2017 - 2018 LEGISLATURE
December 7, 2017 - Introduced by Senator Moulton, cosponsored by
Representatives Petryk, Pronschinske, Krug, Kulp, Rohrkaste, Knodl,
Spiros, Kooyenga, Bernier, Born and Tusler. Referred to Committee on
Agriculture, Small Business and Tourism.
1An Act to create
409.109 (4) (n), chapter 420 and 421.202 (11) of the statutes; 2relating to: regulation of rental-purchase agreements and granting
Analysis by the Legislative Reference Bureau
This bill creates requirements that specifically apply to rental-purchase
agreements, imposes requirements on rental-purchase companies, and exempts
rental-purchase companies and rental-purchase agreements from the Wisconsin
Consumer Act (consumer act).
Under current law, a consumer credit transaction that is entered into for
personal, family, or household purposes is generally subject to the consumer act. The
consumer act grants consumers certain rights and remedies and contains notice and
disclosure requirements and prohibitions relating to consumer credit transactions,
including credit sales and consumer leases that have a term of more than four
months. In addition, the consumer act applies to any other consumer lease, if the
lessee pays or agrees to pay at least an amount that is substantially equal to the value
of the leased property and if the lessee will become, or for not more than a nominal
additional payment has the option to become, the owner of the leased property.
This bill defines a “rental-purchase agreement" as an agreement between a
rental-purchase company and a lessee for the use of rental property if all of the
following apply: 1) the rental property is to be used primarily for personal, family,
or household purposes; 2) the agreement has an initial term of four months or less
and is renewable with each payment after the initial term; 3) the agreement does not
obligate or require the lessee to renew the agreement beyond the initial term; and
4) the agreement permits, but does not obligate, the lessee to acquire ownership of
the rental property. For purposes of a rental-purchase agreement, “rental property"
does not include motor vehicles or musical instruments used in schools. A
“rental-purchase company" is defined as a person engaged in the business of
entering into rental-purchase agreements in this state or acquiring rental-purchase
agreements that are entered into in this state.
Under the bill, every rental-purchase agreement must contain certain
provisions, including the following, to the extent applicable:
1. A description of the rental property.
2. The cash price of the rental property.
3. The total amount of the rental payments necessary to acquire ownership of
4. The difference between the amount described under item 3., above, and the
cash price of the rental property.
5. The total amount of the initial payment due when the rental-purchase
agreement is executed or the rental property is delivered.
6. The rental payment necessary to renew the rental-purchase agreement.
7. An itemized description of any other charges or fees the rental-purchase
company may charge upon the occurrence of a contingency specified in the
rental-purchase agreement, such as late fees.
8. A statement of, and information related to, the lessee's early-purchase
9. A statement of the lessee's responsibility in the event of theft of or damage
to the rental property.
10. A statement that, with certain exceptions, the rental-purchase company
is required to service the rental property and maintain it in good working condition.
11. A statement that the lessee may terminate the rental-purchase agreement
at any time, without penalty, by surrendering the rental property in good repair.
12. An explanation of the lessee's right to reinstate the rental-purchase
13. A statement that the lessee will not own the rental property until the lessee
exercises an early-purchase option or makes all payments necessary to acquire
All required provisions of a rental-purchase agreement must be clearly and
conspicuously disclosed to the lessee in the rental-purchase agreement in at least
eight-point standard type, except for certain provisions that must be disclosed in at
least ten-point boldface type. The bill also requires the rental-purchase company
to provide the lessee, or one lessee if there are multiple lessees under the same
agreement, with a copy of the executed rental-purchase agreement. The bill also
includes certain disclosure requirements for property subject to a rental-purchase
agreement if the property is not displayed or offered at a physical location that
derives 50 percent or more of its revenues from rental-purchase agreements.
The bill also prohibits the inclusion of certain provisions in a rental-purchase
agreement. The prohibited provisions include the following: 1) a confession of
judgment; 2) a provision granting the rental-purchase company permission to enter
the lessee's residence or commit a breach of the peace in repossessing the rental
property; 3) a waiver of any defense or counterclaim or any provision of the bill's
requirements; 4) a provision requiring rental payments totaling more than the total
dollar amount of all rental payments necessary to acquire ownership; and 5) a
provision requiring the lessee to purchase insurance from the rental-purchase
company to insure the rental property.
The bill allows a rental-purchase company and lessee to contract for, and allows
the rental-purchase company to charge a fee for, a liability damage waiver, but the
fee may not exceed 10 percent of the periodic rental payment. The bill imposes
various requirements with respect to such a liability damage waiver and specifies
that the waiver is not insurance.
Under the bill, a lessee may reinstate a rental-purchase agreement that has
ended without losing any rights or options previously acquired if all of the following
apply: 1) the lessee voluntarily returned or surrendered the rental property within
seven days after the expiration of the rental-purchase agreement; and 2) not more
than 120 days have passed after the date on which the rental-purchase agreement
ended. As a condition of reinstatement, the rental-purchase company may require
the payment of all past-due rental charges, any applicable late fees, the rental
payment for the next term, and a reinstatement fee not to exceed $5 or $8, depending
on the circumstances. Upon reinstatement, the rental-purchase company must
provide the lessee with the same rental property or with substitute property of
comparable quality and condition.
Under the bill, a rental-purchase company must provide the lessee with a
receipt for any payment made by the lessee in cash, or upon request, for any other
type of payment. With certain exceptions, upon the request of a lessee, a
rental-purchase company must also provide the lessee or a person the lessee
designates with a copy of the lessee's payment history. The rental-purchase
company may charge a fee if a lessee or designated person requests more than one
copy in any 12-month period.
The bill creates requirements for advertising rental-purchase transactions.
With certain exceptions, the bill requires a rental-purchase company to display a
card or tag on or next to any property offered for rent, indicating whether the
property is new or used and indicating the cash price of the property, the amount and
timing of the rental payments, and the total number and total amount of all rental
payments necessary to acquire ownership of the property. In addition, a
rental-purchase company must ensure that an advertisement for a rental-purchase
agreement that refers to the amount of a payment for a specific item of property also
states that the advertisement is for a rental-purchase agreement and that the lessee
does not acquire ownership of the property if the lessee fails to make all payments
necessary to acquire ownership. The advertisement must also include the total
number and total dollar amount of all rental payments necessary to acquire
ownership of the property.
Under the bill, a rental-purchase company that violates any of the provisions
of the bill, or any applicable rule or order of the Department of Financial Institutions,
pertaining to a lessee is liable to the lessee in an amount equal to the greater of the
following: 1) the actual damages sustained by the lessee as a result of the violation;
2) if the action is not brought as a class action, 25 percent of the total payments
necessary for the lessee to acquire ownership of the rental property, but not less than
$100 nor more than $1,000; or 3) if the action is brought as a class action, the amount
the court determines to be appropriate. However, there are two limitations on such
an award of damages. First, a rental-purchase company is not liable for any
violation if the rental-purchase company shows by a preponderance of the evidence
that the violation was not intentional and resulted from a bona fide error, and the
rental-purchase company maintained procedures reasonably adapted to avoid such
an error. Second, in a class action or series of class actions, the total recovery by all
lessees arising out of the same violation may not be more than the lesser of $500,000
or 1 percent of the net worth of the rental-purchase company. If a court awards any
monetary amount of damages to a lessee, the rental-purchase company is also liable
to the lessee for the costs of the action and reasonable attorney fees. The bill also
allows DFI to promulgate rules to administer and enforce the requirements of the
Under the bill, rental-purchase agreements entered into in compliance with
the provisions of the bill are not subject to the consumer act or to the security interest
provisions of the Uniform Commercial Code.
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:
409.109 (4) (n) of the statutes is created to read:
(n) Rental-purchase agreements entered into by a rental-purchase 3
company in compliance with ch. 420.
Chapter 420 of the statutes is created to read:
In this chapter:
“Cash price" means the price at which a rental-purchase company would 9
sell rental property to the lessee of the rental property if the lessee were to pay for
the rental property in full on the date on which the rental-purchase agreement is 2
“Department" means the department of financial institutions.
“Displayed or offered primarily for rental-purchase,” with respect to rental 5
property, means rental property displayed or offered at a physical location that 6
derives 50 percent or more of its revenues from rental-purchase agreements.
“Rental property" means property rented under a rental-purchase 8
agreement but does not include any motor vehicle, as defined in s. 340.01 (35), or any 9
musical instrument that is intended to be used in whole or in part in an elementary 10
school or high school.
“Rental-purchase agreement" means an agreement between a 12
rental-purchase company and a lessee for the use of rental property if all of the 13
(a) The rental property is to be used primarily for personal, family, or household 15
(b) The agreement has an initial term of 4 months or less and is renewable with 17
each payment after the initial term.
(c) The agreement does not obligate or require the lessee to renew the 19
agreement beyond the initial term.
(d) The agreement permits, but does not obligate, the lessee to acquire 21
ownership of the rental property.