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S.B. 180 Enrolled

             1     

MOTOR VEHICLE LEASE AGREEMENTS

             2     
2006 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Mark B. Madsen

             5     
House Sponsor: Patrick Painter

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies the Motor Vehicle Business Regulation Act by amending provisions
             10      related to dealer disclosures.
             11      Highlighted Provisions:
             12          This bill:
             13          .    provides that a dealer may not issue a temporary permit or release possession of a
             14      motor vehicle unless the dealer makes certain disclosures in a contract to enter into
             15      a lease agreement;
             16          .    provides that if a dealer does not properly execute the required disclosures or if the
             17      dealer is unable to secure financing arrangements as set forth in the disclosures, a
             18      prospective lessee shall return the motor vehicle and receive a refund of all money
             19      and consideration given;
             20          .    provides that if a dealer has sold or otherwise disposed of a motor vehicle or other
             21      property traded in, the dealer shall return the amount of money equivalent to the
             22      trade-in allowance disclosed in a contract to enter into a lease agreement;
             23          .    provides that if a dealer sends a notice to a prospective lessee that the dealer has not
             24      been able to secure financing arrangements within the terms disclosed, the contract
             25      is rescinded and the prospective lessee:
             26              .    shall return the vehicle within 48 hours of receiving the notice; and
             27              .    is liable for all physical damage and mileage for the cost of operating the motor
             28      vehicle;
             29          .    provides procedures for a dealer to mail a written notice;


             30          .    provides that if a dealer fails to give written notice, the prospective lessee shall
             31      return the vehicle within 48 hours of the date the prospective lessee learns that the
             32      dealer has not been able to secure financing arrangements as set forth in the
             33      disclosure;
             34          .    provides that a prospective lessee or a dealer may bring an action to enforce
             35      contractual and statutory rights;
             36          .    provides that the prevailing party in an action shall receive attorneys' fees; and
             37          .    provides that a motor vehicle that is returned pursuant to a contract rescission is not
             38      considered leased for purposes of sales and use tax.
             39      Monies Appropriated in this Bill:
             40          None
             41      Other Special Clauses:
             42          None
             43      Utah Code Sections Affected:
             44      ENACTS:
             45          41-3-401.5, Utah Code Annotated 1953
             46     
             47      Be it enacted by the Legislature of the state of Utah:
             48          Section 1. Section 41-3-401.5 is enacted to read:
             49     
Part 4. Disclosure Requirements

             50          41-3-401.5. Disclosure of financing arrangements relating to the lease of a motor
             51      vehicle.
             52          (1) (a) A dealer may not issue a temporary permit or release possession of a motor
             53      vehicle wherein the dealer has contracted to enter into a lease agreement to someone other than
             54      another dealer unless the contract to enter into a lease agreement contains the disclosure listed
             55      in Subsection (2).
             56          (b) The disclosure shall be set forth clearly and conspicuously on the first or front page
             57      of the contract to enter into a lease agreement, executed by the prospective lessee and the


             58      dealer.
             59          (2) The form to be used when the dealer contracts to enter into a lease agreement for
             60      the potential lease of a motor vehicle shall read as follows:
             61          "(1) THE PROSPECTIVE LESSEE OF THE MOTOR VEHICLE DESCRIBED IN
             62      THIS CONTRACT TO ENTER INTO A LEASE AGREEMENT HAS EXECUTED THE
             63      CONTRACT IN RELIANCE UPON THE DEALER'S REPRESENTATION THAT THE
             64      DEALER CAN SECURE FROM A FINANCIAL INSTITUTION FINANCING
             65      ARRANGEMENTS FOR THE LEASE OF THE MOTOR VEHICLE. THE PRIMARY
             66      TERMS OF THE FINANCING ARRANGEMENT ARE TO BE AS FOLLOWS:
             67          TERM BETWEEN _____ MONTHS AND ______ MONTHS. MONTHLY
             68      PAYMENTS BETWEEN $______ PER MONTH AND $ _____ PER MONTH BASED ON
             69      A DOWN PAYMENT OR TRADE-IN ALLOWANCE OF $ _________.
             70          (2) (a) IF THE DEALER IS NOT ABLE TO SECURE FINANCING
             71      ARRANGEMENTS WITHIN THE TERMS DISCLOSED, THEN THE DEALER MUST
             72      WITHIN SEVEN CALENDAR DAYS OF THE DATE OF THE CONTRACT TO ENTER
             73      INTO A LEASE AGREEMENT MAIL NOTICE TO THE PROSPECTIVE LESSEE THAT
             74      THE DEALER HAS NOT BEEN ABLE TO SECURE FINANCING ARRANGEMENTS IN
             75      ACCORDANCE WITH THE DISCLOSED TERMS AND THE CONTRACT TO ENTER
             76      INTO A LEASE AGREEMENT IS THEREFORE RESCINDED.
             77          (b) IF THE DEALER IS NOT ABLE TO SECURE FINANCING ARRANGEMENTS
             78      WITHIN THE TERMS DISCLOSED, SUCH FAILURE DOES NOT UNDER ANY
             79      CIRCUMSTANCES REQUIRE THE DEALER TO PROVIDE THE FINANCING
             80      NECESSARY FOR THE PROSPECTIVE LESSEE TO LEASE THE VEHICLE.
             81          (c) IF THE CONTRACT TO ENTER INTO A LEASE AGREEMENT IS
             82      RESCINDED, THE PROSPECTIVE LESSEE HAS 48 HOURS FROM RECEIPT OF THE
             83      NOTICE TO:
             84          (i) RETURN TO THE DEALER THE MOTOR VEHICLE THE PROSPECTIVE
             85      LESSEE AGREED TO LEASE;


             86          (ii) PAY THE DEALER AN AMOUNT EQUAL TO THE CURRENT STANDARD
             87      MILEAGE RATE FOR THE COST OF OPERATING A MOTOR VEHICLE ESTABLISHED
             88      BY THE FEDERAL INTERNAL REVENUE SERVICE FOR EACH MILE THE MOTOR
             89      VEHICLE HAS BEEN DRIVEN WHILE IN THE PROSPECTIVE LESSEE'S POSSESSION;
             90      AND
             91          (iii) COMPENSATE THE DEALER FOR ANY PHYSICAL DAMAGE TO THE
             92      MOTOR VEHICLE WHILE THE VEHICLE WAS IN THE PROSPECTIVE LESSEE'S
             93      POSSESSION.
             94          (3) IN RETURN, UPON RECEIPT OF THE ITEMS SET FORTH IN (2)(c)(i), (ii),
             95      and (iii) THE DEALER SHALL RETURN TO THE PROSPECTIVE LESSEE ALL
             96      PAYMENTS OR OTHER CONSIDERATION PAID BY THE PROSPECTIVE LESSEE,
             97      INCLUDING ANY DOWN PAYMENT AND ANY MOTOR VEHICLE TRADED IN.
             98          (4) IF THE TRADE-IN HAS BEEN SOLD OR OTHERWISE DISPOSED OF
             99      BEFORE THE CONTRACT TO ENTER INTO A LEASE AGREEMENT IS RESCINDED,
             100      THEN THE DEALER SHALL RETURN TO THE PROSPECTIVE LESSEE A SUM
             101      EQUIVALENT TO THE ALLOWANCE TOWARD THE LEASE PRICE GIVEN BY THE
             102      DEALER FOR THE TRADE-IN, AS NOTED IN THE CONTRACT TO ENTER INTO A
             103      LEASE AGREEMENT.
             104                                  ______________________________
             105                                  (Signature of the Prospective Lessee)
             106                                  ______________________________
             107                                  (Signature of the Dealer)"
             108          (3) (a) (i) In addition to the penalties in this chapter, if the disclosure in Subsection (2)
             109      is not properly executed or if the dealer is unable to secure financing arrangements for the
             110      lessee as provided in Subsection (2) within seven calendar days immediately following the date
             111      disclosed on the contract to enter into a lease agreement, then in either case the prospective
             112      lessee may return the motor vehicle to the dealer and receive a complete refund of all money
             113      and other consideration given to the dealer for the contract to enter into a lease agreement,


             114      including any motor vehicle or property used as a trade-in.
             115          (ii) If the motor vehicle or property used as a trade-in has been sold or otherwise
             116      disposed of, the dealer shall return to the prospective lessee the amount of money equivalent to
             117      the allowance towards the lease price given by the dealer for the motor vehicle or property
             118      traded in, as noted in the contract to enter into a lease agreement.
             119          (b) If the dealer provides the notice as set forth in Subsection (2)(a) of the disclosure
             120      statement, the contract to enter into a lease agreement is rescinded.
             121          (c) If a contract to enter into a lease agreement is rescinded under Subsection (3)(b):
             122          (i) the prospective lessee shall return the leased vehicle within 48 hours of receiving a
             123      notice that the dealer is unable to secure financing arrangements for the lease; and
             124          (ii) the prospective lessee is liable to the dealer:
             125          (A) for all physical damage to the motor vehicle while in the possession of the
             126      prospective lessee; and
             127          (B) in an amount equal to the current standard mileage rate for the cost of operating a
             128      motor vehicle established by the federal Internal Revenue Service for each mile the motor
             129      vehicle was driven between the date the prospective lessee first acquired possession and the
             130      date when the prospective lessee returned the motor vehicle to the dealer.
             131          (4) (a) A dealer who has complied with Subsection (2), but who has not been able to
             132      secure financing arrangements as set forth in the disclosure, shall within seven days of the date
             133      of the contract to enter into a lease agreement mail written notice to the prospective lessee:
             134          (i) disclosing that the dealer has not been able to secure financing arrangements as set
             135      forth in the disclosure; and
             136          (ii) instructing the prospective lessee of the prospective lessee's responsibility to return
             137      the vehicle within 48 hours of receiving the notice, as provided for in Subsection (2).
             138          (b) (i) The dealer shall mail notification to the prospective lessee within seven calendar
             139      days following the date that the contract to enter into a lease agreement was executed.
             140          (ii) A notice complies with Subsection (4)(b)(i) if it is postmarked before the end of the
             141      seventh day following the date that the contract to enter into a lease agreement was executed


             142      and addressed to the prospective lessee at the address contained in the contract to enter into a
             143      lease agreement.
             144          (iii) If the prospective lessee's address is not contained on the contract to enter into a
             145      lease agreement, then proof of compliance with the notification provision of this Subsection
             146      (4)(b) shall be borne by the dealer.
             147          (iv) If a dealer gives notice in the manner prescribed, the prospective lessee has 48
             148      hours from receipt of the notice to return the vehicle to the dealer.
             149          (c) If a dealer executes the disclosure required by Subsection (2), but is not able to
             150      secure financing arrangements as set forth in the disclosure, and the dealer fails to give written
             151      notice to the prospective lessee within seven days, as provided for in Subsections (4)(a) and
             152      (b), then the prospective lessee shall return the vehicle within 48 hours of the date the
             153      prospective lessee first learns that the dealer has not been able to secure financing arrangements
             154      as set forth in the disclosure.
             155          (5) (a) Either the prospective lessee or a dealer may bring an action to enforce
             156      contractual or statutory rights under this section.
             157          (b) The prevailing party in an action under Subsection (5)(a) is entitled to reasonable
             158      attorneys' fees as part of the costs of the action.
             159          (6) A motor vehicle returned by the prospective lessee to the dealer in accordance with
             160      the rescission provisions of this section is not considered leased for purposes of sales and use
             161      tax under Title 59, Chapter 12, Sales and Use Tax Act.


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