N.Y. Personal Property Law § 337: Requirements as to retail lease agreements

§ 337. Requirements as to retail lease agreements. 1. A retail lease

agreement shall be in a writing and, except as otherwise provided in

subdivision two of section three hundred forty-five of this article,

signed contemporaneously by the lessor and the lessee. Except as

provided in sections three hundred thirty-five and three hundred

thirty-six of this article, a retail lease agreement shall contain in a

single document all the agreements of the parties.

2. The printed portion of the agreement shall be printed in at least

eight-point type in ink that contrasts with the paper used. The

agreement shall contain the following items printed or written in a size

equal to at least ten-point bold type:

(a) Both at the top of the agreement and directly above the space

reserved for the signature of the lessee, the words "LEASE AGREEMENT",

"RETAIL LEASE AGREEMENT" or "MOTOR VEHICLE LEASE AGREEMENT";

(b) A specific statement that physical damage or liability insurance

coverage for bodily injury and property damage caused to others is not

included, if that is the case; and

(c) Directly above the acknowledgment permitted by subdivision three

of this section to appear above the space reserved for the signature of

the lessee, a written notice informing the lessee that: (i) the lessee

should not sign the agreement before he or she reads it or if it

contains any blank space; and (ii) the lessee is entitled to a

completely filled in copy of the agreement when he or she signs it. A

notice substantially similar to the following notice complies with the

requirements of this paragraph: "NOTICE TO THE LESSEE: 1. Do not sign

this agreement before you read it or if it contains any blank space. 2.

You are entitled to a completely filled in copy of this agreement when

you sign it."

3. The lessor shall deliver to the lessee, or mail to him or her at

his or her address shown on the agreement, a copy of the agreement

signed by the lessor. Until the lessor does so, a lessee who has not

received delivery of the motor vehicle shall have an unconditional right

to cancel the agreement and to receive an immediate refund of all

payments made and redelivery of all goods traded-in to the lessor on

account of or in contemplation of the agreement. Any acknowledgment by

the lessee of delivery of a copy of the agreement shall be printed or

written in a size equal to at least eight-point bold type and, if

contained in the agreement, shall appear directly above the legend

required by paragraph (a) of subdivision two of this section to appear

directly above the space reserved for the signature of the lessee.

4. The agreement shall contain the names of the lessor and the lessee,

the place of business of the lessor, the residence or place of business

of the lessee as specified by the lessee and a description of the motor

vehicle including its make, year model, model and identification number

or marks.

5. The agreement shall contain:

(a) All items required to be disclosed by the act of Congress entitled

"Consumer Leasing Act of 1976" and the regulations thereunder, as such

act and regulations may from time to time be amended; provided, however,

that the disclosures required by the "Consumer Leasing Act of 1976"

shall be made in all leasing transactions covered by this article

regardless of the exemption in the "Consumer Leasing Act of 1976" for

lease transactions in which the total contractual obligation exceeds

twenty-five thousand dollars;

(b) The capitalized cost, using the term "capitalized cost" and a

descriptive explanation such as "the sum of the adjusted capitalized

cost and any capitalized cost reduction. The capitalized cost and the

amount of the rental payment may be negotiable";

(c) The adjusted capitalized cost of the vehicle, using the term

"adjusted capitalized cost", a descriptive explanation such as "the

amount which is capitalized in connection with the lease and is used in

determining the amount of your periodic payment" and immediately

thereafter one of the following additional explanatory statements:

(i) In the case of an agreement which provides for an "additional

early termination charge" and whose early termination provisions

expressly refer to the "adjusted capitalized cost," a statement that

"this amount plus the additional early termination charge will be used

in determining your early termination liability";

(ii) In the case of an agreement which provides for an "additional

early termination charge" and whose early termination provisions do not

expressly refer to the "adjusted capitalized cost," a statement that

"this amount plus the additional early termination charge will be used

in determining the legal limit on your early termination liability";

(iii) In the case of an agreement which does not provide for an

"additional early termination charge" and whose early termination

provisions expressly refer to the "adjusted capitalized cost," a

statement that "this amount will be used in determining your early

termination liability"; or

(iv) In the case of an agreement which does not provide for an

"additional early termination charge" and whose early termination

provisions do not expressly refer to the "adjusted capitalized cost," a

statement that "this amount will be used in determining the legal limit

on your early termination liability";

(d) The amount, if any, included for insurance and other benefits,

specifying and describing the coverages and the amount included for each

type of coverage;

(e) In close proximity to the adjusted capitalized cost disclosure

required by paragraph (c) of this subdivision and only as applicable,

any additional early termination charge provided for under the

agreement, using the term "additional early termination charge", and one

of the following descriptive explanations:

(i) In the case of an agreement whose early termination provisions

expressly refer to the "adjusted additional early termination charge," a

descriptive explanation such as "an additional amount the unamortized

portion of which will be used in determining your early termination

liability"; or

(ii) In the case of an agreement whose provisions do not expressly

refer to the "additional early termination charge," a descriptive

explanation such as "an additional amount the unamortized portion of

which will be used in determining the legal limit on your early

termination liability"; and immediately after the descriptive

explanation additional explanatory statements that "this amount

represents the total costs and damages, in addition to the adjusted

capitalized cost, which we would incur if this agreement were to be

terminated before you had made any rental payments."

(f) In close proximity to the "adjusted capitalized cost" and

"additional early termination charge" disclosures required by paragraphs

(c) and (e) of this subdivision, one of the following statements:

(i) In the case of an agreement which provides for an "additional

early termination charge" and whose early termination provisions do not

expressly refer to either the "adjusted capitalized cost" or the

"additional early termination charge," a statement that "although they

are not referred to in the early termination provisions of this lease,

the 'adjusted capitalized cost' and the 'additional early termination

charge' may be used to compare the early termination provisions of

competing lessors";

(ii) In the case of an agreement which provides for an "additional

early termination charge" and whose early termination provisions do not

expressly refer to the "additional early termination charge," a

statement that "although the 'additional early termination charge' is

not referred to in the early termination provisions of this lease, the

'additional early termination charge' and the 'adjusted capitalized

cost' may be used to compare the early termination provisions of

competing lessors";

(iii) In the case of an agreement which provides for an "additional

early termination charge" and whose early termination provisions do not

expressly refer to the "adjusted capitalized cost," a statement that

"although the 'adjusted capitalized cost' is not referred to in the

early termination provisions of this lease, the 'adjusted capitalized

cost' and the 'additional early termination charge' may be used to

compare the early termination provisions of competing lessors";

(iv) In the case of an agreement which provides for an "additional

early termination charge" and whose early termination provisions

expressly refer to both the "adjusted capitalized cost," and the

"additional early termination charge," a statement that "the 'adjusted

capitalized cost' and the 'additional early termination charge' may be

used to compare the early termination provisions of competing lessors";

(v) In the case of an agreement which does not provide for any

"additional early termination charge" and whose early termination

provisions do not expressly refer to the "adjusted capitalized cost," a

statement that "although the 'adjusted capitalized cost' is not referred

to in the early termination provisions of this lease, the 'adjusted

capitalized cost' may be used to compare the early termination

provisions of competing lessors"; or

(vi) In the case of an agreement which does not provide for any

"additional early termination charge" and whose early termination

provisions expressly refer to the "adjusted capitalized cost," a

statement that "the 'adjusted capitalized cost' may be used to compare

the early termination provisions of competing lessors."

(g) A statement in at least eight-point bold type informing the lessee

that he or she has the right to terminate the agreement voluntarily at

any time after the first fifty percent of the total number of months

constituting the full scheduled lease term, or earlier if the agreement

so provides, if he or she is in full compliance with the terms of the

agreement and satisfies his or her early termination obligation;

(h) A statement in at least eight-point bold type to the effect that

"early termination may require you to pay a substantial charge";

(i) A statement in at least eight-point bold type stating that the

lessee shall not be liable for an early termination fee if he or she has

deceased before the end of the lease;

(j) A provision permitting a lessee whose default consists solely of

the failure to make timely rental payments to cure his or her default

and reinstate the agreement, without losing any rights or options

previously acquired under the agreement, by paying all past due rental

and delinquency charges and, if the agreement so provides, a

reinstatement fee not to exceed ten dollars and the actual and

reasonable costs of repossession, storage, pickup and redelivery within

twenty-five days after the lessee is sent written notice of his or her

reinstatement rights. The reinstatement right granted pursuant to this

paragraph may be restricted to a lessee who has not previously been

afforded the opportunity to reinstate the agreement. For purposes of

this paragraph, a rental charge is past due if it is not paid by its

scheduled due date or within any grace period specified in the

agreement;

(k) The estimated residual value of the vehicle, using the term

"estimated residual value";

* (l) In the case of an agreement which does not obligate the lessee

upon a total loss of the vehicle occasioned by its theft or physical

damage for any of the items specified in paragraphs (e) and (f) of

subdivision one of section three hundred forty-one of this article, a

conspicuous notice that the lessee has no such obligation.

* NB There are 2 par (l)'s

* (l) The liability of the lessee in the case of a total loss of the

vehicle or the vehicle is rendered inoperable. Disclosure of liability

pursuant to this paragraph shall include the financial liability of the

lessee and the lessor's rules, policies and procedures in the event the

car is declared a total loss or rendered inoperable during the term of

the lease.

* NB There are 2 par (l)'s

Nothing in this subdivision prevents a holder from attempting to

repossess a vehicle, accepting its voluntary surrender or selling it

during the reinstatement period, but such a repossession, voluntary

surrender, or sale shall not affect the reinstatement right of the

lessee. Upon reinstatement, the holder shall provide the lessee with the

same vehicle leased by the lessee prior to reinstatement or, if that

vehicle is not available, a substitute vehicle of comparable worth,

quality and condition.

6. (a) (i) The amount, if any, included for liability insurance or

insurance on the vehicle, shall not exceed the premiums charged by the

insurance company for such insurance. The holder, if the cost of

liability insurance or insurance on the motor vehicle is included in a

retail lease agreement and the policy or policies are delivered to the

holder, shall within thirty days after execution of the retail lease

agreement, send or cause to be sent to the lessee a copy of the policy

or policies of insurance, issued by an insurance company authorized to

do that kind of insurance business in this state, clearly setting forth

the amount of the premium, the kind or kinds of insurance and the scope

of the coverage and all the terms, exceptions, limitations, restrictions

and conditions of the contract or contracts of insurance.

(ii) The lessee of a motor vehicle under a retail lease agreement

shall have the privilege of purchasing such insurance from an agent or

broker of his or her own selection and of selecting an insurance company

acceptable to the lessor; provided, however, that the inclusion of the

insurance premium in the retail lease agreement when the lessee selects

the agent, broker or company, shall be optional with the lessor and in

such case the lessor or assignee shall have no obligation to send, or

cause to be sent, to the lessee a copy of the policy of insurance.

(b) If any such policy of liability insurance or insurance on the

motor vehicle is cancelled, the unearned insurance premium refund

received or receivable by the holder of the agreement or, if the amount

included therefor in the agreement exceeds the cost to the holder of the

agreement for such insurance, the unearned portion of the amount so

included, shall be either: (i) refunded to the lessee within ten

business days after it is received by the holder; or (ii) credited,

together with the unearned portion of the lease charge applicable

thereto, to the final maturing rental payments or, at the option of the

holder, to the end of term obligations under the retail lease agreement

except to the extent applied toward payment for similar insurance

protecting the interests of the lessee and the holder of the agreement

or either of them, provided that no such credit or refund need be made

if the amount thereof would be less than one dollar.

(c) The amount, if any, included for group credit insurance or for

insurance other than gap insurance, liability insurance or insurance on

the motor vehicle shall not exceed the premiums charged by the insurance

company for such insurance. If such group credit or other insurance is

cancelled the refund for unearned insurance premiums received or

receivable by the holder of the agreement, or the excess of the amount

included in the agreement for group credit or other insurance over the

premiums paid or payable by the holder of the agreement therefor shall

be either: (i) refunded to the lessee within ten business days after it

is received by the holder; or (ii) credited, together with, in either

case, the unearned portion of the lease charge applicable thereto, to

the final maturing rental payments or, at the option of the holder, to

the end of term obligations under the retail lease agreement, provided

that no such credit or refund need be made if the amount thereof would

be less than one dollar.

(d) The amount of any separate charge included for a waiver by the

lessor of its contractual right to hold the lessee liable for the gap

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

retail lease transaction.

7. (a) If the lessee is obligated in connection with the lease to

maintain liability insurance or insurance on the motor vehicle that is

the subject of the agreement and if subsequent to the execution of the

agreement the lessee fails to maintain the required insurance, the

holder may make advances to procure the equivalent limits of insurance

for either the interests of the lessee and the holder or the interest of

either of them, and any amount so advanced may be the subject of a lease

charge as though such amount was part of the initial lease value.

(b) If under subdivision two of section three hundred thirty-five of

this article, the lessor waives its contractual right to hold the lessee

liable for the gap amount, and lessor gap insurance coverage which the

lessor or holder purchased in connection with the transaction

subsequently is terminated prior to the filing of a claim due to the

insolvency of the insurance company, notwithstanding the provisions of

paragraph three of subsection (b) of section one thousand one hundred

one of the insurance law the holder may make an advance to procure

equivalent limits of lessor gap insurance covering the transaction and

any amount so advanced may be the subject of a lease charge as though

such amount was part of the capitalized cost.

(c) Each amount so advanced shall be subject to the default provisions

of the lease agreement if so provided in the agreement and if the holder

notifies the lessee in writing of the advance of such amount and of his

or her option to repay such amount in any one of the following ways:

(i) Full payment within ten days from the date of giving or mailing

the notice;

(ii) Full amortization during the term of the insurance or the

remaining term of the agreement, at the option of the holder;

(iii) If offered by the holder, as a final balloon payment payable one

month after the last scheduled payment under the agreement;

(iv) If offered by the holder, full amortization after the term of the

agreement, to be made in periodic payments which do not exceed the

average periodic payment under the agreement; or

(v) If offered by the holder, any other amortization plan.

If the lessee neither pays in full the amount so advanced nor notifies

the holder in writing of his or her choice regarding the amortization

options before the expiration of ten days from the date of giving or

mailing the notice by the holder, the holder shall amortize the amount

so advanced pursuant to subparagraph (ii) of paragraph (c) of this

subdivision.

8. (a) The holder of a retail lease agreement may, if the agreement so

provides, collect a delinquency and collection charge on each rental

payment in default for a period not less than ten days in an amount not

in excess of the amount or amounts agreed to in the agreement. In

addition to a delinquency and collection charge, the retail lease

agreement may provide for the payment of reasonable attorneys' fees not

exceeding fifteen percent of the amount due and payable under the

agreement where the agreement is referred to an attorney not a salaried

employee of the holder of the agreement for collection, plus the court

costs.

(b) The holder may not assess or collect a delinquency and collection

charge under paragraph (a) of this subdivision on a rental payment,

which payment is otherwise a full payment for the applicable period and

is paid within ten days after its scheduled or deferred due date, when

the only delinquency is attributable to delinquency and collection

charges assessed on an earlier rental payment or payments.

9. No retail lease agreement shall be signed by any party thereto when

it contains blank spaces to be filled in after it has been signed except

that, if delivery of the motor vehicle is not made at the time of the

execution of the agreement, the identifying numbers or marks of the

motor vehicle or similar information and the due date of the first

payment may be inserted in the agreement after its execution. The

lessee's written acknowledgment, conforming to the requirements of

subdivision three of this section, of delivery of a copy of the

agreement shall be conclusive proof of such delivery and of compliance

with this subdivision in any action or proceeding by or against an

assignee of the agreement without knowledge to the contrary when he or

she purchases the agreement.

10. No retail lease agreement shall contain any provision by which the

lessee agrees not to assert against a holder a claim or defense or

require or entail the execution of any note or series of notes which,

when separately negotiated, will cut off as to third parties any right

of action or defense which the lessee may have against the lessor. The

holder of a retail lease agreement shall be subject to all claims and

defenses of the lessee against the lessor arising from the lease

notwithstanding any agreement to the contrary, but the holder's

liability under this subdivision shall not exceed the amount owing to

the holder at the time the claim or defense is asserted against the

holder. The holder shall have recourse against the lessor to the extent

of any liability incurred by the holder pursuant to this subdivision

regardless of whether the assignment of the agreement was with or

without recourse.

11. Notwithstanding any contrary provision of this chapter, the lien

law, banking law or other law: (a) a person may purchase a retail lease

agreement from a lessor on such terms and conditions and for such price

as may be mutually agreed upon; and (b) no filing of the assignment, no

notice to the lessee of the assignment, and no requirement that the

lessor be deprived of dominion over payments upon the agreement or over

the vehicle if repossessed by or returned to the lessor, shall be

necessary to the validity of a written assignment of a retail lease

agreement as against creditors, subsequent purchasers, pledgees,

mortgagees or encumbrancers of the lessor.

12. Unless the lessee has notice of actual or intended assignment of a

retail lease agreement, payment thereunder made by the lessee to the

last known holder of such agreement shall be binding upon all subsequent

holders or assignees. A notification which does not reasonably identify

the rights assigned is ineffective. If requested by the lessee, the

assignee shall furnish reasonable proof that the assignment has been

made and unless he or she does so the lessee may pay the original

lessor.

13. (a) Upon written request from the lessee, the holder of a retail

lease agreement shall give or forward to the lessee a written statement

of the dates and amounts of the rental payments that have been made

under the agreement and the total amount of the remaining rental

payments. A lessee shall be given a written receipt for any payment when

made in cash.

(b) Upon written request from a lessee who is then entitled to

terminate the agreement early, the holder of a retail lease agreement

shall give or forward to the lessee a written statement of his or her

gross early termination liability under the agreement.

14. No retail lease agreement shall contain any provision applicable

to a natural person who leases a vehicle primarily for personal, family

or household use by which:

(a) in the absence of the lessee's default, the holder may,

arbitrarily and without reasonable cause, accelerate the maturity of any

part or all of the amount owing thereon;

(b) a power of attorney is given to confess judgment, or an assignment

of wages is given;

(c) the lessor or holder of the agreement or other person acting on

his or her behalf is given authority to enter upon the lessee's premises

unlawfully, or to commit any breach of the peace in the repossession of

the motor vehicle;

(d) the lessee waives any right of action against the lessor or holder

of the agreement, or other person acting on his or her behalf, for any

illegal act committed in the collection of payments under the agreement

or in the repossession of the motor vehicle;

(e) the lessee executes a power of attorney appointing the lessor or

holder of the agreement, or other person acting on his or her behalf, as

the lessee's agent in collection of payments under the agreement or in

the repossession of the motor vehicle; provided, however, that this

paragraph shall not prohibit the inclusion in a retail lease agreement

of a limited power of attorney or other provision authorizing the holder

to execute in the name of the lessee any proofs of insurance claims or

losses or to endorse the name of the lessee on any insurance settlement

draft or check;

(f) the lessor is relieved from liability for any legal remedy which

the lessee may have had against the lessor under the agreement, or any

separate instrument executed in connection therewith;

(g) the maturity of any part or all of the amount owing thereon is

accelerated where, following a default consisting solely of the failure

to make timely rental payments, a lessee who has the right to reinstate

the agreement makes timely tender of an amount which would be sufficient

to reinstate the agreement under paragraph (i) of subdivision five of

this section;

(h) the lessee waives any right to a trial by jury in any action or

proceeding arising out of the agreement;

(i) a lessee who is not in default of his or her obligations under the

agreement would be prohibited from terminating the agreement at any time

after the expiration of the first fifty percent of the total number of

months of the lease term. The exercise of this right to terminate early

voluntarily is contingent upon the lessee discharging fully his or her

liability under the early termination provisions of the agreement; or

(j) the lessee would be charged a turn-in fee at the expiration of the

term which constitutes solely an additional fee for administrative,

handling or clerical charges.

15. Any such prohibited provision shall be void but shall not

otherwise affect the validity of the agreement.

16. Where necessary to ensure consistency with the pronoun usage in

the underlying agreement, any language required by this article to be

used in connection with a required disclosure may be modified to refer

to the lessee in the first person and the holder in the second person.