. This [Act] takes effect at [ &nbs p; ; ].
SECTION 603. TRANSITION. A consumer lease entered into before this [Act] takes effect and the rights, duties, and interests resulting from it may be terminated, completed, or enforced as required or permitted by any statute, rule of law, or other law amended, repealed, or modified by this [Act] as though the repeal, amendment, or modification had not occurred. However, this [Act] applies to a renegotiation made after this [Act] takes effect as to a consumer lease whenever previously entered into.
SECTION 604. REPEALS AND AMENDMENTS.
(a) The following acts and parts of acts are repealed:
(1)
(2)
(b) The following acts and parts of acts are amended:
(1)
(2)