AB954: Bill Text

AB954,25,13 (2) Insurance indemnifying the creditor against loss due to the customer's default.; or

AB954, s. 73 Section 73. 424.201 (3) of the statutes is created to read:

AB954,25,17 424.201 (3) With respect to a motor vehicle consumer lease, a lessor's waiver of its contractual right to hold the lessee liable for any or all of the gap amount, as defined in s. 429.104 (12), if the waiver is granted without a separate charge.

AB954, s. 74 Section 74. 425.106 (1) (intro.) of the statutes is amended to read:

AB954,25,24 425.106 (1) (intro.) Except to the extent that the merchant has a valid security interest which is permitted by chs. 421 to 427 and 429 or has a lien under ch. 779 in such property, or where the transaction is for medical or legal services and there has been no finance charge actually imposed, the following property of the customer shall be exempt from levy, execution, sale, and other similar process in satisfaction of a judgment for an obligation arising from a consumer credit transaction:

AB954, s. 75 Section 75. 425.107 (4) of the statutes is amended to read:

AB954,26,4 425.107 (4) Any charge or practice expressly permitted by chs. 421 to 427 and 429 is not in itself unconscionable but even though a practice or charge is authorized by chs. 421 to 427 and 429, the totality of a creditor's conduct may show that such practice or charge is part of an unconscionable course of conduct.

AB954, s. 76 Section 76. Chapter 429 of the statutes is created to read:

AB954,26,8 Chapter 429 motor vehicle consumer leases

AB954,26,10 Subchapter i general provisions

AB954,26,12 429.101 Title. This chapter may be cited as the Wisconsin motor vehicle consumer lease act.

AB954,26,17 429.102 Applicable law. (1) Unless superseded by the particular provisions of this chapter, s. 218.01 and chs. 411 and 421 to 427 and the principles of law and equity, including the law relative to capacity to contract, principal and agent, estoppel, fraud, misrepresentation, duress, coercion, mistake, bankruptcy, or other validating or invalidating cause supplement this chapter.

AB954,26,21 (2) Unless superseded by the particular provisions of this chapter, parties to a motor vehicle consumer lease have all of the obligations, duties, rights and remedies provided in s. 218.01 and chs. 411 and 421 to 427 that apply to the transaction.

AB954,26,25 429.103 Construction against implied repeal. This chapter being a general act intended as a unified coverage of its subject matter, no part of this chapter shall be construed to be impliedly repealed by subsequent legislation if such construction can reasonably be avoided.

AB954,27,1 429.104 Definitions. In this chapter:

AB954,27,3 (1) "Adjusted capitalized cost" means the amount computed by subtracting from capitalized cost any capitalized cost reduction.

AB954,27,6 (2) "Average periodic depreciation" means the adjusted capitalized cost, after first subtracting the residual value, divided by the number of lease-payment periods or, for a single-payment lease, the number of months in the term of the lease.

AB954,27,9 (3) "Average periodic lease charge" means the lease charge for the originally scheduled term of the consumer lease divided by the number of lease-payment periods or, for a single-payment lease, the number of months in the term of the lease.

AB954,27,10 (4) "Base lease payment" means an amount determined as follows:

AB954,27,13 (a) With respect to a single-payment lease, the product of the number of months in the term of the lease multiplied by the sum of the average periodic lease charge and the average periodic depreciation.

AB954,27,15 (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.

AB954,28,4 (5) "Capitalized cost" means all costs capitalized in the consumer lease that, after subtracting the capitalized cost reduction, amortizes to the residual value of the depreciation portion of the periodic lease payments over the unexpired term of the lease or, for a single-payment lease, the single payment. These costs may include taxes; fees for registration, license, acquisition, administration and assignment; other fees; and charges for insurance, 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 includes 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.

AB954,28,9 (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 amount credited the lessor for any trade-in. The term does not include any base lease payments due at the inception of the consumer lease.

AB954,28,12 (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.

AB954,28,19 (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 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 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).

AB954,28,21 (10) "Early termination" means termination of a consumer lease before the termination date set forth in the consumer lease.

AB954,28,23 (11) "Federal consumer leasing act" means the federal consumer leasing act, 15 USC 1667 et seq., and regulations issued under that act.

AB954,29,8 (12) "Gap amount" means the difference between the amount specified in the consumer lease to be paid to the lessor by the lessee in the event of total loss or destruction of the leased vehicle prior to expiration of the lease 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 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.

AB954,29,11 (13) "Gap protection" means a provision in a consumer lease under which the lessor agrees, for a charge, to waive the gap amount or provide that another person shall be liable for the gap amount.

AB954,29,14 (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.

AB954,29,18 (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 under the consumer lease or the owner or beneficiary of an interest in a trust that owns consumer leases.

AB954,29,21 (16) "Lease charge" means the sum of all charges, calculated by a lessor on any basis, payable by the lessee for the privilege of making the scheduled lease payments under a consumer lease. The term does not include capitalized cost.

AB954,29,23 (17) "Lessee" means a natural person who leases a vehicle from a lessor under a consumer lease.

AB954,29,25 (18) "Lessor" means a person regularly engaged in the business of leasing or selling vehicles who leases a vehicle to a lessee under a consumer lease.

AB954,30,1 (19) "Motor vehicle" has the meaning given in s. 218.01 (1) (m).

AB954,30,3 (20) "Periodic" means weekly, monthly, quarterly or any other period of time specified in a consumer lease.

AB954,30,7 (22) "Realized value" means, with respect to a leased vehicle that has been appraised under s. 429.206, the fair market value of the vehicle or an amount agreed upon between the lessor and the lessee and, with respect to any other leased vehicle, means the greatest of the following:

AB954,30,10 (a) The price obtained by the holder for disposition of the vehicle, after subtracting all actual and reasonable expenses incurred by the lessor in connection with disposition of the vehicle.

AB954,30,12 (b) Insurance proceeds received by the holder in the event of the total loss or destruction of the vehicle.

AB954,30,14 (c) The highest bona fide offer received by the holder for disposition of the vehicle.

AB954,30,21 (23) "Renegotiation" means the 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 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.

AB954,30,23 (24) "Residual value" means the estimated value of the leased vehicle at the expiration of the lease.

AB954,30,25 (25) "Single-payment lease" means a consumer lease that requires only one payment, to be paid at the time of commencement of the lease.

AB954,31,3 Subchapter II Disclosures; limitations on agreements and practices

AB954,31,7 429.201 Prelease availability of consumer lease application form. A lessor shall, upon request of a prospective lessee, make readily available a blank sample of its current consumer lease application form for examination by the prospective lessee before execution of the consumer lease.

AB954,31,18 429.202 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 or, if applicable, to have the trade-in vehicle returned to him or her as promptly as possible. 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.

AB954,31,23 (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:

AB954,32,3 (a) That the contract price establishes the value of the vehicle for purposes of determining the capitalized cost reduction or, if the parties fail to execute a consumer lease, the amount due the prospective lessee for the vehicle.

AB954,32,7 (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 vehicle to be ordered from a manufacturer, including a vehicle not yet in production as of the date of sale.

AB954,32,11 (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.

AB954,32,13 429.203 Requirements of a consumer lease. (1) A consumer lease shall be in writing and signed by the lessor and the lessee.

AB954,32,17 (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 clear and conspicuous manner:

AB954,32,19 (a) At the top of the consumer lease, the words "MOTOR VEHICLE LEASE AGREEMENT" in at least 10-point type.

AB954,32,24 (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 AGREEMENT."

AB954,33,3 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.

AB954,33,4 (3) The consumer lease shall contain all of the following disclosures:

AB954,33,8 (a) The capitalized cost, using the term "capitalized cost", and an explanation of the term in substantially the following language: "Capitalized cost is the agreed-upon amount determined at the inception of the consumer lease for all items and services included in the lease."

AB954,33,9 (b) Any capitalized cost reduction, using the term "capitalized cost reduction".

AB954,33,15 (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."

AB954,33,16 (d) The residual value of the vehicle, using the term "residual value".

AB954,33,19 (e) The standards to be applied by the holder in determining the excess wear and damage to the vehicle for which the lessee shall be held liable, subject to s. 429.208. These standards shall comply with the federal consumer leasing act.

AB954,33,20 (f) Any disclosure required under s. 422.303 (3m).

AB954,33,21 (g) Any other disclosure required by the federal consumer leasing act.

AB954,34,2 (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 a detailed description of the vehicle, including the year, make, model and, if known, serial or identification number or other identifying marks.

AB954,34,6 (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.

AB954,34,10 (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.

AB954,34,18 (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 include a charge for an applicable insurance premium in the consumer lease and, if such charge is included in the consumer lease, has no obligation to send or cause to be sent to the lessee a copy of the applicable insurance policy.

AB954,35,3 (c) If any liability insurance policy or other insurance on the 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 would be less than $1 or is applied toward the purchase of similar liability insurance protecting the interests of the lessee or holder.

AB954,35,12 (7) A holder may purchase or sell, or otherwise acquire or transfer, an interest in a consumer lease or a 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 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, pledgees, encumbrancers, mortgagees, successors or assigns.

AB954,35,16 (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 the value of the leased vehicle, the projected obligation that the lessee will incur in the event of early termination of the consumer lease.

AB954,35,22 (b) No charge may be imposed or collected for the preparation of one statement under par. (a) in a 12-month period. A holder may impose and collect 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.

AB954,35,24 (9) A holder is not required to pay interest on any security deposit under the consumer lease.

AB954,36,3 (10) No consumer lease may contain a clause which, upon nonacceptance of the vehicle by the lessee, would subject the lessee to a penalty greater than 5% of the capitalized cost of the vehicle.

AB954,36,4 (11) If applicable, the consumer lease shall comply with s. 218.01 (7b).

AB954,36,7 (12) 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.

AB954,36,12 429.204 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 information, using the term "gap amount". The acceptance of a consumer lease may not be conditioned upon the lessee's agreement to gap protection.

AB954,36,22 (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 clearly and conspicuously disclosed to the lessee, and the consumer lease also contains a clear and 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.

AB954,36,24 (b) A lessee is not liable for a separate charge or for any or all of the gap amount if the consumer lease fails to provide the notice required by par. (a).

AB954,37,2 (3) A lessor's waiver under sub. (2) may be conditioned upon payment of any of the following:

AB954,37,3 (a) The separate charge, if any, for the waiver.

AB954,37,8 (b) All amounts due under the consumer lease as of the date of receipt by the lessor of insurance proceeds or the amount specified in the consumer lease to be paid by the lessee in the event of total loss or destruction of the leased vehicle or, if the consumer lease does not specify the applicable date of receipt, as of the date of total loss or destruction of the leased vehicle.

AB954,37,11 (c) An amount from the lessee equal to any deductible amount under an applicable liability insurance policy and any other subtractions specified in such insurance policy.

AB954,37,14 (d) Insurance proceeds from the applicable liability insurance policy required under the consumer lease or the equivalent amount with respect to the value of the vehicle.

AB954,37,19 429.205 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:

AB954,37,21 (a) The taking of a security deposit, advance lease payment or other prepayment by cash, check, credit card or other device.

AB954,37,22 (b) Any right of setoff.

AB954,38,2 (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.

AB954,38,4 (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.

AB954,38,19 429.206 Realized value at lease termination. (1) If a consumer lease is terminated before the termination date set forth in the lease and, for a lease with an option to purchase, the lessee does not exercise the option to purchase, the holder shall act in a commercially reasonable manner when disposing of the leased vehicle or obtaining cash bids on the leased value for the purpose of establishing the vehicle's realized value. Within 5 business days of early termination of the consumer lease, a lessee who is not in default and, if applicable, does not exercise the option to purchase may obtain 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 shall be final and binding, and shall establish the vehicle's realized value for purposes of determining the liability of the lessee under the consumer lease. Nothing in this subsection shall be construed to prohibit the lessee and the lessor from mutually agreeing upon the vehicle's realized value, which shall be final and binding for purposes of determining the liability of the lessee under the consumer lease.