SB589: Bill Text

SB589,21,24 (9) Notwithstanding sub. (2), or (3) or (4), a merchant may contract for and receive a minimum finance charge with respect to a transaction other than one pursuant to an open-end credit plan, of not more than $5 when the amount financed does not exceed $75, or $7.50 when the amount financed exceeds $75.

SB589,22,3 (12) Except as provided in sub. (4), this This section does not apply to a consumer credit transaction primarily for an agricultural purpose if the transaction occurs on or after April 6, 1980.

SB589, s. 62 Section 62. 422.201 (12m) of the statutes is renumbered 422.201 (12m) (intro.) and amended to read:

SB589,22,7 422.201 (12m) (intro.) This section does not apply to consumer any of the following:

SB589,22,10 (b) Consumer credit sales of or consumer loans secured by a first lien on or equivalent security interest in mobile homes as defined in s. 218.10 (2), if the sales or loans are made on or after November 1, 1981.

SB589, s. 63 Section 63. 422.201 (12m) (a) of the statutes is created to read:

SB589,22,12 422.201 (12m) (a) Motor vehicle consumer leases.

SB589, s. 64 Section 64. 422.202 (1) (e) of the statutes is created to read:

SB589,22,17 422.202 (1) (e) With respect to a motor vehicle consumer lease, any reasonable fee or charge that, if disclosed in writing to the prospective lessee before execution of the motor vehicle consumer lease, is agreed upon by the lessor and lessee and that is not prohibited by chs. 421 to 427 and 429.

SB589, s. 65 Section 65. 422.207 (1) of the statutes is amended to read:

SB589,23,6 422.207 (1) With respect to a consumer credit transaction the parties may, to the extent not prohibited by chs. 421 to 427 or 429, agree that the customer will perform certain duties with respect to preserving or insuring collateral or goods subject to a motor vehicle consumer lease, if such duties are reasonable in relation to the risk of loss of or damage to the collateral or goods. If the customer fails to so perform the creditor may, if authorized by the agreement, pay for the performance of such duties on behalf of the customer. The amount paid may be added to the unpaid balance of the customer's obligation, if, in the absence of performance, the merchant has made all expenditures on behalf of the customer in good faith and in a commercially reasonable manner and except in the case of a transaction for an agricultural purpose where the collateral is perishable and threatens to decline speedily in value, the merchant has given the customer written notice of the nonperformance and reasonable opportunity after such notice to so perform.

SB589, s. 66 Section 66. 422.207 (3) of the statutes is amended to read:

SB589,23,14 422.207 (3) A finance charge may be made for sums advanced pursuant to sub. (1) at a rate not exceeding the rate stated to the customer pursuant to the provisions on disclosure in subch. III, or if no disclosure is required then at the annual rate of finance charge assessed on that transaction. With respect to an open-end credit plan the amount of the advance may be added to the unpaid balance of the account and the merchant may make a finance charge not exceeding that permitted by s. 422.201. This subsection does not apply to a motor vehicle consumer lease.

SB589, s. 67 Section 67. 422.208 of the statutes is amended to read:

SB589,23,21 422.208 Right to prepay. Subject to s. 422.209 and, with respect to a motor vehicle consumer lease, s. 429.207, the customer may prepay in full or in any part, at any time without penalty, the unpaid balance of any consumer credit transaction other than a transaction secured by a first lien mortgage or equivalent security interest on real estate with an original term of 10 years or more and on which the annual percentage rate disclosed pursuant to subch. III is 10% or less.

SB589, s. 68 Section 68. 422.303 (3) (intro.) of the statutes is amended to read:

SB589,24,2 422.303 (3) (intro.) Except as provided in sub. subs. (3m) and (4), every writing evidencing the customer's obligation to pay under a consumer credit transaction, other than one pursuant to an open-end credit plan, shall contain immediately above or adjacent to the place for the signature of the customer, a clear, conspicuous, printed or typewritten notice in substantially the following language:

SB589, s. 69 Section 69. 422.303 (3m) of the statutes is created to read:

SB589,24,7 422.303 (3m) Except as provided in sub. (4), 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 clear, conspicuous, printed or typewritten notice in substantially the following language:

SB589,24,8 NOTICE TO LESSEE

SB589,24,12 (a) THIS IS A MOTOR VEHICLE CONSUMER LEASE. YOU HAVE NO OWNERSHIP RIGHTS IN THE VEHICLE UNLESS THIS LEASE CONTAINS A PURCHASE OPTION AND YOU EXERCISE YOUR OPTION TO PURCHASE THE VEHICLE.

SB589,24,14 (b) DO NOT SIGN THIS LEASE BEFORE YOU READ IT, INCLUDING THE WRITING ON THE REVERSE SIDE.

SB589,24,15 (c) DO NOT SIGN THIS IF IT CONTAINS ANY BLANK SPACES.

SB589,24,17 (d) EARLY TERMINATION OF THIS LEASE MAY REQUIRE YOU TO PAY A SUBSTANTIAL AMOUNT.

SB589,24,19 (e) YOU ARE ENTITLED TO A COMPLETED COPY OF THIS LEASE WHEN YOU SIGN IT.

SB589, s. 70 Section 70. 422.413 (1) of the statutes is amended to read:

SB589,24,25 422.413 (1) Except as provided in subs. (2) and (2g), no term of a writing evidencing a consumer credit transaction may provide for any charges as a result of default by the customer other than reasonable expenses incurred in the disposition of collateral or goods subject to a motor vehicle consumer lease and such other charges as are specifically authorized by chs. 421 to 427 and 429.

SB589, s. 71 Section 71. 422.417 (2) of the statutes is amended to read:

SB589,25,7 422.417 (2) With respect to a consumer lease, except as otherwise provided in s. 429.205 with respect to a motor vehicle consumer lease, a lessor may not take a security interest in any property of owned or leased by the customer other than the leased goods to secure the lessor's obligations under the lease. This subsection does not prohibit a security interest in a cash security deposit for a consumer lease of motor vehicles or agricultural equipment.

SB589, s. 72 Section 72. 424.201 (1) and (2) of the statutes are amended to read:

SB589,25,11 424.201 (1) Insurance issued as an isolated transaction on the part of the insurer not related to an agreement or plan for insuring customers of the creditor; or

SB589,25,13 (2) Insurance indemnifying the creditor against loss due to the customer's default.; or

SB589, s. 73 Section 73. 424.201 (3) of the statutes is created to read:

SB589,25,17 424.201 (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.

SB589, s. 74 Section 74. 425.106 (1) (intro.) of the statutes is amended to read:

SB589,25,24 425.106 (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:

SB589, s. 75 Section 75. 425.107 (4) of the statutes is amended to read:

SB589,26,4 425.107 (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.

SB589, s. 76 Section 76. Chapter 429 of the statutes is created to read:

SB589,26,8 Chapter 429 motor vehicle consumer leases

SB589,26,10 Subchapter i general provisions

SB589,26,12 429.101 Title. This chapter may be cited as the Wisconsin motor vehicle consumer lease act.

SB589,26,17 429.102 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.

SB589,26,21 (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.

SB589,26,25 429.103 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.

SB589,27,1 429.104 Definitions. In this chapter:

SB589,27,3 (1) "Adjusted capitalized cost" means the amount computed by subtracting from capitalized cost any capitalized cost reduction.

SB589,27,6 (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.

SB589,27,9 (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.

SB589,27,10 (4) "Base lease payment" means an amount determined as follows:

SB589,27,13 (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.

SB589,27,15 (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.

SB589,28,4 (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.

SB589,28,9 (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.

SB589,28,12 (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.

SB589,28,19 (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).

SB589,28,21 (10) "Early termination" means termination of a consumer lease before the termination date set forth in the consumer lease.

SB589,28,23 (11) "Federal consumer leasing act" means the federal consumer leasing act, 15 USC 1667 et seq., and regulations issued under that act.

SB589,29,8 (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.

SB589,29,11 (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.

SB589,29,14 (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.

SB589,29,18 (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.

SB589,29,21 (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.

SB589,29,23 (17) "Lessee" means a natural person who leases a vehicle from a lessor under a consumer lease.

SB589,29,25 (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.

SB589,30,1 (19) "Motor vehicle" has the meaning given in s. 218.01 (1) (m).

SB589,30,3 (20) "Periodic" means weekly, monthly, quarterly or any other period of time specified in a consumer lease.

SB589,30,7 (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:

SB589,30,10 (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.

SB589,30,12 (b) Insurance proceeds received by the holder in the event of the total loss or destruction of the vehicle.

SB589,30,14 (c) The highest bona fide offer received by the holder for disposition of the vehicle.

SB589,30,21 (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.

SB589,30,23 (24) "Residual value" means the estimated value of the leased vehicle at the expiration of the lease.

SB589,30,25 (25) "Single-payment lease" means a consumer lease that requires only one payment, to be paid at the time of commencement of the lease.

SB589,31,3 Subchapter II Disclosures; limitations on agreements and practices

SB589,31,7 429.201 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.

SB589,31,18 429.202 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.

SB589,31,23 (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:

SB589,32,3 (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.

SB589,32,7 (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.

SB589,32,11 (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.

SB589,32,13 429.203 Requirements of a consumer lease. (1) A consumer lease shall be in writing and signed by the lessor and the lessee.

SB589,32,17 (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:

SB589,32,19 (a) At the top of the consumer lease, the words "MOTOR VEHICLE LEASE AGREEMENT" in at least 10-point type.

SB589,32,24 (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."

SB589,33,3 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.

SB589,33,4 (3) The consumer lease shall contain all of the following disclosures:

SB589,33,8 (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."

SB589,33,9 (b) Any capitalized cost reduction, using the term "capitalized cost reduction".