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Introduced by Representatives Martin of Springfield, Emmons of Springfield and Shand of Weathersfield

Referred to Committee on


Subject:  Commerce and trade; motor vehicle lease; disclosures

Statement of purpose:  This bill proposes to require and implement standards for the disclosure of terms in retail motor vehicle leases to all lessees.


It is hereby enacted by the General Assembly of the State of Vermont:


This bill may be referred to as the Vermont Motor Vehicle Retail Leasing Act.


The general assembly finds the following:

(1)  Retail motor vehicle lease agreements are often difficult for consumers to understand.

(2)  Frequently, retail motor vehicle lease agreements are signed by multiple persons.

(3)  Federal Reserve Board Regulation M implemented the federal Consumer Leasing Act, which only requires disclosures be given to one lessee, therefore not affording consumer protections to all lessees obligated under such leases.

(4)  All persons named on or who sign a retail motor vehicle lease should be aware of and understand their rights and obligations under such an agreement.

Sec. 3.  9 V.S.A. chapter 60 is added to read:


§ 2381.  Definitions

For the purposes of this chapter, the following words shall have the following meanings:

(1)  “Commercial purpose” means a purpose related to the production, exhibition, marketing, transportation, processing, or manufacturing of goods or services.

(2)  “Early termination” means the ending of the lease before the scheduled termination date.  Early termination may be voluntary according to the terms of a retail lease agreement, or involuntary due to default, theft, accident, or death of the lessee.

(3)  “Motor vehicle” or “vehicle” means any vehicle propelled or drawn by power other than muscular power.

(4)  “Person” means any individual, partnership, joint venture, corporation, or any other group however organized.

(5)  “Retail” means for any purpose other than resale or for a commercial purpose.

(6)  “Retail lease” means a transfer from a retail lessor to a retail lessee of the right to possession and use of a motor vehicle in return for consideration.

(7)  “Retail lease agreement” means a contract entered into in this state for the lease of a motor vehicle by a retail lessee for a scheduled term exceeding six months, whether or not the lessee has the option to purchase or otherwise become owner of the vehicle at the expiration of the agreement.

(8)  “Retail lessee” means a person who agrees to lease a motor vehicle other than for commercial purposes.

(9)  “Retail lessor” means a person engaged in the business of leasing motor vehicles to retail lessees.

§ 2382.  Disclosure requirements

(a)  Form of disclosures.  A lessor shall make all disclosures required by this chapter:

(1)  Clearly and conspicuously;

(2)  In writing;

(3)  On a form the lessee may keep; and

(4)  Prior to the consummation of the lease.

(b)  Multiple lessees.  When a retail lease agreement involves more than one lessee, the lessor must provide all disclosures required under this section to all lessees named in or who sign the lease.

(c)  Content of disclosures.  Unless excluded by subsection (d) of this section, all retail motor-vehicle lease agreements shall contain or be accompanied by the following disclosures:

(1)  Payment calculation.

(A)  Gross capitalized cost.  The gross capitalized cost, including a disclosure of the agreed-upon price of the vehicle, a description such as “the agreed-upon value of the vehicle [state the amount] and any items you pay for over the lease term (such as service contracts),” and a statement of the lessee’s option to receive a separate written itemization of the gross capitalized cost.  If requested by the lessee, the itemization shall be provided prior to consummation.

(B)  Capitalized cost reduction.  The capitalized cost reduction, with a description such as “the amount of any net trade-in allowance, noncash credit, or cash you pay that reduces the gross capitalized cost.”

(C)  Adjusted capitalized cost.  The adjusted capitalized cost, with a description such as “the amount used in calculating your base [periodic] payment.”

(D)  Amount due at lease signing or delivery.  The total amount to be paid prior to or at consummation or at the time of delivery, if delivery occurs after consummation, using the term “amount due at lease signing or delivery.”  The lessor shall itemize each component by type and amount, including any advance monthly or other periodic payment, capitalized reduction, net trade-in allowance, rebates, noncash credits, and cash payments.

(E)  Number of lease payments.  The number and due dates or periods of payment scheduled under the lease.

(F)  Base periodic payment.  The adjusted capitalized cost divided by the number of payment periods in the lease.

(G)  Total periodic payment.  The sum of the base periodic payment plus depreciation, amortized amounts, and any other charges that are part of the periodic payment.

(H)  Fees and taxes.  The dollar amount for all official and license fees, registration, title, or taxes required to be paid in connection with the lease.

(I)  Other charges.  The total amount of other charges payable to the lessor, itemized by type and amount, that are not included in the periodic payments.  Such charges include the amount of any liability the lease imposes upon the lessee at the end of the lease term.

(J)  Total of payments.  The total of payments, with a description such as “the amount you will have paid by the end of the lease.”  This amount is the sum of the amount due at lease signing (less any refundable amounts), the total amount of periodic payments (less any portion of the periodic payment paid at lease signing), and other charges assessed under this section.

(K)  Penalties and other charges for delinquency.  The amount or method of determining the amount of any penalty or other charge for delinquency, default, or late payments, which must be reasonable.

(L)  Residual value.  The residual value, with a description such as “the value of the vehicle at the end of the lease used.”

(M)  Mutually agreeable final adjustment.  A statement that the lessee and lessor are permitted, after termination of the lease, to make any mutually agreeable final adjustment regarding excess liability.

(2)  Maintenance responsibilities.

(A)  Notice of wear and use standard.  A statement of the lessor’s standards for wear and use (if any), which must be reasonable, and a notice substantially similar to the following:  “Excessive Wear and Use.  You may be charged for excessive wear based on our standards for normal use.”  The notice shall also specify the amount or method for determining any charge for excess mileage.

(B)  Warranties or guarantees.  A statement identifying all express warranties and guarantees from the manufacturer or lessor with respect to the leased property.

(C)  Insurance.  A brief identification of the lessee’s obligation, if any, to obtain insurance and the types and amounts of coverage required.

(3)  Termination.

(A)  Purchase option.

(i)  End of lease term.  If at the end of the lease term, the purchase price; and

(ii)  During lease term.  If prior to the end of the lease term, the purchase price or the method for determining the price and when the lessee may exercise this option.

(B)  Early termination.

(i)  In general.  A statement in at least eight-point bold type to the effect that “early termination may require you to pay a substantial charge.”

(ii)  Additional early termination charge.  The amount that will be charged to a lessee in the event of early termination in addition to the costs specified in subsections 2383(a) through (e) of this chapter, if any.

(iii)  Early termination liability.  The total amount due, or a formula for calculating that amount, in the event of early termination, the components of which shall be consistent with section 2383 of this chapter.

(d)  Renegotiations, extensions, and assumptions.

(1)  Renegotiation.  A renegotiation occurs when a lease is satisfied and replaced by a new lease undertaken by the same lessee.  A renegotiation requires new disclosures, except as provided in subdivision (4) of this subsection.

(2)  Extension.  An extension is a continuation, agreed to by the lessor and the lessee of an existing lease, beyond the originally scheduled end of the lease term, except when the continuation is the result of a renegotiation.  An extension that exceeds six months requires new disclosures, except as provided in subdivision (4) of this subsection.

(3)  Assumption.  New disclosures are not required when a lease is assumed by another person, whether or not the lessor charges an assumption fee.

(4)  Exceptions.  New disclosures are not required for the following, even if they meet the definition of renegotiation or extension:

(A)  The deferment of one or more payments, whether or not a fee is charged;

(B)  The extension of a lease for not more than six months on a month-to-month basis or otherwise; or

(C)  An agreement resulting from a court proceeding.

§ 2383.  Restriction on early termination

If an agreement is terminated early, the early termination obligation of the lessee may not exceed an amount equal to the sum of:

(1)  any unpaid periodic payments that accrued through the early termination date;

(2)  any other unpaid charges, other than excess mileage charges, arising from the failure of the lessee to fulfill his or her obligations under the agreement;

(3)  any official fees and taxes imposed in connection with the lease termination;

(4)  a reasonable disposition fee, or in lieu thereof, the reasonable costs of retaking, storing, preparing for sale, and selling the vehicle;

(5)  the difference, if any, between (A) the adjusted capitalized cost, and (B) the sum of all depreciation amounts accrued through the date of early termination, calculated in accordance with the constant yield method or any other accepted actuarial method, and the realized value of the vehicle; and

(6)  an additional early termination charge which is reasonable in light of the anticipated actual harm caused by the default or early termination, the difficulties of proof or loss, and the inconvenience or infeasibility of otherwise obtaining an adequate remedy.

§ 2384.  Waiver

No act or agreement of the retail lessee before or at the time of consummating a lease under this chapter shall constitute a valid waiver of any of the provisions of this chapter.

§ 2385.  Record retention

A lessor shall retain evidence of compliance with the requirements imposed by this chapter for a period of not less than two years after the date the disclosures are required to be made or an action is required to be taken.

Published by:

The Vermont General Assembly
115 State Street
Montpelier, Vermont