September 15, 2010, Introduced by Reps. Dean, Stanley, Young, Cushingberry, Hammel, Smith, Lemmons, Clemente, Sheltrown, Melton, Gonzales, Lipton, Donigan, Bennett, Leland, Huckleberry, Bettie Scott, Roy Schmidt, Gregory, Jackson and Johnson and referred to the Committee on Regulatory Reform.
A bill to amend 1984 PA 424, entitled
"Rental-purchase agreement act,"
by amending sections 2, 3, and 4 (MCL 445.952, 445.953, and
445.954), and by adding section 4a.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 2. As used in this act:
(a) "Cash price" means the amount for which a lessor would
sell personal property described in a rental-purchase agreement to
the lessee at the inception of the rental-purchase agreement if the
lessee purchased rather than leased the property.
(b) (a)
"Lessee" means a person
who leases personal property
pursuant
to under a rental-purchase agreement.
(c) (b)
"Lessor" means a person who,
that, in the ordinary
course of business, regularly leases, offers to lease, or arranges
for the leasing of personal property under a rental-purchase
agreement.
(d) (c)
"Period" means a day,
week, 1 month, or other
subdivision of a year.
(e) "Periodic payment" means the amount a lessee is required
to pay each period under a rental-purchase agreement for the right
of possession and use of leased property under a rental-purchase
agreement for that period. The term does not include any amounts
paid on a periodic basis for taxes.
(f) (d)
"Rental-purchase
agreement" means an agreement for the
use of personal property by a lessee primarily for personal,
family, or household purposes, for an initial period of 4 months or
less that is automatically renewable with each payment after the
initial period and that permits the lessee to become the owner of
the property. Rental-purchase agreements shall not include any of
the following:
(i) A lease or agreement which that constitutes
a credit sale
as
defined in 12 C.F.R. CFR
226.2(a)(16) and section 1602(g) of
the
truth
in lending act, 15 U.S.C. USC 1602(g).
(ii) A lease which that constitutes
a consumer lease as defined
in
12 C.F.R. 213.2(a)(6).CFR 213.2(e).
(iii) Any lease for agricultural, business, or commercial
purposes.
(iv) Any lease made to an organization.
(v) Any lease of money or intangible personal property.
(vi) A lease or agreement which that constitutes
a retail
installment transaction as defined in section 2 of the retail
installment
sales act, Act No. 224 of the Public Acts of 1966,
being
section 445.852 of the Michigan Compiled Laws.1966 PA 224,
MCL 445.852.
(g) "Total of payments" means the total amount of periodic
payments necessary to acquire ownership of personal property that
is subject of a rental-purchase agreement if the lessee makes all
of the regularly scheduled payments.
Sec. 3. (1) A rental-purchase agreement shall be in the form
of
a written statement which shall include that includes all of the
following:
(a) A brief description of the leased property, sufficient to
identify the property to the lessee and lessor including whether
the property is new or previously rented. If a lease is for
multiple items, a description of each item may be provided in a
separate
statement which that is incorporated by reference in the
primary disclosure statement.
(b) The total amount of any initial payment, including any
advance payment, delivery charge, or any trade-in allowance to be
paid by the lessee at or before consummation of the rental-purchase
agreement.
(c) The amount and timing of periodic payments.
(d) The amount of all other charges, individually itemized,
payable by the lessee to the lessor, which are not included in the
periodic payments.
(e) A statement of the party liable for loss, damage in excess
of normal wear and tear, or destruction to the leased property.
(f) The lessee's right to reinstate and the amount or method
of determining the amount of any penalty or other charge for
reinstatement as established in section 8.
(g) The party responsible for maintaining or servicing the
leased property together with a brief description of this
responsibility.
(h) A statement of the conditions under which the lessee or
lessor may terminate the lease.
(i) A statement of the total of payments expressed as the
product of the number of periodic payments times the amount of each
payment necessary to acquire ownership of the leased property.
(j) A statement that the lessee has the option to purchase the
leased property during the term of the rental purchase agreement
and, at what price, formula, or by what method the price is
determined.
(k)
The cash price of the property. if purchased rather than
leased.
(l) A statement that if any part of a manufacturer's warranty
remains on the leased property at the point that a lessee assumes
ownership of the property, the warranty will be passed on to the
lessee.
(m) A notice in a prominent place in type not smaller than the
size of 12-point type, or in legible print with letters not smaller
than 1/8 inch, in substantially the following form:
NOTICE: THIS AGREEMENT IS REGULATED BY STATE LAW AND MAY BE
ENFORCED BY THE ATTORNEY GENERAL OR BY PRIVATE LEGAL ACTION.
(2)
All information required by under
this section shall be
stated in a clear and coherent manner, using words and phrases of
common meaning. The information shall be appropriately divided and
captioned by its sections. All numerical amounts and percentages
shall be stated in figures. The information shall also be disclosed
by
the lessor prior to before
the signing of the lease by the
lessee on a dated written statement which identifies the lease or
rental-purchase agreement and the parties to it. The written
statement
shall contain all of the information required by under
this section and shall be provided directly on the lease contract
or
instrument, or on a separate form . A separate form that may
utilize the format provided for in section 19.
(3) At the lessor's option, a rental-purchase agreement may
disclose
information in addition to that
required by under this
section
may be disclosed if the additional information is not
stated,
utilized, or placed in a manner which that will contradict,
obscure, or distract attention from the required information.
Sec.
4. (1) The amount to be paid by the a lessee to acquire
ownership of personal property under a rental-purchase agreement as
disclosed
in under section 3(j) shall not be greater than the cash
price as disclosed under section 3(k) minus an amount equal to 45%
of
all periodic rental payments made by the lessee.
(2) If at any time an amount equal to 45% of the total
periodic
rental payments paid by the a lessee to the a lessor
for
personal property under a rental-purchase agreement equals the cash
purchase price disclosed under section 3(k), then the lessee shall
acquire ownership of the rental property.
(3)
This section shall does not prohibit a lessor from
offering
a rental-purchase agreement which that provides
that an
amount equal to 45% or more of the periodic rental payments is
applied
toward the purchase price disclosed in under section 3(k).
Sec. 4a. The maximum total of payments for leased property
under a rental-purchase agreement shall not exceed 2.25 times the
cash price for that property, as disclosed under section 3(k).