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Lease Purchase Agreement Template

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									     BILL AS INTRODUCED                                                             H.676
     2008                                                                           Page 1

 1                                          H.676

 2   Introduced by Representatives Martin of Springfield, Emmons of Springfield

 3                    and Shand of Weathersfield

 4   Referred to Committee on

 5   Date:

 6   Subject: Commerce and trade; motor vehicle lease; disclosures

 7   Statement of purpose: This bill proposes to require and implement standards

 8   for the disclosure of terms in retail motor vehicle leases to all lessees.


10   It is hereby enacted by the General Assembly of the State of Vermont:

11   Sec. 1. SHORT TITLE

12      This bill may be referred to as the Vermont Motor Vehicle Retail Leasing

13   Act.


15      The general assembly finds the following:

16           (1) Retail motor vehicle lease agreements are often difficult for

17   consumers to understand.

18           (2) Frequently, retail motor vehicle lease agreements are signed by

19   multiple persons.

     BILL AS INTRODUCED                                                             H.676
     2008                                                                           Page 2

 1         (3) Federal Reserve Board Regulation M implemented the federal

 2   Consumer Leasing Act, which only requires disclosures be given to one lessee,

 3   therefore not affording consumer protections to all lessees obligated under

 4   such leases.

 5         (4) All persons named on or who sign a retail motor vehicle lease should

 6   be aware of and understand their rights and obligations under such an

 7   agreement.

 8   Sec. 3. 9 V.S.A. chapter 60 is added to read:

 9                   CHAPTER 60. MOTOR VEHICLE LEASING

10   § 2381. DEFINITIONS

11      For the purposes of this chapter, the following words shall have the

12   following meanings:

13         (1) “Commercial purpose” means a purpose related to the production,

14   exhibition, marketing, transportation, processing, or manufacturing of goods or

15   services.

16         (2) “Early termination” means the ending of the lease before the

17   scheduled termination date. Early termination may be voluntary according to

18   the terms of a retail lease agreement, or involuntary due to default, theft,

19   accident, or death of the lessee.

20         (3) “Motor vehicle” or “vehicle” means any vehicle propelled or drawn

21   by power other than muscular power.

     BILL AS INTRODUCED                                                            H.676
     2008                                                                          Page 3

 1         (4) “Person” means any individual, partnership, joint venture,

 2   corporation, or any other group however organized.

 3         (5) “Retail” means for any purpose other than resale or for a commercial

 4   purpose.

 5         (6) “Retail lease” means a transfer from a retail lessor to a retail lessee

 6   of the right to possession and use of a motor vehicle in return for consideration.

 7         (7) “Retail lease agreement” means a contract entered into in this state

 8   for the lease of a motor vehicle by a retail lessee for a scheduled term

 9   exceeding six months, whether or not the lessee has the option to purchase or

10   otherwise become owner of the vehicle at the expiration of the agreement.

11         (8) “Retail lessee” means a person who agrees to lease a motor vehicle

12   other than for commercial purposes.

13         (9) “Retail lessor” means a person engaged in the business of leasing

14   motor vehicles to retail lessees.


16      (a) Form of disclosures. A lessor shall make all disclosures required by

17   this chapter:

18         (1) Clearly and conspicuously;

19         (2) In writing;

20         (3) On a form the lessee may keep; and

21         (4) Prior to the consummation of the lease.

     BILL AS INTRODUCED                                                             H.676
     2008                                                                           Page 4

 1      (b) Multiple lessees. When a retail lease agreement involves more than one

 2   lessee, the lessor must provide all disclosures required under this section to all

 3   lessees named in or who sign the lease.

 4      (c) Content of disclosures. Unless excluded by subsection (d) of this

 5   section, all retail motor-vehicle lease agreements shall contain or be

 6   accompanied by the following disclosures:

 7         (1) Payment calculation.

 8            (A) Gross capitalized cost. The gross capitalized cost, including a

 9   disclosure of the agreed-upon price of the vehicle, a description such as “the

10   agreed-upon value of the vehicle [state the amount] and any items you pay for

11   over the lease term (such as service contracts),” and a statement of the lessee’s

12   option to receive a separate written itemization of the gross capitalized cost. If

13   requested by the lessee, the itemization shall be provided prior to

14   consummation.

15            (B) Capitalized cost reduction. The capitalized cost reduction, with a

16   description such as “the amount of any net trade-in allowance, noncash credit,

17   or cash you pay that reduces the gross capitalized cost.”

18            (C) Adjusted capitalized cost. The adjusted capitalized cost, with a

19   description such as “the amount used in calculating your base [periodic]

20   payment.”

     BILL AS INTRODUCED                                                             H.676
     2008                                                                           Page 5

 1            (D) Amount due at lease signing or delivery. The total amount to be

 2   paid prior to or at consummation or at the time of delivery, if delivery occurs

 3   after consummation, using the term “amount due at lease signing or delivery.”

 4   The lessor shall itemize each component by type and amount, including any

 5   advance monthly or other periodic payment, capitalized reduction, net trade-in

 6   allowance, rebates, noncash credits, and cash payments.

 7            (E) Number of lease payments. The number and due dates or periods

 8   of payment scheduled under the lease.

 9            (F) Base periodic payment. The adjusted capitalized cost divided by

10   the number of payment periods in the lease.

11            (G) Total periodic payment. The sum of the base periodic payment

12   plus depreciation, amortized amounts, and any other charges that are part of

13   the periodic payment.

14            (H) Fees and taxes. The dollar amount for all official and license

15   fees, registration, title, or taxes required to be paid in connection with the lease.

16            (I) Other charges. The total amount of other charges payable to the

17   lessor, itemized by type and amount, that are not included in the periodic

18   payments. Such charges include the amount of any liability the lease imposes

19   upon the lessee at the end of the lease term.

20            (J) Total of payments. The total of payments, with a description such

21   as “the amount you will have paid by the end of the lease.” This amount is the

     BILL AS INTRODUCED                                                           H.676
     2008                                                                         Page 6

 1   sum of the amount due at lease signing (less any refundable amounts), the total

 2   amount of periodic payments (less any portion of the periodic payment paid at

 3   lease signing), and other charges assessed under this section.

 4              (K) Penalties and other charges for delinquency. The amount or

 5   method of determining the amount of any penalty or other charge for

 6   delinquency, default, or late payments, which must be reasonable.

 7              (L) Residual value. The residual value, with a description such as

 8   “the value of the vehicle at the end of the lease used.”

 9              (M) Mutually agreeable final adjustment. A statement that the lessee

10   and lessor are permitted, after termination of the lease, to make any mutually

11   agreeable final adjustment regarding excess liability.

12         (2) Maintenance responsibilities.

13              (A) Notice of wear and use standard. A statement of the lessor’s

14   standards for wear and use (if any), which must be reasonable, and a notice

15   substantially similar to the following: “Excessive Wear and Use. You may be

16   charged for excessive wear based on our standards for normal use.” The notice

17   shall also specify the amount or method for determining any charge for excess

18   mileage.

19              (B) Warranties or guarantees. A statement identifying all express

20   warranties and guarantees from the manufacturer or lessor with respect to the

21   leased property.

     BILL AS INTRODUCED                                                            H.676
     2008                                                                          Page 7

 1            (C) Insurance. A brief identification of the lessee’s obligation, if any,

 2   to obtain insurance and the types and amounts of coverage required.

 3         (3) Termination.

 4            (A) Purchase option.

 5                (i) End of lease term. If at the end of the lease term, the purchase

 6   price; and

 7                (ii) During lease term. If prior to the end of the lease term, the

 8   purchase price or the method for determining the price and when the lessee

 9   may exercise this option.

10            (B) Early termination.

11                (i) In general. A statement in at least eight-point bold type to the

12   effect that “early termination may require you to pay a substantial charge.”

13                (ii) Additional early termination charge. The amount that will be

14   charged to a lessee in the event of early termination in addition to the costs

15   specified in subsections 2383(a) through (e) of this chapter, if any.

16                (iii) Early termination liability. The total amount due, or a

17   formula for calculating that amount, in the event of early termination, the

18   components of which shall be consistent with section 2383 of this chapter.

19      (d) Renegotiations, extensions, and assumptions.

20         (1) Renegotiation. A renegotiation occurs when a lease is satisfied and

21   replaced by a new lease undertaken by the same lessee. A renegotiation

     BILL AS INTRODUCED                                                          H.676
     2008                                                                        Page 8

 1   requires new disclosures, except as provided in subdivision (4) of this

 2   subsection.

 3          (2) Extension. An extension is a continuation, agreed to by the lessor

 4   and the lessee of an existing lease, beyond the originally scheduled end of the

 5   lease term, except when the continuation is the result of a renegotiation. An

 6   extension that exceeds six months requires new disclosures, except as provided

 7   in subdivision (4) of this subsection.

 8          (3) Assumption. New disclosures are not required when a lease is

 9   assumed by another person, whether or not the lessor charges an assumption

10   fee.

11          (4) Exceptions. New disclosures are not required for the following,

12   even if they meet the definition of renegotiation or extension:

13              (A) The deferment of one or more payments, whether or not a fee is

14   charged;

15              (B) The extension of a lease for not more than six months on a

16   month-to-month basis or otherwise; or

17              (C) An agreement resulting from a court proceeding.


19      If an agreement is terminated early, the early termination obligation of the

20   lessee may not exceed an amount equal to the sum of:

     BILL AS INTRODUCED                                                              H.676
     2008                                                                            Page 9

 1         (1) any unpaid periodic payments that accrued through the early

 2   termination date;

 3         (2) any other unpaid charges, other than excess mileage charges, arising

 4   from the failure of the lessee to fulfill his or her obligations under the

 5   agreement;

 6         (3) any official fees and taxes imposed in connection with the lease

 7   termination;

 8         (4) a reasonable disposition fee, or in lieu thereof, the reasonable costs

 9   of retaking, storing, preparing for sale, and selling the vehicle;

10         (5) the difference, if any, between (A) the adjusted capitalized cost, and

11   (B) the sum of all depreciation amounts accrued through the date of early

12   termination, calculated in accordance with the constant yield method or any

13   other accepted actuarial method, and the realized value of the vehicle; and

14         (6) an additional early termination charge which is reasonable in light of

15   the anticipated actual harm caused by the default or early termination, the

16   difficulties of proof or loss, and the inconvenience or infeasibility of otherwise

17   obtaining an adequate remedy.

18   § 2384. WAIVER

19      No act or agreement of the retail lessee before or at the time of

20   consummating a lease under this chapter shall constitute a valid waiver of any

21   of the provisions of this chapter.

    BILL AS INTRODUCED                                                            H.676
    2008                                                                         Page 10


2      A lessor shall retain evidence of compliance with the requirements imposed

3   by this chapter for a period of not less than two years after the date the

4   disclosures are required to be made or an action is required to be taken.


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