AN ACT
Relating to consumer leases; amending RCW 63.10.020, 63.10.040, and 63.10.050;
adding new sections to chapter 63.10 RCW; and providing an effective date.
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 "adjusted capitalized cost" means the agreed-upon amount that
serves as the basis for determining the periodic lease payment, computed by
subtracting from the capitalized cost any capitalized cost reduction.
(2)
The term "capitalized cost" means the amount ascribed by the lessor
to the vehicle including optional equipment, plus taxes, title, license fees,
lease acquisition and administrative fees, insurance premiums, warranty
charges, and any other product, service, or amount amortized in the lease.
However, any definition of capitalized cost adopted by the federal reserve
board to be used in the context of mandatory disclosure of the capitalized cost
to lessees in consumer motor vehicle lease transactions supersedes the
definition of capitalized cost in this subsection.
(3)
The term "capitalized cost reduction" means any payment made by cash,
check, or similar means, any manufacturer rebate, and net trade in allowance
granted by the lessor at the inception of the lease for the purpose of reducing
the capitalized cost but does not include any periodic lease payments due at
the inception of the lease or all of the periodic lease payments if they are
paid at the inception of the lease.
(4)
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 total contractual
obligation 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)))
(5) The term "lessee" means a natural person who leases or is
offered a consumer lease.
(((3)))
(6) 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.
(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)
In consumer leases of motor vehicles:
(i)
The capitalized cost stated as a total and the identity of the components
listed in the definition of capitalized cost and the respective amount of each
component;
(ii)
Any capitalized cost reduction stated as a total and the identity of the
components and the respective amount of each component;
(iii)
A statement of adjusted capitalized cost;
(iv)
A disclosure, in proximity to the lessees signature, in not less than ten point
bold type to the lessee: "WARNING!: EARLY TERMINATION UNDER THIS LEASE
MAY RESULT IN SIGNIFICANT COSTS TO YOU THE CONSUMER. READ THIS AGREEMENT
CAREFULLY AND UNDERSTAND ALL PROVISIONS BEFORE SIGNING. GET ALL PROMISES IN
WRITING. ORAL PROMISES ARE DIFFICULT TO ENFORCE."; and
(v)
If the lessee trades in a motor vehicle, the amount of any 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.
(2) ((Any
consumer lease which complies with the disclosure requirements of)) Where
disclosures required under this chapter are the same as those required under
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, disclosures complying
with the federal consumer leasing act 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:
Each
of the following acts or practices are unlawful in the context of offering a
consumer lease of a motor vehicle:
(1)
Advertising that is false, deceptive, misleading, or in violation of 12 C.F.R.
Sec. 213.5 (a) through (d) and 15 U.S.C. 1667, Regulation M;
(2)
Misrepresenting any of the following:
(a)
The material terms or conditions of a lease agreement;
(b)
That the transaction is a purchase agreement as opposed to a lease agreement;
or
(c)
The amount of any equity or value the leased vehicle will have at the end of
the lease; and
(3)
Failure to comply 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, including, but not limited to,
failure to disclose all fees that will be due when a consumer exercises the
option to purchase.
Sec.
4. RCW
63.10.050 and 1983 c 158 s 5 are each amended to read as follows:
The
legislature finds that the practices covered by this chapter are matters
vitally affecting the public interest for the purpose of applying the consumer
protection act, chapter 19.86 RCW. Violations of this chapter are not
reasonable in relation to the development and preservation of business. A
violation of this chapter is an unfair or deceptive act or practice in
((the conduct of)) trade or commerce and an unfair method of
competition for the purpose of ((the application of)) applying
the consumer protection act, chapter 19.86 RCW.
Regarding
damages awarded under this section, the court may award damages allowed under
chapter 19.86 RCW or 15 U.S.C. Sec. 1667d (a) and 15 U.S.C. Sec. 1640, but not
both.
NEW
SECTION. Sec. 5. A new
section is added to chapter 63.10 RCW to read as follows:
The
provisions of this chapter shall be cumulative and nonexclusive and shall not
affect any other remedy available at law or in equity.
NEW
SECTION. Sec. 6. If any
provision of this act or its application to any person or circumstance is held
invalid, the remainder of the act or the application of the provision to other
persons or circumstances is not affected.
NEW SECTION. Sec. 7. This act
shall take effect January 1, 1996.
