5121-S

AN ACT Relating to consumer leases of automobiles; amending RCW 63.10.020 and 63.10.040; adding a new section to chapter 63.10 RCW; and creating a new section.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. RCW 63.10.020 and 1992 c 134 s 15 are each amended to read as follows:

As used in this chapter, unless the context otherwise requires:

(1) The term "consumer lease" means a contract of lease or bailment for the use of personal property by a natural person for a period of time exceeding four months, and for a total contractual obligation not exceeding twenty-five thousand dollars, primarily for personal, family, or household purposes, whether or not the lessee has the option to purchase or otherwise become the owner of the property at the expiration of the lease, except that such term shall not include any lease which meets the definition of a retail installment contract under RCW 63.14.010 or the definition of a lease-purchase agreement under chapter 63.19 RCW. The twenty-five thousand dollar maximum in this subsection shall not apply to consumer leases of motor vehicles. The inclusion in a lease of a provision whereby the lessee's or lessor's liability, at the end of the lease period or upon an earlier termination, is based on the value of the leased property at that time, shall not be deemed to make the transaction other than a consumer lease. The term "consumer lease" does not include a lease for agricultural, business, or commercial purposes, or to a government or governmental agency or instrumentality, or to an organization.

(2) The term "lessee" means a natural person who leases or is offered a consumer lease.

(3) The term "lessor" means a person who is regularly engaged in leasing, offering to lease, or arranging to lease under a consumer lease.

Sec. 2. RCW 63.10.040 and 1983 c 158 s 4 are each amended to read as follows:

(1) In any lease contract subject to this chapter, the following items, as applicable, shall be disclosed:

(a) A brief description of the leased property, sufficient to identify the property to the lessee and lessor.

(b) The total amount of any payment, such as a refundable security deposit paid by cash, check, or similar means, advance payment, capitalized cost reduction, or any trade-in allowance, appropriately identified, to be paid by the lessee at consummation of the lease.

(c) The number, amount, and due dates or periods of payments scheduled under the lease and the total amount of the periodic payments. If the lessee trades in a motor vehicle, the amount of the sales tax exemption for the agreed value of the traded vehicle and any reduction in the periodic payments resulting from the application of the sales tax exemption shall be disclosed in the lease contract. The disclosures shall appear substantially as follows:

SALES TAX EXEMPTION FOR TRADED VEHICLE

(i) Value of traded vehicle $. . . . . .

(ii)Net trade-in allowance $. . . . . .

(iii)Excess of traded vehicle value over trade-in allowance ((i) minus (ii)) $. . . . . .

(iv)Sales tax rate (.0xx)

(v) Sales tax exemption ((iii) multiplied by (iv)) $. . . . . .

(vi)Monthly sales tax $. . . . . .

(vii)Number of months of sales tax exemption ((v) divided by (vi)) . . . . . .

MONTHLY PAYMENT

First Next Last

. .payment(s) . .payment(s) . .payment(s)

Base monthly payment $. . . . . . $. . . . . . $. . . . . .

Monthly sales tax $. . . . . . $. . . . . . $. . . . . .

Other. . . . . . $. . . . . . $. . . . . . $. . . . . .

Total monthly payment $. . . . . . $. . . . . . $. . . . . .

(d) The total amount paid or payable by the lessee during the lease term for official fees, registration, certificate of title, license fees, or taxes.

(e) The total amount of all other charges, individually itemized, payable by the lessee to the lessor, which are not included in the periodic payments. This total includes the amount of any liabilities the lease imposes upon the lessee at the end of the term, but excludes the potential difference between the estimated and realized values required to be disclosed under (m) of this subsection.

(f) A brief identification of insurance in connection with the lease including (i) if provided or paid for by the lessor, the types and amounts of coverages and cost to the lessee, or (ii) if not provided or paid for by the lessor, the types and amounts of coverages required of the lessee.

(g) A statement identifying any express warranties or guarantees available to the lessee made by the lessor or manufacturer with respect to the leased property.

(h) An identification of the party responsible for maintaining or servicing the leased property together with a brief description of the responsibility, and a statement of reasonable standards for wear and use, if the lessor sets such standards.

(i) A description of any security interest, other than a security deposit disclosed under (b) of this subsection, held or to be retained by the lessor in connection with the lease and a clear identification of the property to which the security interest relates.

(j) The amount or method of determining the amount of any penalty or other charge for delinquency, default, or late payments.

(k) A statement of whether or not the lessee has the option to purchase the leased property and, if at the end of the lease term, at what price, and, if prior to the end of the lease term, at what time, and the price or method of determining the price.

(l) A statement of the conditions under which the lessee or lessor may terminate the lease prior to the end of the lease term and the amount or method of determining the amount of any penalty or other charge for early termination.

(m) A statement that the lessee shall be liable for the difference between the estimated value of the property and its realized value at early termination or the end of the lease term, if such liability exists.

(n) Where the lessee's liability at early termination or at the end of the lease term is based on the estimated value of the leased property, a statement that the lessee may obtain at the end of the lease term or at early termination, at the lessee's expense, a professional appraisal of the value which could be realized at sale of the leased property by an independent third party agreed to by the lessee and the lessor, which appraisal shall be final and binding on the parties.

(o) Where the lessee's liability at the end of the lease term is based upon the estimated value of the leased property:

(i) The value of the property at consummation of the lease, the itemized total lease obligation at the end of the lease term, and the difference between them.

(ii) That there is a rebuttable presumption that the estimated value of the leased property at the end of the lease term is unreasonable and not in good faith to the extent that it exceeds the realized value by more than three times the average payment allocable to a monthly period, and that the lessor cannot collect the amount of such excess liability unless the lessor brings a successful action in court in which the lessor pays the lessee's attorney's fees, and that this provision regarding the presumption and attorney's fees does not apply to the extent the excess of estimated value over realized value is due to unreasonable wear or use, or excessive use.

(iii) A statement that the requirements of (o)(ii) of this subsection do not preclude the right of a willing lessee to make any mutually agreeable final adjustment regarding such excess liability.

(p) If the lease is for a motor vehicle, a statement of the capital cost, which shall be the value ascribed to the motor vehicle by the dealer for purposes of setting the lease payments.

(2) Except for subsection (1)(p) of this section, section 3 of this act, and the twenty-five thousand dollar limit under RCW 63.10.020 applying to a consumer lease for a motor vehicle, any consumer lease which complies with the disclosure requirements of Title I of the federal consumer protection act (90 Stat. 257, 15 U.S.C. Sec. 1667 et seq.), which is also known as the federal consumer leasing act, as of the date upon which the consumer lease is executed, shall be deemed to comply with the disclosure requirements of this chapter.

NEW SECTION. Sec. 3. A new section is added to chapter 63.10 RCW to read as follows:

A seller-lessor of a consumer lease for a motor vehicle that includes the option to purchase at the end of the lease term shall provide in the consumer lease a statement substantially as follows:

"I (We) understand that this is a lease transaction with an option to purchase and will not result in ownership of this vehicle unless I choose to exercise the option to purchase by paying or arranging to pay the residual cost of this vehicle and applicable taxes at the conclusion of this agreement."

NEW SECTION. Sec. 4. The attorney general shall report to the legislature in January 1995 on the implementation of this act.