N.Y. General Business Law § 399-w: Total loss notice and waiver of the gap amount for non-motor vehicle retail lease agreements

* § 399-w. Total loss notice and waiver of the gap amount for

non-motor vehicle retail lease agreements. 1. If a non-motor vehicle

retail lease agreement provides that the lessee shall be responsible

upon a total loss of the goods which are the subject of the agreement

occasioned by theft, confiscation or physical damage for the gap amount,

the lessor, prior to the execution of the agreement, shall by a notice

on a separate document conspicuously disclose that fact and the

obligations for which the lessee would remain liable in the event of a

theft, confiscation or total loss of the goods. If the lessor is

required under subdivision two of this section to offer to waive its

contractual right to hold the lessee liable for the gap amount in the

event of a total loss of the goods occasioned by theft or physical

damage, the notice shall also: (a) state that for a separate charge

disclosed in the notice the lessor will waive its contractual right to

hold the lessee liable for the gap amount in the event of a total loss

of the goods occasioned by theft or physical damage; (b) contain a

provision informing the lessee that he or she may as an alternative to

purchasing a waiver, be able to purchase insurance covering the gap

amount from an insurance company which has been licensed by the

superintendent of financial services to write non-motor vehicle lessee

gap insurance in this state; and (c) contain a provision permitting the

lessee to indicate whether he or she wants the lessor to waive its

contractual right to hold the lessee liable for the gap amount in the

event of a total loss of the goods occasioned by theft or physical

damage. The notice shall be signed by the lessee. The lessor or assignee

shall provide a copy of the signed notice to the lessee, and shall

maintain a copy in the lessor's or assignee's files for at least the

term of the lease. Failure to provide the notice and to obtain the

lessee's signature as required by this subdivision shall invalidate any

provision of the agreement which otherwise would obligate a lessee to

pay the gap amount to the lessor or lessor's assignee, after a total

loss of the goods occasioned by theft, confiscation or physical damage.

No retail lease agreement shall be conditioned upon the lessee's

obtaining of non-motor vehicle lessee gap insurance as set forth in

subparagraph (D) of paragraph twenty-six of subsection (a) of section

one thousand one hundred thirteen of the insurance law.

2. If the retail lease agreement provides that the lessee shall be

responsible upon a total loss of the goods occasioned by theft or

physical damage for the gap amount, the lessor, prior to the execution

of the agreement, shall offer to waive its contractual right to hold the

lessee liable for the gap amount in the event of a total loss of the

goods occasioned by theft or physical damage, only if non-motor vehicle

lessor gap insurance coverage is available to the lessor or the

anticipated assignee and such coverage is obtained from a

property/casualty insurance company, which has been licensed by the

superintendent of financial services of this state to write non-motor

vehicle lessor gap insurance in this state. This offer may be made

contingent upon the payment by the lessee of a separate charge that

shall not exceed the cost of lessor gap insurance covering the retail

lease transaction plus an administrative fee not to exceed ten dollars.

Nothing contained in this section shall be construed to authorize a

waiver, in connection with a transaction with respect to which lessor

gap insurance has not been obtained, of a contractual right to hold the

lessee liable for the gap amount in the event of a total loss of the

goods occasioned by theft or physical damage.

3. A lessor shall not be obligated under subdivision two of this

section to offer to waive its contractual right to hold the lessee

liable for the gap amount if, during the current calendar year or during

the odd-numbered calendar year immediately preceding the calendar year

in which the agreement is entered into, the lessor or the anticipated

assignee of the lessor has received non-motor vehicle lessor gap

insurance declination notices or other evidence of unavailability from

every insurance company whose name appears on the department of

financial services compilation of insurance companies which during that

calendar year were authorized to write non-motor vehicle lessor gap

insurance in this state. Evidence of these declinations shall be

retained by such a lessor or the anticipated assignee of such a lessor

for a period of six years after the expiration of the calendar year in

which they were issued.

If the lessor is not obligated to waive its contractual right to hold

the lessee liable for the gap amount, then the notice required by

subdivision one of this section shall contain a statement that the

lessee may be able to purchase lessee gap insurance covering the gap

amount directly from an insurer authorized to do such business in this

state, but that the purchase of gap insurance is not required under the

retail lease agreement.

4. In order to enable lessors or their anticipated assignees to comply

with the requirements imposed by subdivision two of this section, the

superintendent of financial services shall compile and make available a

periodically updated list of those insurance companies which are

authorized to write non-motor vehicle lessor gap insurance coverage in

this state.

5. Nothing in this section shall be construed to apply to the lessor,

or any anticipated assignee of a lessor, under a retail lease agreement

under which the lessee is not liable upon a total loss of the goods

occasioned by theft, confiscation or physical damage for the gap amount,

except that the lessor shall provide to the lessee conspicuous notice

that, in the event of a total loss of the goods, the lessee has no

obligation for the gap amount.

6. Whenever there shall be a violation of this section an application

may be made by the attorney general in the name of the people of the

state of New York to a court or justice having jurisdiction by a special

proceeding to issue an injunction, and upon notice to the defendant of

not less than five days, to enjoin and restrain the continuance of such

violations; and if it shall appear to the satisfaction of the court or

justice that the defendant has, in fact, violated this section, an

injunction may be issued by the court or justice, enjoining and

restraining any further violations, without requiring proof that any

person has, in fact, been injured or damaged thereby. In any such

proceeding, the court may make allowances to the attorney general as

provided in paragraph six of subdivision (a) of section eighty-three

hundred three of the civil practice law and rules, and direct

restitution. Whenever the court shall determine in any such proceeding

that a violation of this section has occurred, the court may impose a

civil penalty of not more than five hundred dollars for each violation.

In connection with any such proposed application the attorney general is

authorized to take proof and make a determination of the relevant facts

and to issue subpoenas in accordance with the civil practice law and

rules.

7. For purposes of this section: (a) "Goods" means all chattels

personal, other than things in action or money, leased for other than a

commercial or business use or for purpose of sublease. The term includes

goods which, at the time of the lease or subsequently, are to be so

affixed to realty as to become a part thereof whether or not severable

therefrom, but does not include a motor vehicle as defined in article

nine-A of the personal property law.

(b) "Lessee" means a natural person who leases goods from a lessor

primarily for personal, family or household use and who executes a

retail lease agreement in connection therewith. The term does not

include a person who leases goods primarily for agricultural, business

or commercial use or for the purpose of subleasing.

(c) "Lessor" means a person regularly engaged in the business of

leasing or selling goods who leases goods to a lessee under or subject

to a retail lease agreement.

(d) "Lease" means a transfer from a lessor to a lessee of the right to

possession and use of goods in return for consideration. The term does

not include a sale, including a sale on approval or a sale or return, a

retail instalment sale as defined in article ten of the personal

property law or the retention or creation of a security interest in the

goods.

(e) "Retail lease agreement" or "agreement" means an agreement,

entered into in this state, for the lease of goods and which may include

the purchase of goods or services incidental thereto by a lessee for a

scheduled term exceeding four months, whether or not the lessee has the

option to purchase or otherwise become the owner of the goods at the

expiration of the agreement. The term includes such an agreement

wherever entered into if executed by the lessee in this state and if

solicited in person by a person acting on his or her own behalf or that

of the lessor. The term does not include a retail instalment contract or

a rental-purchase agreement as defined in articles ten and eleven of the

personal property law. An agreement that substantially complies with

this article does not create a security interest in the goods as the

term "security interest" is defined in paragraph thirty-five of

subsection (b) of section 1--201 of the uniform commercial code.

(f) "Gap amount" has the meaning ascribed to it in paragraph fifty-two

of subsection (a) of section one hundred seven of the insurance law.

(g) "Gap insurance" has the meaning ascribed to it in paragraph

twenty-six of subsection (a) of section one thousand one hundred

thirteen of the insurance law.

(h) "Person" means an individual, partnership, corporation,

association or other group, however organized.

* NB There are 2 § 399-w's