2023 New York Laws › GBS - General Business › Article 26 - Miscellaneous › 399-W - Total Loss Notice and Waiver of the Gap Amount for Non-Motor Vehicle Retail Lease Agreements.

* §  399-w.  Total  loss  notice  and  waiver  of  the  gap amount for
non-motor vehicle retail lease agreements. 1.  If  a  non-motor  vehicle
retail  lease  agreement  provides  that the lessee shall be responsible
upon a total loss of the goods which are the subject  of  the  agreement
occasioned by 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  goods.  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 goods occasioned by 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  goods  occasioned  by  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 non-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 goods occasioned by 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  the  gap  amount  to the lessor or lessor's assignee, after a total
loss of the goods occasioned by theft, confiscation or physical  damage.
No  retail  lease  agreement  shall  be  conditioned  upon  the lessee's
obtaining of non-motor vehicle lessee gap  insurance  as  set  forth  in
subparagraph  (D)  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  goods occasioned by 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
goods occasioned by theft or physical damage, only if non-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  non-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
goods occasioned by 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  non-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  non-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.
If the lessor is not obligated to waive its contractual right to  hold
the  lessee  liable  for  the  gap  amount,  then the notice required by
subdivision one of this section  shall  contain  a  statement  that  the
lessee  may  be  able  to purchase lessee gap insurance covering the gap
amount directly from an insurer authorized to do such business  in  this
state,  but that the purchase of gap insurance is not required under the
retail lease agreement.
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 non-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  goods
occasioned by theft, confiscation or physical damage for the gap amount,
except  that  the  lessor shall provide to the lessee conspicuous notice
that, in the event of a total loss of  the  goods,  the  lessee  has  no
obligation for the gap amount.
6.  Whenever there shall be a violation of this section an application
may be made by the attorney general in the name of  the  people  of  the
state of New York to a court or justice having jurisdiction by a special
proceeding  to  issue an injunction, and upon notice to the defendant of
not less than five days, to enjoin and restrain the continuance of  such
violations;  and  if it shall appear to the satisfaction of the court or
justice that the defendant has,  in  fact,  violated  this  section,  an
injunction  may  be  issued  by  the  court  or  justice,  enjoining and
restraining any further violations, without  requiring  proof  that  any
person  has,  in  fact,  been  injured  or  damaged thereby. In any such
proceeding, the court may make allowances to  the  attorney  general  as
provided  in  paragraph  six  of subdivision (a) of section eighty-three
hundred  three  of  the  civil  practice  law  and  rules,  and   direct
restitution.  Whenever  the court shall determine in any such proceeding
that a violation of this section has occurred, the court  may  impose  a
civil  penalty of not more than five hundred dollars for each violation.
In connection with any such proposed application the attorney general is
authorized to take proof and make a determination of the relevant  facts
and  to  issue  subpoenas  in accordance with the civil practice law and
rules.
7. For purposes of  this  section:  (a)  "Goods"  means  all  chattels
personal,  other than things in action or money, leased for other than a
commercial or business use or for purpose of sublease. The term includes
goods which, at the time of the lease or  subsequently,  are  to  be  so
affixed  to  realty as to become a part thereof whether or not severable
therefrom, but does not include a motor vehicle as  defined  in  article
nine-A of the personal property law.
(b)  "Lessee"  means  a  natural person who leases goods from a lessor
primarily for personal, family or  household  use  and  who  executes  a
retail  lease  agreement  in  connection  therewith.  The  term does not
include a person who leases goods primarily for  agricultural,  business
or commercial use or for the purpose of subleasing.
(c)  "Lessor"  means  a  person  regularly  engaged in the business of
leasing or selling goods who leases goods to a lessee under  or  subject
to a retail lease agreement.
(d) "Lease" means a transfer from a lessor to a lessee of the right to
possession  and  use of goods in return for consideration. The term does
not include a sale, including a sale on approval or a sale or return,  a
retail  instalment  sale  as  defined  in  article  ten  of the personal
property law or the retention or creation of a security interest in  the
goods.
(e)  "Retail  lease  agreement"  or  "agreement"  means  an agreement,
entered into in this state, for the lease of goods and which may include
the purchase of goods or services incidental thereto by a lessee  for  a
scheduled  term exceeding four months, whether or not the lessee has the
option to purchase or otherwise become the owner of  the  goods  at  the
expiration  of  the  agreement.  The  term  includes  such  an agreement
wherever entered into if executed by the lessee in  this  state  and  if
solicited  in person by a person acting on his or her own behalf or that
of the lessor. The term does not include a retail instalment contract or
a rental-purchase agreement as defined in articles ten and eleven of the
personal property law. An agreement  that  substantially  complies  with
this  article  does  not  create a security interest in the goods as the
term  "security  interest"  is  defined  in  paragraph  thirty-five   of
subsection (b) of section 1--201 of the uniform commercial code.
(f) "Gap amount" has the meaning ascribed to it in paragraph fifty-two
of subsection (a) of section one hundred seven of the insurance law.
(g)  "Gap  insurance"  has  the  meaning  ascribed  to it in paragraph
twenty-six of  subsection  (a)  of  section  one  thousand  one  hundred
thirteen of the insurance law.
(h)   "Person"   means   an   individual,   partnership,  corporation,
association or other group, however organized.
* NB There are 2 § 399-w's