AN
ACT Relating to clarifying the definition of capitalized cost for purposes of
the consumer leasing act; and amending RCW 63.10.020 and 63.10.040.
BE IT ENACTED BY THE
LEGISLATURE OF THE STATE OF WASHINGTON:
Sec.
1. RCW
63.10.020 and 1995 c 112 s 1 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 gross capitalized cost any capitalized cost
reduction.
(2)
The term "gross 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 gross capitalized cost adopted by the
federal reserve board to be used in the context of mandatory disclosure of the gross
capitalized cost to lessees in consumer motor vehicle lease transactions
supersedes the definition of gross 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 gross 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.
(5)
The term "lessee" means a natural person who leases or is offered a
consumer lease.
(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 1995 c 112 s 2 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 gross capitalized cost stated as a total and the identity of the
components listed in the definition of gross 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; and
(v)
A statement of the total amount to be paid prior to or at consummation or by
delivery, if delivery occurs after consummation. The lessor shall itemize each
component by type and amount and shall itemize how the total amount will be
paid, by type and amount.
(2) 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.
