Amendment SSA1-SB589

SB589-SSA1,30,15 429.104 Definitions. In this chapter:

SB589-SSA1,30,18 (1) "Adjusted capitalized cost" means the amount computed by subtracting from capitalized cost any capitalized cost reduction, for the purpose of determining the base lease payment.

SB589-SSA1,30,22 (2) "Average periodic depreciation" means the adjusted capitalized cost, after first subtracting the residual value, divided by the number of payment periods under the consumer lease or, for a single-payment lease, the number of months in the term of the lease.

SB589-SSA1,31,2 (3) "Average periodic lease charge" means the lease charge for the scheduled term of the consumer lease divided by the number of payment periods under the consumer lease or, for a single-payment lease, the number of months in the term of the lease.

SB589-SSA1,31,3 (4) "Base lease payment" means an amount determined as follows:

SB589-SSA1,31,6 (a) With respect to a single-payment lease, the product of the number of months in the scheduled term of the lease multiplied by the sum of the average periodic lease charge and the average periodic depreciation.

SB589-SSA1,31,8 (b) With respect to a lease other than a single-payment lease, the sum of the average periodic lease charge and the average periodic depreciation.

SB589-SSA1,31,23 (5) "Capitalized cost" means the sum of all amounts capitalized in the consumer lease that, after subtracting the capitalized cost reduction, amortizes to the residual value by the depreciation portion of the periodic lease payments over the scheduled term of the lease or, for a single-payment lease, the single payment. These amounts may include taxes; fees for registration, license, acquisition, administration and assignment; other fees; charges for insurance, service contracts and extended warranties; and charges for a waiver of the contractual obligation to pay the gap amount, for accessories and their installation, for other services and benefits incidental to the consumer lease, and for delivering, servicing, repairing or improving the vehicle. With respect to a vehicle or other property traded in connection with a consumer lease, the term may include the outstanding unpaid balance of the amount financed under a consumer loan, as defined in s. 421.301 (12), or a retail instalment contract, as defined in s. 218.01 (1) (t), or the unpaid balance of any early termination costs under a lease or other obligation of the lessee. The term does not include any lease charge.

SB589-SSA1,32,3 (6) "Capitalized cost reduction" means the sum, at the time of inception of the consumer lease, of any payments made by cash, check, rebates or the like that constitute a downpayment made by the lessee and the net amount credited by the lessor for any trade-in. The term does not include any base lease payments due at the inception of the consumer lease.

SB589-SSA1,32,6 (7) "Conspicuous" means that the term or clause is so written as to be distinguished from other terms or clauses by type size or in some other manner. The term includes any writing in at least 10-point boldface type.

SB589-SSA1,32,10 (8) "Constant yield method" means any of the following methods of determining the unpaid balance of the lease charge using a constant yield that assumes that any scheduled payment under the consumer lease is made on its exact due date and that the consumer lease is and remains a valid lease for its duration:

SB589-SSA1,32,18 (a) In the case of a lease other than a single-payment lease, the method of determining the lease charge portion of each base lease payment pursuant to which the lease charge for each payment period is earned in advance of that period by multiplying the constant rate used to compute the lease charge times the balance subject to a lease charge at the scheduled time of a lease payment. For purposes of this paragraph, the balance subject to a lease charge is calculated by subtracting from the adjusted capitalized cost the sum of the first base lease payment and all depreciation amounts accrued during any preceding payment period.

SB589-SSA1,33,2 (b) In the case of a single-payment lease, the method of determining the periodic earning of the lease charge pursuant to which the lease charge for any computational period is earned in advance of that period by multiplying the constant rate used to compute the lease charge times the balance subject to a lease charge at the applicable time during the term of the lease. For purposes of this paragraph, the balance subject to a lease charge is calculated by subtracting the total lease charge from the sum of the residual value and all lease charges accrued during any preceding computational periods.

SB589-SSA1,33,9 (9) "Consumer lease" or "lease" means a lease entered into in this state that transfers the right of possession and use by a natural person of a motor vehicle primarily for a personal, family, household or agricultural purpose, for a period of time exceeding 4 months, if the total lease obligation, excluding any option to purchase or otherwise become owner of the motor vehicle at the expiration of the consumer lease, does not exceed $25,000. The term does not include a credit sale, as defined under 12 CFR 226.2 (a) (16).

SB589-SSA1,33,11 (10) "Early termination" means termination of a consumer lease before the termination date set forth in the consumer lease.

SB589-SSA1,33,13 (11) "Federal consumer leasing act" means the federal consumer leasing act, as amended, 15 USC 1667-1667e, and regulations issued under that act.

SB589-SSA1,33,24 (12) "Gap amount" means the difference between the amount specified in the consumer lease to be paid by the lessee under the consumer lease in the event of total loss or destruction of the leased vehicle prior to expiration of the lease term by theft, physical damage, or other occurrence specified in the lease, and the actual cash value or portion thereof received by the lessor from insurance proceeds or from any other person on account of the total loss or destruction of the motor vehicle. The term does not include any deductible amount applicable to any insurance policy maintained by the lessee, any past-due payments owed by the lessee at the time of receipt by the lessor of the actual cash value or portion thereof from insurance proceeds or from any other person, or any other amount due under the lease resulting from default by the lessee.

SB589-SSA1,33,25 (13) "Gap protection" means any of the following:

SB589-SSA1,34,2 (a) A provision in a consumer lease under which the lessor agrees, for a charge, to waive the gap amount.

SB589-SSA1,34,4 (b) Insurance coverage that provides that another person is liable for the gap amount.

SB589-SSA1,34,7 (14) "Group credit insurance" means group credit life insurance, group credit accident insurance, group credit accident and health insurance, group disability insurance or group credit unemployment insurance.

SB589-SSA1,34,11 (15) "Holder" means, with respect to a consumer lease, the lessor and, upon assignment of the lease, the assignee for the period of assignment. The term does not include a pledgee of a consumer lease or the owner or beneficiary of an interest in a trust that owns consumer leases.

SB589-SSA1,34,14 (16) "Lease charge" means the sum of all charges payable by the lessee for the privilege of making the scheduled lease payments under a consumer lease. The term does not include capitalized cost.

SB589-SSA1,34,16 (17) "Lessee" means a natural person who leases a motor vehicle from a lessor under a consumer lease.

SB589-SSA1,34,18 (18) "Lessor" means a person regularly engaged in the business of leasing or selling vehicles who leases a motor vehicle to a lessee under a consumer lease.

SB589-SSA1,34,19 (19) "Motor vehicle" has the meaning given in s. 218.01 (1) (m).

SB589-SSA1,34,21 (20) "Periodic" means weekly, monthly, quarterly or any other period of time specified in a consumer lease.

SB589-SSA1,34,24 (21) "Prospective lessee" means a natural person who enters into a prelease agreement under s. 218.01 (6x) with a prospective lessor, or who otherwise intends to become a lessee.

SB589-SSA1,35,3 (21m) "Prospective lessor" means a person regularly engaged in the business of leasing or selling vehicles who enters into a prelease agreement under s. 218.01 (6x) with a prospective lessee, or who otherwise intends to become a lessor.

SB589-SSA1,35,6 (22) "Realized value" means, with respect to any motor vehicle leased under a consumer lease that is terminated before the expiration date, the value determined under s. 429.206.

SB589-SSA1,35,13 (23) "Renegotiation" means the satisfaction and replacement of an existing consumer lease by a new consumer lease between the same parties, including an assignee of the lessor. The term does not include a deferral or extension of any periodic lease payments or portions thereof not exceeding 6 months in the aggregate, a satisfaction and replacement of a consumer lease involving a court proceeding or the settlement of a dispute, or any other action that does not constitute a renegotiation under the federal consumer leasing act.

SB589-SSA1,35,16 (24) "Residual value" means the estimated value of the leased vehicle at the expiration of the lease term that is used in the consumer lease to determine the base lease payment.

SB589-SSA1,35,18 (25) "Single-payment lease" means a consumer lease that requires only one payment, to be paid at the time of consummation of the lease.

SB589-SSA1,35,19 (26) "Total lease obligation" means the sum of all of the following:

SB589-SSA1,35,20 (a) All scheduled periodic payments under the lease.

SB589-SSA1,35,21 (b) Capitalized cost reduction.

SB589-SSA1,35,24 Subchapter II Disclosures; limitations on agreements and practices

SB589-SSA1,36,4 429.201 Prelease availability of consumer lease form. A lessor shall, upon request of a prospective lessee, make readily available a blank sample of its current consumer lease form for examination by the prospective lessee before execution of the consumer lease.

SB589-SSA1,36,14 429.202 Advance payment or trade-in; refund or return. (1) If a prospective lessee has made an advance payment or surrendered possession of a vehicle to a prospective lessor as a trade-in pending the execution of a consumer lease, the prospective lessee shall have the right, if the application for the consumer lease is not approved, to receive a prompt refund of the advance payment and, if applicable, to have the trade-in vehicle promptly returned. If a prospective lessor takes possession of a trade-in vehicle under this subsection, the prospective lessor may not sell, offer for sale, lease, transfer or otherwise dispose of the vehicle in any manner until execution of the consumer lease or, except for return of the vehicle to the prospective lessee, disapproval of the consumer lease application.

SB589-SSA1,36,19 (2) This section does not apply to the sale of a vehicle by a prospective lessee to a prospective lessor under a separate contract of sale if the contract of sale is executed prior to execution of the consumer lease between the parties, gives the date of sale and is signed by both parties. Any contract of sale under this subsection shall provide for all of the following:

SB589-SSA1,36,23 (a) That the contract price establishes the value of the vehicle to be credited against the amount due from the lessee at the consummation of the lease or, if the parties fail to execute a consumer lease, the amount due the prospective lessee for the vehicle.

SB589-SSA1,37,2 (b) That the prospective lessee agrees to leave the contract price on deposit with the prospective lessor pending the execution of a consumer lease between the parties with respect to a motor vehicle to be ordered from a manufacturer, including a motor vehicle not yet in production as of the date of sale.

SB589-SSA1,37,6 (c) That the prospective lessee shall be entitled to payment of the contract price from the prospective lessor no later than 75 days after the date of sale, unless the parties have executed a consumer lease or the prospective lessee has already received such payment.

SB589-SSA1,37,8 429.203 Requirements of a consumer lease. (1) A consumer lease shall be in writing and signed by the lessor and the lessee.

SB589-SSA1,37,12 (2) Except as otherwise provided in this subsection, the printed portion of a consumer lease, other than instructions for its completion, shall be in at least 8-point type. The consumer lease shall contain all of the following printed in a conspicuous manner:

SB589-SSA1,37,14 (a) At the top of the consumer lease, the words "MOTOR VEHICLE LEASE AGREEMENT" in at least 10-point type.

SB589-SSA1,37,19 (b) 1. Except as provided in subd. 2., if no liability insurance for bodily injury or property damage is provided for under the consumer lease, a notice in substantially the following language in bold-faced capital letters of not less than 10-point type: "NO LIABILITY INSURANCE FOR BODILY INJURY OR PROPERTY DAMAGE IS INCLUDED IN THIS LEASE."

SB589-SSA1,37,22 2. The notice required under subd. 1. may be provided on a separate document delivered to the prospective lessee not later than the time of execution of the consumer lease.

SB589-SSA1,38,2 (2m) Every writing evidencing the customer's obligation to pay under a motor vehicle consumer lease shall contain immediately above or adjacent to the place for the signature of the customer, a conspicuous, printed or typewritten notice in substantially the following language:

SB589-SSA1,38,3 NOTICE TO LESSEE

SB589-SSA1,38,7 (a) THIS IS A MOTOR VEHICLE LEASE AGREEMENT. YOU HAVE NO OWNERSHIP RIGHTS IN THE MOTOR VEHICLE UNLESS THIS LEASE CONTAINS A PURCHASE OPTION AND YOU EXERCISE YOUR OPTION TO PURCHASE THE MOTOR VEHICLE.

SB589-SSA1,38,9 (b) DO NOT SIGN THIS LEASE BEFORE YOU READ IT, INCLUDING ANY WRITING ON THE REVERSE SIDE.

SB589-SSA1,38,10 (c) DO NOT SIGN THIS IF IT CONTAINS ANY BLANK SPACES.

SB589-SSA1,38,12 (d) EARLY TERMINATION OF THIS LEASE MAY REQUIRE YOU TO PAY A SUBSTANTIAL AMOUNT.

SB589-SSA1,38,14 (e) YOU ARE ENTITLED TO A COMPLETED COPY OF THIS LEASE WHEN YOU SIGN IT.

SB589-SSA1,38,17 (3) The consumer lease shall contain all disclosures required by the federal consumer leasing act and any of the following disclosures that are not disclosed in the same or substantially similar disclosures under the federal consumer leasing act:

SB589-SSA1,38,22 (a) The capitalized cost, using the term "capitalized cost", and an explanation of the term in substantially the following language: "The capitalized cost is the agreed-upon amount determined at the inception of the consumer lease for all items and services included in the lease other than the charges you pay for the privilege of making the scheduled lease payments."

SB589-SSA1,39,2 (b) Any capitalized cost reduction, using the term "capitalized cost reduction", and an explanation of the term in substantially the following language: "The capitalized cost reduction is any cash, check, rebate or the like and, if applicable, net trade-in allowance that reduces the capitalized cost."

SB589-SSA1,39,8 (c) The adjusted capitalized cost, using the term "adjusted capitalized cost", and an explanation of the term, as applicable, in substantially the following language: "The adjusted capitalized cost is the agreed-upon amount that serves as the basis for determining the base lease payment. If you are not in default on the consumer lease, this amount (plus any applicable early termination charges) determines your maximum early termination obligation."

SB589-SSA1,39,12 (d) The residual value of the leased vehicle, using the term "residual value", and an explanation of the term in substantially the following language: "The residual value is the estimated value of the leased vehicle at the end of the lease term that is used in determining the base lease payment."

SB589-SSA1,39,15 (e) The standards to be applied by the holder in determining the excess wear and damage to the leased vehicle for which the lessee shall be held liable. These standards shall comply with the federal consumer leasing act.

SB589-SSA1,39,16 (f) Any disclosure required under sub. (2m).

SB589-SSA1,39,20 (4) The consumer lease shall contain the names of the lessor and the lessee; the place of business of the lessor; the place of business or residence of the lessee, as specified by the lessee; and the year, make, model and, if known, serial or identification number of the motor vehicle.

SB589-SSA1,39,24 (5) The lessor shall deliver to the lessee a completed copy of the consumer lease signed by both parties. Any acknowledgement of delivery of a copy of the consumer lease by the lessee shall be conspicuous and appear directly above the space reserved for the signature of the lessee.

SB589-SSA1,40,4 (6) (a) Any policy of bodily injury and property damage liability insurance with respect to operation of the leased vehicle for which a charge is included in the consumer lease shall be issued by an insurer authorized to transact business in this state.

SB589-SSA1,40,12 (b) The lessee shall have the right of purchasing a policy of bodily injury and property damage liability insurance with respect to operation of the leased vehicle from an insurance agent or broker selected by the lessee, if the insurer selected to issue the policy is acceptable to the lessor. If a lessee purchases an insurance policy under this paragraph, the lessor may agree to pay an applicable insurance premium and include a charge equal to the insurance premium in the consumer lease. A lessor has no obligation under this paragraph to send or cause to be sent to the lessee a copy of the applicable insurance policy.

SB589-SSA1,40,22 (c) If any liability insurance policy or other insurance on the leased vehicle is canceled, a refund of any insurance premium paid for the insurance that is received by the holder from the insurer shall be refunded to the lessee or credited, together with that portion of the lease charge applicable to such refund, to the lessee's outstanding obligations under the consumer lease, including to any remaining lease payments or, at the option of the holder, to the existing obligations of the lessee upon expiration, termination or cancellation of the consumer lease. A refund or credit under this paragraph is not required if the amount of the refund or credit is applied toward the purchase of similar liability insurance protecting the interests of the lessee or holder or would be less than $1.

SB589-SSA1,41,6 (7) A holder may purchase or sell, or otherwise acquire or transfer, an interest in a consumer lease or a motor vehicle subject to a consumer lease, on such terms and conditions as may be mutually agreed upon by the parties to the sale, transfer or acquisition. No filing of the sale, transfer or acquisition, or any requirement that the holder be deprived of any payments due with respect to the consumer lease or, if subject to replevin or otherwise returned to the holder, the motor vehicle, shall be necessary to the validity of any written bill of sale or other instrument of transfer of the interest in a consumer lease as against creditors, subsequent purchasers, pledges, encumbrancers, mortgagees, successors or assigns.

SB589-SSA1,41,10 (8) (a) Upon written request from a lessee, the holder shall give or forward to the lessee a written statement that specifies, without regard to realized value, the projected obligation that the lessee will incur in the event of early termination of the consumer lease.

SB589-SSA1,41,15 (b) No charge may be imposed for the preparation of one statement under par. (a) in a 12-month period. A holder may impose a reasonable charge, not exceeding $20 per statement, for the preparation of a 2nd or subsequent statement under par. (a) in a 12-month period, if the charge has been disclosed to the lessee either orally or in writing prior to preparation of a statement under this paragraph.

SB589-SSA1,41,17 (9) A holder is not required to pay interest on any security deposit under the consumer lease.

SB589-SSA1,41,20 (10) Any provision of a consumer lease in violation of this chapter is void and unenforceable, but shall not affect the validity of any other provision of the consumer lease.

SB589-SSA1,41,24 429.204 Gap amount; notice; waiver. (1) If a consumer lease provides that the lessee is responsible for any or all of the gap amount, the consumer lease shall disclose this fact, using the term "gap amount". The acceptance of a consumer lease may not be conditioned upon the lessee's agreement to gap protection.

SB589-SSA1,42,9 (2) (a) A lessor may waive any right under the consumer lease to hold a lessee liable for any or all of the gap amount. The consumer lease may contain a separate charge for the waiver under this paragraph if the charge is conspicuously disclosed to the lessee, and the consumer lease also contains a conspicuous notice stating that, for such separate charge, the lessor agrees to waive such contractual right and that, in lieu of such separate charge, the lessee may purchase insurance from an insurer authorized to transact business in this state insuring the lessee for any or all of the gap amount. A waiver under this paragraph without a separate charge is not consumer credit insurance, as defined in s. 424.201, or insurance on property.

SB589-SSA1,42,11 (b) A lessee is not liable for any or all of the gap amount if the consumer lease fails to provide the notice required by par. (a).

SB589-SSA1,42,13 (3) A lessor's waiver under sub. (2) may be conditioned upon payment of any of the following:

SB589-SSA1,42,14 (a) The separate charge, if any, for the waiver.

SB589-SSA1,42,17 (b) All amounts due under the consumer lease as of the date of total loss or destruction of the leased vehicle or, if specified in the consumer lease, as of the date of receipt by the lessor of insurance proceeds.

SB589-SSA1,42,20 (c) An amount from the lessee equal to any deductible amount under an applicable insurance policy and any other subtractions made by the insurance company under the insurance policy.

SB589-SSA1,42,23 (d) Insurance proceeds from the applicable insurance policy required under the consumer lease or the equivalent amount with respect to the value of the motor vehicle.

SB589-SSA1,43,3 429.205 Security interest. (1) No consumer lease, or any other document executed by a lessee in connection with a consumer lease, shall create a security interest in any real or personal property of the lessee to secure payment of any obligations assumed by the lessee under the consumer lease. This subsection does not apply to any of the following:

SB589-SSA1,43,5 (a) The taking of a security deposit, advance lease payment or other prepayment by cash, check, credit card or other device.

SB589-SSA1,43,6 (b) Any right of setoff.

SB589-SSA1,43,10 (c) Any security interest in the leased vehicle or in any proceeds, refunds for cancellation or any other rights of the lessee with respect to the consumer lease or the leased vehicle, including any insurance contracts, gap protection contracts, repair contracts and extended warranty or maintenance service contracts.

SB589-SSA1,43,12 (2) Any security interest taken in violation of this section is void and unenforceable, but shall not otherwise affect the validity of the consumer lease.

SB589-SSA1,43,16 429.206 Determination of realized value upon early termination. If a consumer lease is terminated before the expiration date set forth in the lease, the realized value of the motor vehicle leased under the consumer lease shall be determined as follows:

SB589-SSA1,43,18 (1) If the lessee and the lessor mutually agree upon the motor vehicle's realized value, the realized value is the mutually agreed-upon amount.

SB589-SSA1,43,24 (2) If there is a total loss or destruction of the vehicle occasioned by its theft, physical damage or other occurrence specified in the consumer lease and no amount is agreed upon under sub. (1), the realized value equals the sum of any insurance proceeds received by the holder under an insurance policy required under the consumer lease and any amounts received by the holder from any other party in payment for the loss or destruction of the leased vehicle.

SB589-SSA1,44,9 (3) If the realized value has not been determined under sub. (1) or (2) and an appraisal is obtained under this subsection, the realized value is the amount established by the appraisal. An appraisal may be obtained under this subsection if, within 5 business days of the early termination of the consumer lease, a lessee who is not in default obtains at his or her own expense a professional appraisal of the current wholesale value of the vehicle by an appraiser mutually agreeable to the lessee and the holder. An appraisal under this subsection is final and binding and establishes the realized value for purposes of determining the liability of the lessee under the consumer lease.