1. The Laws of New York
  2. Consolidated Laws
  3. Personal Property
  4. Article 9-A: Motor Vehicle Retail Leasing Act


Section 337 Requirements as to retail lease agreements

Personal Property (PEP)

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; or

  (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.

  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.