AB954: Bill Text

After a pretermination inspection or inspection after termination of the lease, the consumer may, under specified conditions and at his or her own expense, obtain a counter-inspection for excess wear and damage by a mutually agreed upon inspector. With limited exceptions, the counter-inspection is conclusive as to the consumer's excess wear and damage obligations under the lease, except for any excess wear and damage that occurred after the counter-inspection or for excess wear and damage that was obscured or concealed. A consumer does not default on a motor vehicle consumer lease for failing to obtain a pretermination inspection or counter-inspection.

7. No motor vehicle consumer lease creates a security interest in any real or personal property of the consumer, except for any security deposit, advance lease payment or other prepayment; any right of setoff; or in any security interest in the leased vehicle or in any proceeds, refunds for cancellation or any other rights of the consumer with respect to the consumer lease.

8. The bill contains provisions governing the refund of an advance payment or the return of a trade-in vehicle if the consumer lease application is not approved.

9. The bill provides that any person who violates any provision of the Wisconsin motor vehicle consumer lease act is liable to the consumer. The amount of the liability is $100 and actual damages sustained by the consumer as a result of the violation, including any incidental and consequential damages.

This liability provision does not apply to failure of a lessor to substantially comply with the provisions of the act relating to excess wear and damage, in which case the exclusive remedy is a waiver of the lessor's right to collect all contested excess wear and damage charges from the consumer.

Prelease agreement

The bill governs prelease agreements. A "prelease agreement" is defined to mean an agreement to enter into a motor vehicle consumer lease. The agreement must be in writing and signed by both parties.

A prospective lessor must make certain disclosures to the prospective consumer before entering into a prelease agreement. These disclosures must include most of the disclosures pertaining to a motor vehicle consumer lease and a statement that includes a notice that the prelease agreement is binding and obligates the consumer to enter into a motor vehicle consumer lease with the prospective lessor when the vehicle to be leased is available and ready for delivery.

The bill permits a prospective lessor to cancel the prelease agreement within 10 business days of entering into the agreement if the prospective consumer is unable to obtain credit approval of an applicable sales finance company, and the prelease agreement contains notice to the prospective consumer of this cancellation right.

A prelease agreement may not contain a penalty, for nonacceptance of the vehicle by the prospective consumer, that is greater than 5% of the capitalized cost of the vehicle.

Other provisions

Other provisions of the bill make changes to state law relating to the leasing of motor vehicles. These changes include all of the following:

1. Under current law, a person may not rent or lease a motor vehicle unless a bond or liability insurance policy is filed with the department of transportation (DOT). The bill provides that the bondsman or liability insurer (and not the renter or lessor of the vehicle) is liable for damages caused by the negligent operation of the leased vehicle. If no liability policy is filed with DOT, the renter or lessor may be held personally liable for damages, but only in an amount up to the limits that apply whenever proof of financial responsibility is required. These limits are $25,000 for injury or death to one person in any one accident, $50,000 for injury or death to 2 or more persons and $10,000 for damage to property. The bill does not affect the right or ability to recover damages from the person whose negligent operation of the rented or leased vehicle caused the injury or damage.

2. The bill extends the definitions of "motor vehicle dealer", "motor vehicle salesperson" and "sales finance company" to cover motor vehicle consumer leases and the leasing of motor vehicles. In addition, various provisions relating to the denial, suspension or revocation of a license of a motor vehicle dealer, motor vehicle salesperson or sales finance company extend to prelease agreements and the leasing of motor vehicles.

3. The bill requires a sales finance company to provide and maintain in force a bond or irrevocable letter of credit of not less than $25,000. The bond or credit must be executed in the name of the state for the benefit of the state and any person who sustains a loss because of an act of the sales finance company that would constitute grounds for the suspension or revocation of the sales finance company's license.

4. Under current law, a minor must have the advance consent of a custodial parent of the minor or, if neither parent has custody, the person having custody of the minor, before the minor may purchase a motor vehicle. A statement signed by the parent or other custodian of the minor must be submitted to the seller of the motor vehicle. Any person who sells a motor vehicle to a minor with knowledge of this fact without obtaining the statement may be fined not more than $200 or imprisoned for not more than 6 months or both.

The bill extends this requirement and penalty for a violation to motor vehicle consumer leases.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB954, s. 1 Section 1. 218.01 (1) (ar) of the statutes is created to read:

AB954,5,2 218.01 (1) (ar) "Capitalized cost" has the meaning given in s. 429.104 (5).

AB954, s. 2 Section 2. 218.01 (1) (ct) of the statutes is created to read:

AB954,5,4 218.01 (1) (ct) "Consumer lease" has the meaning given in s. 429.104 (9).

AB954, s. 3 Section 3. 218.01 (1) (ji) of the statutes is created to read:

AB954,5,7 218.01 (1) (ji) "Lease" or "leasing" means, with respect to a lessor, to enter into or offer to enter into a consumer lease with a lessee.

AB954, s. 4 Section 4. 218.01 (1) (jj) of the statutes is created to read:

AB954,5,9 218.01 (1) (jj) "Lessee" has the meaning given in s. 429.104 (17).

AB954, s. 5 Section 5. 218.01 (1) (jk) of the statutes is created to read:

AB954,6,2 218.01 (1) (jk) "Lessor" means a person who leases a motor vehicle to a lessee under a consumer lease, but does not include an assignee of a consumer lease.

AB954, s. 6 Section 6. 218.01 (1) (n) 1. and 2. of the statutes are amended to read:

AB954,6,6 218.01 (1) (n) 1. For commission, money or other thing of value, sells, leases, exchanges, buys, rents with the option of purchase, offers or attempts to negotiate a sale, consumer lease or exchange of an interest in motor vehicles; or,

AB954,6,9 2. Is engaged wholly or in part in the business of selling or leasing motor vehicles, including motorcycles, whether or not such motor vehicles are owned by such person, firm or corporation.

AB954, s. 7 Section 7. 218.01 (1) (o) 5. of the statutes is created to read:

AB954,6,12 218.01 (1) (o) 5. Sales finance companies who purchase or otherwise acquire consumer leases from a motor vehicle dealer.

AB954, s. 8 Section 8. 218.01 (1) (p) of the statutes is amended to read:

AB954,6,18 218.01 (1) (p) "Motor vehicle salesperson" means sales representative, sales manager, general manager or other person who is employed by a motor vehicle dealer for the purpose of selling or approving retail sales, or leasing or approving consumer leases, of motor vehicles. Any motor vehicle salesperson licensed hereunder shall be licensed to sell or lease only for one dealer at a time.

AB954, s. 9 Section 9. 218.01 (1) (pw) of the statutes is created to read:

AB954,6,20 218.01 (1) (pw) "Periodic" has the meaning given in s. 429.104 (20).

AB954, s. 10 Section 10. 218.01 (1) (qm) of the statutes is created to read:

AB954,6,24 218.01 (1) (qm) "Prelease agreement" means an agreement to enter into a consumer lease whereby the motor vehicle will be available and ready to be delivered to the prospective lessee at a later time.

AB954, s. 11 Section 11. 218.01 (1) (v) of the statutes is amended to read:

AB954,7,7 218.01 (1) (v) "Sales finance company" means and includes any person, firm or corporation engaging in the business, in whole or in part, of acquiring by purchase or by loan on the security thereof, or otherwise, retail instalment contracts or consumer leases from retail sellers or lessors in this state, including any motor vehicle dealer who sells or leases any motor vehicle on an instalment contract or consumer lease or acquires any retail instalment contracts in the dealer's retail sales or leases of motor vehicles.

AB954, s. 12 Section 12. 218.01 (1a) of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

AB954,7,24 218.01 (1a) Authority of licensors. The department of transportation shall issue the licenses provided for in sub. (2) (d) 1. to 6. and have supervision over the licensees thereunder in respect to all the provisions of this section, except only as to such matters as relate to the sale of motor vehicles on retail instalment contracts and the financing and servicing of such contracts and as to such matters as relate to consumer leases, over which matter the division of banking shall have jurisdiction and control, and the division of banking shall issue the licenses to sales finance companies. Either licensor hereunder shall, upon request, furnish the other licensor with any information it may have in respect to any licensee or applicant for license or any transaction in which such licensee or applicant may be a party or be interested. No license shall be issued under sub. (2) (d) 1. and 8. until both licensors have approved the application. The suspension or revocation of either of such licenses shall automatically likewise suspend or revoke the other license; and such suspension or revocation shall be certified by the licensor ordering it to the other licensor.

AB954, s. 13 Section 13. 218.01 (2) (b) of the statutes, as affected by 1995 Wisconsin Act 27, section 5843, is amended to read:

AB954,8,17 218.01 (2) (b) Application for license shall be made to the licensor, at such time, in such form and with such information as the licensor shall require and shall be accompanied by the required fees. An applicant for a sales finance company license, other than a motor vehicle dealer, shall pay to the division of banking a nonrefundable $300 investigation fee in addition to the license fee under par. (dr). If the cost of an investigation exceeds $300, the applicant shall, upon demand of the division of banking, pay the amount by which the cost of the investigation exceeds the nonrefundable fee. A licensee is not required to pay an investigation fee for the renewal of a license. The licensor may require the applicant to provide information relating to any pertinent matter that is commensurate with the safeguarding of the public interest in the locality in which the applicant proposes to engage in business, except that information relating to the applicant's solvency and financial standing may not be required for motor vehicle dealers except as provided in par. (h) 1. The information provided may be considered by the licensor in determining the fitness of the applicant to engage in business as set forth in this section.

AB954, s. 14 Section 14. 218.01 (2) (bb) of the statutes, as affected by 1995 Wisconsin Act 27, is renumbered 218.01 (2) (bb) 1.

AB954, s. 15 Section 15. 218.01 (2) (bb) 2. of the statutes is created to read:

AB954,9,3 218.01 (2) (bb) 2. A sales finance company or an applicant for a sales finance company license shall provide and maintain in force a bond or irrevocable letter of credit of not less than $25,000 issued by a surety company licensed to do business in this state or a federally insured financial institution, as defined in s. 705.01 (3). The bond or letter of credit shall be payable to the state of Wisconsin for the use of the state and of any person who sustains a loss because of an act of a sales finance company that constitutes grounds for the suspension or revocation of a license under this section.

AB954, s. 16 Section 16. 218.01 (2) (d) 8. b. of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

AB954,9,9 218.01 (2) (d) 8. b. For motor vehicle dealers that operate as a sales finance company or that carry or retain time sales retail instalment contracts or consumer leases for more than 30 days, to the division of banking, the same as for sales finance companies under par. (dr), except for gross volume of $100,000 or less, $50.

AB954, s. 17 Section 17. 218.01 (2) (dr) of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

AB954,9,20 218.01 (2) (dr) The fee for licenses for sales finance companies, except as provided in par. (d) 8., for each calendar year, or part of a calendar year, is based on the gross volume of purchases of retail sales instalment contracts and consumer leases of motor vehicles sold or leased in this state for the 12 months immediately preceding October 31 of the year in which the application for license is made, as follows: On a gross volume of $100,000 or less, $50; and on each $100,000 or part thereof over $100,000, an additional $15. No extra charge shall be made for branch licenses for sales finance companies. Gross volume shall be based on the unpaid balance of the retail instalment contracts and consumer leases.

AB954, s. 18 Section 18. 218.01 (2) (h) 2. of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

AB954,9,25 218.01 (2) (h) 2. Provided the licensor has reasonable cause to doubt the financial responsibility of the applicant or licensee or the compliance by the applicant or licensee with this section, the licensor may require the applicant or licensee to furnish and maintain a bond in the form, amount and with the sureties it approves, but not less than $5,000, nor more than $100,000, conditioned upon the applicant or licensee complying with the statutes applicable to the licensee and as indemnity for any loss sustained by any person by reason of any acts of the licensee constituting grounds for suspension or revocation of the license under this section. The bonds shall be executed in the name of the department of transportation for the benefit of any aggrieved parties; provided that the aggregate liability of the surety to all such parties shall, in no event, exceed the amount of the bond. The bonding requirements in this subdivision shall not apply to manufacturers, factory branches, and their agents and is in addition to the bond or letter of credit required of a motor vehicle dealer under par. (bb) 1.

AB954, s. 19 Section 19. 218.01 (2) (k) 3. of the statutes is amended to read:

AB954,10,14 218.01 (2) (k) 3. Has had experience or training in, or is otherwise qualified for, selling or leasing motor vehicles.

AB954, s. 20 Section 20. 218.01 (2) (k) 5. of the statutes is amended to read:

AB954,10,17 218.01 (2) (k) 5. Is reasonably familiar with the motor vehicle sales or consumer lease laws or contracts that the applicant is proposing to solicit, negotiate or effect.

AB954, s. 21 Section 21. 218.01 (3) (a) 5. of the statutes is amended to read:

AB954,10,20 218.01 (3) (a) 5. Wilfully defrauding any retail buyer , lessee or prospective lessee to the buyer's, lessee's or prospective lessee's damage.

AB954, s. 22 Section 22. 218.01 (3) (a) 6. of the statutes is amended to read:

AB954,10,23 218.01 (3) (a) 6. Wilful failure to perform any written agreement with any retail buyer, lessee or prospective lessee.

AB954, s. 23 Section 23. 218.01 (3) (a) 8. of the statutes is amended to read:

AB954,11,2 218.01 (3) (a) 8. Having made a fraudulent sale, consumer lease, prelease agreement, transaction or repossession.

AB954, s. 24 Section 24. 218.01 (3) (a) 9. of the statutes is amended to read:

AB954,11,7 218.01 (3) (a) 9. Fraudulent misrepresentation, circumvention or concealment through whatsoever subterfuge or device of any of the material particulars or the nature thereof required hereunder to be stated or furnished to the retail buyer, lessee or prospective lessee.

AB954, s. 25 Section 25. 218.01 (3) (a) 10. of the statutes is amended to read:

AB954,11,12 218.01 (3) (a) 10. Employment of fraudulent devices, methods or practices in connection with compliance with the statutes with respect to the retaking of goods under retail instalment contracts or consumer leases and the redemption and resale or subsequent lease of such goods.

AB954, s. 26 Section 26. 218.01 (3) (a) 13. of the statutes is amended to read:

AB954,11,15 218.01 (3) (a) 13. Having sold a retail instalment contract or consumer lease to a sales finance company not licensed hereunder.

AB954, s. 27 Section 27. 218.01 (3) (a) 14. of the statutes is amended to read:

AB954,11,18 218.01 (3) (a) 14. Having violated any law relating to the sale, lease, distribution or financing of motor vehicles.

AB954, s. 28 Section 28. 218.01 (3) (a) 18. of the statutes is amended to read:

AB954,12,2 218.01 (3) (a) 18. Having accepted an order or contract of purchase or a contract from a buyer or a consumer lease or prelease agreement from a lessee or prospective lessee if such arrangement results in the practice of bushing. For the purpose of this section, "bushing" means the practice of increasing the selling price or capitalized cost of a motor vehicle above that originally quoted the purchaser , lessee or prospective lessee as evidenced by a purchase order or , contract, prelease agreement or consumer lease which has been signed by both the purchaser, lessee or prospective lessee and dealer licensee.

AB954, s. 29 Section 29. 218.01 (3) (a) 19. of the statutes is amended to read:

AB954,12,8 218.01 (3) (a) 19. Having advertised, printed, displayed, published, distributed, broadcast or televised or caused or permitted to be advertised, printed, displayed, published, distributed, broadcast or televised in any manner whatsoever, any statement or representation with regard to the sale, lease or financing of motor vehicles which is false, deceptive or misleading.

AB954, s. 30 Section 30. 218.01 (3) (a) 20. of the statutes is amended to read:

AB954,12,16 218.01 (3) (a) 20. Having set up, promoted or aided in the promotion of a plan by which motor vehicles are sold or leased to a person for a consideration and upon the further consideration that the purchaser or lessee agrees to secure one or more persons to participate in the plan by respectively making a similar purchase or lease and in turn agreeing to secure one or more persons likewise to join in said plan, each purchaser or lessee being given the right to secure money, credits, goods or something of value, depending upon the number of persons joining in the plan.

AB954, s. 31 Section 31. 218.01 (3) (a) 21. of the statutes is amended to read:

AB954,12,24 218.01 (3) (a) 21. Being a dealer who keeps open the dealer's place of business on Sunday for the purpose of buying, leasing or selling motor vehicles; but nothing in this subdivision shall apply to any person who conscientiously believes that the 7th day of the week, from sunset Friday to sunset Saturday, should be observed as the Sabbath and who actually refrains from conducting or engaging in the business of buying, leasing, selling or offering for lease or sale motor vehicles, or performing other secular business on that day.

AB954, s. 32 Section 32. 218.01 (3) (a) 25. of the statutes is amended to read:

AB954,13,1 218.01 (3) (a) 25. Having violated chs. 421 to 427 or 429.

AB954, s. 33 Section 33. 218.01 (3) (a) 29. of the statutes is amended to read:

AB954,13,5 218.01 (3) (a) 29. Being an inactive business, as evidenced by 3 or less motor vehicle purchases and sales or consumer leases during the prior year licensing period.

AB954, s. 34 Section 34. 218.01 (3) (bf) 1. of the statutes, as affected by 1995 Wisconsin Act 27, is amended to read:

AB954,13,16 218.01 (3) (bf) 1. The department of transportation shall not license as a dealer an applicant for the sale or lease of motor vehicles at retail unless such applicant owns or leases a vehicle display lot and a permanent building wherein there are facilities to display automobiles and motorcycles and facilities to repair functional and nonfunctional parts of motor vehicles and where replacement parts, repair tools and equipment to service motor vehicles are kept, and at which place of business shall be kept and maintained the books, records and files necessary to conduct the business. A residence, tent or temporary stand is not a sufficiently permanent place of business within the meaning of this paragraph.

AB954, s. 35 Section 35. 218.01 (5) (a) of the statutes is amended to read: