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This entry was published on 2014-09-22
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SECTION 335
Total loss notice and waiver of the gap amount
Personal Property (PEP) CHAPTER 41, ARTICLE 9-A
§ 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.