§ 399-W — Total loss notice and waiver of the gap amount for non-motor vehicle retail lease agreements

New York § 399-W

• Jurisdiction: New York
• Law GBS: General Business
• Art. 26: Miscellaneous

Text

* § 399-w. Total loss notice and waiver of the gap amount for\nnon-motor vehicle retail lease agreements. 1. If a non-motor vehicle\nretail lease agreement provides that the lessee shall be responsible\nupon a total loss of the goods which are the subject of the agreement\noccasioned by theft, confiscation or physical damage for the gap amount,\nthe lessor, prior to the execution of the agreement, shall by a notice\non a separate document conspicuously disclose that fact and the\nobligations for which the lessee would remain liable in the event of a\ntheft, confiscation or total loss of the goods. If the lessor is\nrequired under subdivision two of this section to offer to waive its\ncontractual right to hold the lessee liable for the gap amount in the\nevent of a total loss of the goods occasioned by theft or physical\ndamage, the notice shall also: (a) state that for a separate charge\ndisclosed in the notice the lessor will waive its contractual right to\nhold the lessee liable for the gap amount in the event of a total loss\nof the goods occasioned by theft or physical damage; (b) contain a\nprovision informing the lessee that he or she may as an alternative to\npurchasing a waiver, be able to purchase insurance covering the gap\namount from an insurance company which has been licensed by the\nsuperintendent of financial services to write non-motor vehicle lessee\ngap insurance in this state; and (c) contain a provision permitting the\nlessee to indicate whether he or she wants the lessor to waive its\ncontractual right to hold the lessee liable for the gap amount in the\nevent of a total loss of the goods occasioned by theft or physical\ndamage. The notice shall be signed by the lessee. The lessor or assignee\nshall provide a copy of the signed notice to the lessee, and shall\nmaintain a copy in the lessor's or assignee's files for at least the\nterm of the lease. Failure to provide the notice and to obtain the\nlessee's signature as required by this subdivision shall invalidate any\nprovision of the agreement which otherwise would obligate a lessee to\npay the gap amount to the lessor or lessor's assignee, after a total\nloss of the goods occasioned by theft, confiscation or physical damage.\nNo retail lease agreement shall be conditioned upon the lessee's\nobtaining of non-motor vehicle lessee gap insurance as set forth in\nsubparagraph (D) of paragraph twenty-six of subsection (a) of section\none thousand one hundred thirteen of the insurance law.\n 2. If the retail lease agreement provides that the lessee shall be\nresponsible upon a total loss of the goods occasioned by theft or\nphysical damage for the gap amount, the lessor, prior to the execution\nof the agreement, shall offer to waive its contractual right to hold the\nlessee liable for the gap amount in the event of a total loss of the\ngoods occasioned by theft or physical damage, only if non-motor vehicle\nlessor gap insurance coverage is available to the lessor or the\nanticipated assignee and such coverage is obtained from a\nproperty/casualty insurance company, which has been licensed by the\nsuperintendent of financial services of this state to write non-motor\nvehicle lessor gap insurance in this state. This offer may be made\ncontingent upon the payment by the lessee of a separate charge that\nshall not exceed the cost of lessor gap insurance covering the retail\nlease transaction plus an administrative fee not to exceed ten dollars.\nNothing contained in this section shall be construed to authorize a\nwaiver, in connection with a transaction with respect to which lessor\ngap insurance has not been obtained, of a contractual right to hold the\nlessee liable for the gap amount in the event of a total loss of the\ngoods occasioned by theft or physical damage.\n 3. A lessor shall not be obligated under subdivision two of this\nsection to offer to waive its contractual right to hold the lessee\nliable for the gap amount if, during the current calendar year or during\nthe odd-numbered calendar year immediately preceding the calendar year\nin which the agreement is entered into, the lessor or the anticipated\nassignee of the lessor has received non-motor vehicle lessor gap\ninsurance declination notices or other evidence of unavailability from\nevery insurance company whose name appears on the department of\nfinancial services compilation of insurance companies which during that\ncalendar year were authorized to write non-motor vehicle lessor gap\ninsurance in this state. Evidence of these declinations shall be\nretained by such a lessor or the anticipated assignee of such a lessor\nfor a period of six years after the expiration of the calendar year in\nwhich they were issued.\n If the lessor is not obligated to waive its contractual right to hold\nthe lessee liable for the gap amount, then the notice required by\nsubdivision one of this section shall contain a statement that the\nlessee may be able to purchase lessee gap insurance covering the gap\namount directly from an insurer authorized to do such business in this\nstate, but that the purchase of gap insurance is not required under the\nretail lease agreement.\n 4. In order to enable lessors or their anticipated assignees to comply\nwith the requirements imposed by subdivision two of this section, the\nsuperintendent of financial services shall compile and make available a\nperiodically updated list of those insurance companies which are\nauthorized to write non-motor vehicle lessor gap insurance coverage in\nthis state.\n 5. Nothing in this section shall be construed to apply to the lessor,\nor any anticipated assignee of a lessor, under a retail lease agreement\nunder which the lessee is not liable upon a total loss of the goods\noccasioned by theft, confiscation or physical damage for the gap amount,\nexcept that the lessor shall provide to the lessee conspicuous notice\nthat, in the event of a total loss of the goods, the lessee has no\nobligation for the gap amount.\n 6. Whenever there shall be a violation of this section an application\nmay be made by the attorney general in the name of the people of the\nstate of New York to a court or justice having jurisdiction by a special\nproceeding to issue an injunction, and upon notice to the defendant of\nnot less than five days, to enjoin and restrain the continuance of such\nviolations; and if it shall appear to the satisfaction of the court or\njustice that the defendant has, in fact, violated this section, an\ninjunction may be issued by the court or justice, enjoining and\nrestraining any further violations, without requiring proof that any\nperson has, in fact, been injured or damaged thereby. In any such\nproceeding, the court may make allowances to the attorney general as\nprovided in paragraph six of subdivision (a) of section eighty-three\nhundred three of the civil practice law and rules, and direct\nrestitution. Whenever the court shall determine in any such proceeding\nthat a violation of this section has occurred, the court may impose a\ncivil penalty of not more than five hundred dollars for each violation.\nIn connection with any such proposed application the attorney general is\nauthorized to take proof and make a determination of the relevant facts\nand to issue subpoenas in accordance with the civil practice law and\nrules.\n 7. For purposes of this section: (a) "Goods" means all chattels\npersonal, other than things in action or money, leased for other than a\ncommercial or business use or for purpose of sublease. The term includes\ngoods which, at the time of the lease or subsequently, are to be so\naffixed to realty as to become a part thereof whether or not severable\ntherefrom, but does not include a motor vehicle as defined in article\nnine-A of the personal property law.\n (b) "Lessee" means a natural person who leases goods from a lessor\nprimarily for personal, family or household use and who executes a\nretail lease agreement in connection therewith. The term does not\ninclude a person who leases goods primarily for agricultural, business\nor commercial use or for the purpose of subleasing.\n (c) "Lessor" means a person regularly engaged in the business of\nleasing or selling goods who leases goods to a lessee under or subject\nto a retail lease agreement.\n (d) "Lease" means a transfer from a lessor to a lessee of the right to\npossession and use of goods in return for consideration. The term does\nnot include a sale, including a sale on approval or a sale or return, a\nretail instalment sale as defined in article ten of the personal\nproperty law or the retention or creation of a security interest in the\ngoods.\n (e) "Retail lease agreement" or "agreement" means an agreement,\nentered into in this state, for the lease of goods and which may include\nthe purchase of goods or services incidental thereto by a lessee for a\nscheduled term exceeding four months, whether or not the lessee has the\noption to purchase or otherwise become the owner of the goods at the\nexpiration of the agreement. The term includes such an agreement\nwherever entered into if executed by the lessee in this state and if\nsolicited in person by a person acting on his or her own behalf or that\nof the lessor. The term does not include a retail instalment contract or\na rental-purchase agreement as defined in articles ten and eleven of the\npersonal property law. An agreement that substantially complies with\nthis article does not create a security interest in the goods as the\nterm "security interest" is defined in paragraph thirty-five of\nsubsection (b) of section 1--201 of the uniform commercial code.\n (f) "Gap amount" has the meaning ascribed to it in paragraph fifty-two\nof subsection (a) of section one hundred seven of the insurance law.\n (g) "Gap insurance" has the meaning ascribed to it in paragraph\ntwenty-six of subsection (a) of section one thousand one hundred\nthirteen of the insurance law.\n (h) "Person" means an individual, partnership, corporation,\nassociation or other group, however organized.\n * NB There are 2 § 399-w's\n