N.Y. Personal Property Law § 335: Total loss notice and waiver of the gap amount

§ 335. Total loss notice and waiver of the gap amount. 1. If the

retail lease agreement provides that the lessee shall be responsible

upon a total loss of the vehicle occasioned by its 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 vehicle. 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

vehicle occasioned by its 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 vehicle occasioned by

its 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 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 vehicle

occasioned by its 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 to the holder, after a total

loss of the motor vehicle occasioned by its theft, confiscation or

physical damage the gap amount. No retail lease agreement shall be

conditioned upon the lessee's obtaining of motor vehicle lessee gap

insurance as set forth in subparagraph (B) 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 vehicle occasioned by its 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

vehicle occasioned by its theft or physical damage, only if 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 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

vehicle occasioned by its 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 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 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.

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 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 vehicle

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

amount.