Session of 1999
HOUSE BILL No. 2177
By Representative Adkins
9 AN ACT enacting the consumer motor vehicle leasing contracts act;
10 amending K.S.A. 84-2a-104 and K.S.A. 1998 Supp. 50-645 and re-
11 pealing the existing sections.
13 Be it enacted by the Legislature of the State of Kansas:
14 New Section 1. As used in sections 1 through 13:
15 (a) "Adjusted capitalized cost" means the amount which serves as the
16 basis for determining the base lease payment, computed by subtracting
17 from the capitalized cost any capitalized cost reduction. The adjusted
18 capitalized cost is amortized during the lease term to the estimated re-
19 sidual value by the application of a portion of each scheduled lease
21 (b) "Capitalized cost" means: (1) The amount which, when reduced
22 by the amount of the capitalized cost reduction, equals the adjusted cap-
23 italized cost.
24 (2) Capitalized cost shall include all items that are capitalized in the
25 lease and, after the application of the capitalized cost reduction, amor-
26 tized by the scheduled lease payments over the term of the lease.
27 (3) Capitalized cost shall include to the extent capitalized and am-
28 ortized as set forth in paragraph (2):
29 (A) Taxes, registration, license, acquisition, administration, assign-
30 ment and other similar fees;
31 (B) charges for insurance, an extended warranty, mechanical repair
32 contract, service contract, vehicle maintenance agreement and any other
33 similar charge;
34 (C) charges for a waiver of the contractual obligation to pay the gap
36 (D) charges for accessories and installation of accessories;
37 (E) charges for delivering, servicing, repairing or improving the ve-
38 hicle; and
39 (F) charges for other goods, services and benefits incidental to the
40 consumer lease transaction.
41 (4) Capitalized cost shall also include, to the extent capitalized and
42 amortized as set forth in paragraph (2), with respect to a vehicle or other
43 property traded-in in connection with a lease, the unpaid balance of any
HB 2177 2
1 amount financed under an outstanding vehicle loan agreement or vehicle
2 retail installment contract or the unpaid portion of the early termination
3 obligation under any lease or other obligation of the lessee.
4 (c) "Capitalized cost reduction" means any payments made by cash,
5 check, rebates or similar means that are in the nature of down payments
6 made by the lessee and any net trade-in allowance granted by the lessor
7 at the inception of the consumer-lease for the purpose of reducing the
8 capitalized cost. Capitalized cost reduction does not include any base
9 lease payments due at the inception of the lease or all of the lease pay-
10 ments if they are all paid at the inception of the lease.
11 (d) "Consumer leasing act" means that act of congress codified at 15
12 U.S.C.§ § 1667 through 1667e, and regulations promulgated pursuant
14 (e) "Dealer" means a dealer as defined in subsection (dd) of K.S.A.
15 8-2401, and amendments thereto.
16 (f) (1) "Lease" or "leasing" means a contract in the form of a bail-
17 ment or lease for the use of a motor vehicle by an individual primarily
18 for personal, family or household purposes, for a period of time exceeding
19 four months; including renewal periods, whether or not the lessee has
20 the option to purchase or otherwise become the owner of the motor
21 vehicle at the expiration of the lease.
22 (2) Lease does not include:
23 (A) A lease which meets the definition of a credit sale in federal
24 regulation Z, 12 C.F.R. § 226.2;
25 (B) a lease for agricultural, business or commercial purposes; or
26 (C) a lease made to an organization.
27 (g) "Lessee" means an individual who leases under, or who is offered,
28 a motor vehicle lease.
29 (h) "Lessor" means a person who during any 12-month period leases
30 or offers to lease five or more motor vehicles or who is assigned five or
31 more leases. Lessor does not include the holder of a security interest in
32 leases to secure an obligation or a holder of an interest in a trust that
33 owns leases.
34 (i) "Motor vehicle" means a motor vehicle that is registered in this
35 state as a passenger vehicle or a truck registered for a gross weight of
36 16,000 pounds or less.
37 (j) "Manufacturer" means a first stage manufacturer or second stage
38 manufacturer as defined in K.S.A. 8-2401, and amendments thereto.
39 (k) "Original lessor" means the person identified in the lease as the
40 lessor of the motor vehicle. Original lessor does not include any assignee
41 of the lease.
42 (l) "Warranty" means the written warranty, so labeled, of the man-
43 ufacturer of a new motor vehicle, including any terms or conditions prec-
HB 2177 3
1 edent to the enforcement of obligations under that warranty and shall
2 include any motor vehicle subject to a lease.
3 Warranty includes any implied warranties provided for by federal or
4 state law, including the federal Magnusson Moss warranty act and the
5 Kansas uniform commercial code.
6 (m) "Warranty period" means the earlier of:
7 (1) The period of the motor vehicle's first 15,000 miles of operation;
9 (2) fifteen months following the date of original delivery of the motor
10 vehicle to the lessee.
11 (n) "Distributor," "factory branch" and "distributor branch" shall
12 have the meaning given such terms under K.S.A. 8-2401, and amend-
13 ments thereto.
14 New Sec. 2. (a) A lease shall be in writing and signed by the lessor
15 and the lessee.
16 (b) The printed portion of the lease, other than directions for com-
17 pletion of the lease and the text of any assignment between the original
18 lessor and an assignee, shall be printed in a size equal to at least 8 point
19 type. The lease shall contain the following items printed or written in a
20 conspicuous manner:
21 (1) At the top of the lease, the words "Motor Vehicle Lease
23 (2) if physical damage or liability insurance coverage for bodily injury
24 and property damage caused to others is not included in the lease, a notice
25 substantially similar to the following: "No physical damage or liability
26 insurance coverage for bodily injury or property damage caused to others
27 is included in this lease.";
28 (3) directly above the acknowledgment permitted by subsection (c),
29 a written notice substantially similar to the following: "Notice to the les-
30 see: This is a lease. You have no ownership rights in the motor vehicle
31 unless and until you exercise your option to purchase the motor vehicle,
32 if this lease contains a purchase option. Do not sign this lease before you
33 read it or if it contains any blank space. You are entitled to a completely
34 filled in copy of this lease when you sign it.";
35 (4) a statement substantially similar to the following: "Early termi-
36 nation may require you to pay a substantial amount."; and
37 (5) the following provision in at least 10 point boldface type:
39 Any holder of this consumer lease is subject to all claims and
40 defenses which the lessee could assert against the lessor of the
41 motor vehicle. Recovery hereunder by the lessee shall not exceed
42 amounts paid by the lessee under this lease."
43 (c) The lessor shall deliver to the lessee, or mail to the lessee at the
HB 2177 4
1 lessee's address shown on the lease, a copy of the lease signed by the
2 lessor. Any acknowledgment by the lessee of delivery of a copy of the
3 lease shall be conspicuous and shall appear directly above the space re-
4 served for the lessee's signature.
5 (d) The lease shall state the names of the original lessor and lessee,
6 the place of business of the original lessor, the residence of the lessee as
7 specified by the lessee and a description of the motor vehicle, including
8 its make, model year, model and the motor vehicle's identification
10 (e) The lease shall contain:
11 (1) All items required to be disclosed by the consumer leasing act;
12 (2) a disclosure of the capitalized cost;
13 (3) the effective interest rate charged; and
14 (4) a provision briefly describing the lessee's rights upon default.
15 (f) If the lessee is obligated under the lease to maintain liability in-
16 surance or other insurance on the motor vehicle and if subsequent to
17 execution of the lease the lessee fails to maintain the required insurance,
18 if the lease permits, the lessor may procure insurance for either the in-
19 terests of the lessee and the lessor or the interest of either of them in-
20 suring substantially the same risks required to be insured by the lease.
21 The lease may also provide that the amount of the premium paid by
22 the lessor may be the subject of a lease charge as though such amount
23 was part of the capitalized cost and shall be subject to the default provi-
24 sions of the lease.
25 Nothing in this subsection shall prevent the lessor from pursuing any
26 other remedy for default set forth in the lease or provided by law.
27 (g) (1) If the lease permits, a lessor may impose on the lessee:
28 (A) A late or delinquency charge for payments or portions of pay-
29 ments that are in default under the lease;
30 (B) a collection charge, which may include all court and other collec-
31 tion costs actually incurred by the lessor and, if the lease is referred for
32 collection to an attorney who is not a salaried employee of the lessor, a
33 reasonable attorney fee; and
34 (C) a service charge for an insufficient check as defined and author-
35 ized by paragraph (e) of subsection (1) of K.S.A. 16a-2-501, and amend-
36 ments thereto.
37 (2) No more than one late or delinquency charge may be imposed
38 for any single payment or portion of payment, regardless of the period
39 during which it remains in default.
40 (h) (1) Except as permitted by paragraph (2), no lease shall be signed
41 by any party if it contains blank spaces to be filled in after it has been
43 (2) If delivery of the motor vehicle is not made at the time of exe-
HB 2177 5
1 cution of the lease, the motor vehicle's identifying numbers, marks or
2 similar information and the due date of the first payment may be filled
3 in after execution of the lease.
4 (3) The lessee's written acknowledgment, conforming to the require-
5 ments of subsection (c), of delivery of a copy of the lease shall be conclu-
6 sive proof of delivery of a copy of the consumer lease in any action or
7 proceeding by or against an assignee of the lease without knowledge to
8 the contrary at the time of the assignment.
9 (i) Notwithstanding any contrary provision of this act or other laws of
10 this state:
11 (1) Subject to the rights of the lessee under the lease, a lessor may
12 sell a lease, a leased motor vehicle or an interest in a lease on such terms
13 and conditions and for such price as may be mutually agreed upon be-
14 tween the lessor and the lessor's assignee; and
15 (2) no filing of the assignment, no notice to the lessee of the assign-
16 ment and no requirement that the lessor be deprived of dominion over
17 payments upon the lease or over the motor vehicle if repossessed by or
18 returned to the lessor, shall be necessary to the validity of a written as-
19 signment of a lease as against creditors, subsequent purchasers, pledgees,
20 mortgagees or encumbrancers of the lessor.
21 (j) (1) Until the lessee has notice of assignment of a lease, payment
22 made by the lessee to the last known holder of the lease shall be binding
23 upon all subsequent assignees.
24 (2) If requested by the lessee, the assignee shall furnish reasonable
25 proof that the assignment has been made and the lessee may pay the
26 original lessor until reasonable proof of the assignment has been
28 (3) The lessor shall provide the lessee with a written receipt for any
29 payment made in cash.
30 (k) (1) Upon written request from a lessee, the lessor shall give or
31 forward to the lessee a written statement of the dates and amounts of the
32 payments that have been made under the lease and the amount of the
33 lessee's remaining payments and any other amounts owed to the lessor
34 as reflected on the lessor's books and records at the time of the notice.
35 (2) Upon written request from a lessee, the lessor shall give or for-
36 ward to the lessee a written estimate of the lessee's total early termination
37 liability under the lease.
38 (3) No charge may be imposed on the lessee for preparation of the
39 statements provided for in paragraphs (1) and (2), except a lessor may
40 impose a reasonable fee, not to exceed $5 per statement, if:
41 (i) The lessee requests more than one statement under paragraph (1)
42 or more than one statement under paragraph (2) in any 12-month period;
HB 2177 6
1 (ii) the charge is disclosed in the lease.
2 (l) A lease may not contain any provision by which:
3 (1) In the absence of the lessee's default, the lessor may, arbitrarily
4 and without reasonable cause, accelerate maturity of any part or all of the
5 amount owing under the lease;
6 (2) the lessor may accelerate maturity of any part or all of the amount
7 owing under the lease solely because the lessor deems itself insecure;
8 (3) a power of attorney is given to confess judgment or an assignment
9 of wages is given;
10 (4) the lessor, or other person acting on behalf of the lessor, is given
11 authority to enter upon the lessee's premises unlawfully or to commit any
12 breach of the peace in the repossession of the motor vehicle;
13 (5) the lessee waives any right of action against the lessor, or other
14 person acting on behalf of the lessor, for any illegal act committed in the
15 collection of payments under the lease or in the repossession of the motor
17 (6) the lessee executes a power of attorney appointing the lessor, or
18 other person acting on behalf of the lessor, as the lessee's agent in col-
19 lection of payments under the lease or in the repossession of the motor
20 vehicle, except that this paragraph shall not prohibit the inclusion in a
21 lease of a limited power of attorney or other provision authorizing the
22 lessor to execute in the lessee's name any proofs of insurance claims or
23 losses, to execute in the lessee's name any titling and registration docu-
24 ments or to endorse the lessee's name on any insurance settlement or
25 premium rebate draft or check the proceeds of which are applicable to
26 the lessee's obligations under the lease;
27 (7) the lessor is relieved from liability for any legal remedy which the
28 lessee may have against the lessor under the lease or any separate instru-
29 ment executed in connection therewith;
30 (8) the maturity of any part or all of the amount owing under the
31 lease is accelerated where, following a default consisting solely of the
32 failure to make timely payments, a lessee who has the right to redeem
33 the lease makes timely payment of an amount sufficient to redeem the
34 lease under section 8, and amendments thereto; or
35 (9) the lessee waives any right provided to the lessee by this act.
36 (m) (1) Any clause or provision prohibited by subsection (l) shall be
37 unenforceable but shall not otherwise affect the lease's continuing validity
38 and enforceability.
39 (2) The penalties provided in section 7, and amendments thereto, do
40 not apply to violations of subsection (1) of this section unless a lessor
41 attempts to enforce a provision prohibited by that subsection.
42 New Sec. 3. (a) A person who leases vehicles to lessees shall not:
43 (1) Make any false, falsely disparaging or misleading oral or written
HB 2177 7
1 statement, visual description or other representation of any kind that has
2 the capacity, tendency or effect of deceiving or misleading a consumer
3 or lessee;
4 (2) by any means advertise or offer to the public any motor vehicle
5 without intent to lease it as advertised or offered; or
6 (3) misrepresent a lease of a motor vehicle as a sale.
7 (b) (1) Except as allowed by paragraph (2), in offering to allow a
8 lessee to cure a default by entering into a new lease for the same motor
9 vehicle, a lessor may not include in the new lease any material provision
10 that is less favorable to the lessee than the provisions of the original lease.
11 (2) A lessor may include in a lease under paragraph (1) an increase
12 in one or more of the following:
13 (A) The security deposit;
14 (B) the down payment paid to the lessor; or
15 (C) the lease payments, so long as the total of scheduled lease pay-
16 ments over the term of the new lease does not exceed the total of sched-
17 uled lease payments under the original lease.
18 New Sec. 4. (a) To the extent that K.S.A. 84-2-313 through 84-2-
19 318, and amendments thereto, apply to the purchase of a motor vehicle,
20 the rights and remedies provided for in those sections shall apply to the
21 lease of a motor vehicle and may be exercised by any lessee.
22 (b) If the warranty period is to include those miles of operation when
23 the new motor vehicle is in the possession of any person other than the
24 lessee, the manufacturer shall state that fact in 12 point boldface type in
25 the manufacturer's written warranty.
26 (c) (1) (A) If a new motor vehicle does not conform to all applicable
27 warranties during the warranty period, the lessee shall, during the war-
28 ranty period, report the nonconformity, defect or condition by giving
29 written notice to the manufacturer, factory branch or lessor by certified
30 mail, return receipt requested.
31 (B) Notice of this procedure shall be conspicuously disclosed to the
32 lessee in writing at the time of lease of the motor vehicle.
33 (2) The lessee shall provide an opportunity for the manufacturer or
34 factory branch, its agent or authorized dealer or the lessor or the lessor's
35 agent to cure the nonconformity, defect or condition.
36 (3) The manufacturer or factory branch, its agent or its authorized
37 dealer or the lessor or the lessor's agent shall correct the nonconformity,
38 defect or condition at no charge to the lessee, even if repairs are made
39 after the expiration of the warranty period.
40 (d) (1) (A) If, during the warranty period, the manufacturer or fac-
41 tory branch, its agent or authorized dealer or the lessor or the lessor's
42 agent is unable to repair or correct any nonconformity, defect or condition
43 that substantially impairs the use and market value of the motor vehicle
HB 2177 8
1 to the lessee after a reasonable number of attempts, the manufacturer or
2 factory branch, at the option of the lessee shall:
3 (i) Replace the motor vehicle with a comparable motor vehicle ac-
4 ceptable to the lessee; or
5 (ii) accept return of the motor vehicle from the lessee and refund to
6 the lessee all moneys paid by the lessee to repair the defect, condition or
7 nonconformity pursuant to a lease, including all excise tax, license fees,
8 registration fees and any similar governmental charges, less a reasonable
9 allowance for the lessee's unimpaired use of the vehicle; and
10 (B) in the event a motor vehicle is replaced under paragraph (1)(A)(i)
11 and provided that the lessee meets the lessor's then current credit criteria
12 with respect to the lease, the lessor shall:
13 (i) Transfer the title of the defective motor vehicle to the
15 (ii) accept title to the comparable replacement motor vehicle;
16 (iii) transfer possession of the comparable replacement motor vehicle
17 to the lessee; and
18 (iv) execute a lease agreement with the lessee with the same time
19 period, terms and conditions of the original lease.
20 (2) (A) In the event a manufacturer accepts return of a motor vehi-
21 cle, under paragraph (1)(A)(ii), the lessee shall be compensated by the
22 manufacturer for any moneys paid during the period in which the motor
23 vehicle was not available due to the defect, condition or nonconformity
24 and the lessor shall be paid by the manufacturer all amounts due to the
25 lessor under the terms of the lease.
26 (B) This subsection shall be construed to provide a mechanism
27 through which the lessee and the lessor shall be made whole for losses
28 incurred as a result of a motor vehicle's nonconformity, defect or condi-
29 tion and actions taken to conform the motor vehicle to applicable
31 (3) If a manufacturer, factory branch, dealer or lessor accepts return
32 of a motor vehicle as described under paragraph (1)(A), the lessee may
33 not be obligated to pay any penalties, early termination fees or other
34 charges as a consequence of the return of the motor vehicle.
35 (e) It shall be presumed that a reasonable number of attempts have
36 been undertaken to conform a motor vehicle to the applicable warranties
38 (1) The same nonconformity, defect or condition has been subject to
39 repair four or more times by the manufacturer or factory branch or its
40 agents or authorized dealers within the warranty period but such non-
41 conformity, defect or condition continues to exist;
42 (2) the motor vehicle is out of service by reason of repair of one or
43 more nonconformities, defects or conditions for a cumulative total of 30
HB 2177 9
1 or more days during the warranty period; or
2 (3) a nonconformity, defect or condition resulting in failure of the
3 braking or steering system has been subject to the same repair at least
4 once within the warranty period and the manufacturer has been notified
5 and given the opportunity to cure the defect and the repair does not bring
6 the vehicle into compliance.
7 (f) The term of any warranty, the warranty period and the 30-day out-
8 of-service period shall be extended by any time during which repair serv-
9 ices are not available to the lessee by reason of war, invasion, strike or
10 fire, flood or other natural disaster.
11 (g) If a motor vehicle is returned to a manufacturer or factory branch
12 under subsection (d)(1)(A), the manufacturer or factory branch shall no-
13 tify the division of vehicles of the department of revenue of the fact that
14 the vehicle was returned under this section as defective.
15 (h) If a motor vehicle that is returned under this section is then made
16 available for resale or subsequent lease, the seller or lessor shall disclose
17 prior to sale or lease in writing in a clear and conspicuous manner, on a
18 separate piece of paper in 10 point all capital type to a lessee or buyer
19 the material fact that this motor vehicle was returned to the manufacturer
20 or factory branch, the nature of the defect which resulted in the return
21 and the condition of the motor vehicle at the time of resale or subsequent
23 New Sec. 5. (a) The provisions of article 2A of chapter 84 of the
24 Kansas Statutes Annotated shall not apply to motor vehicle leases gov-
25 erned by this act.
26 (b) Except as provided in subsection (a), this act does not limit the
27 rights or remedies that are otherwise available to a lessee under any other
28 law, including any implied warranties, including the federal Magnusson
29 Moss warranty act and the Kansas uniform commercial code.
30 (c) If a manufacturer or factory branch has established an informal
31 dispute settlement procedure which complies in all respects with the pro-
32 visions of title 16, code of federal regulations, part 703, as amended, a
33 lessee need not resort to that procedure before section 4, and amend-
34 ments thereto. A lessee who has resorted to an informal dispute settle-
35 ment procedure may not be precluded from seeking the rights or reme-
36 dies available by law.
37 (d) Except as otherwise provided by this act, any agreement entered
38 into by a lessee for the lease of a new motor vehicle that waives, limits or
39 disclaims the rights set forth in this act shall be void.
40 (e) If a lessor permits the lessee to assign any interest in the lease or
41 in the motor vehicle, upon such assignment the rights available to a lessee
42 under this act shall inure to an assignee of the lessee's rights under the
43 lease or a subsequent transferee of the motor vehicle.
HB 2177 10
1 (f) (1) Any action brought under this act may not be brought more
2 than one year after termination of the lease.
3 (2) Notwithstanding the limitation in paragraph (1), a lessee at any
4 time may assert a violation of this act in an action to collect the debt as
5 a matter of defense, by recoupment or setoff.
6 (g) (1) Except as provided in paragraph (2), a lessor may charge fees
7 for excess wear and use or excess mileage, if:
8 (A) The right to charge the fees and method for calculating the fees
9 are disclosed in the lease in at least 8 point bold capital letters;
10 (B) at the time the vehicle is returned, the lessor conducts a visual
11 inspection of the vehicle and provides the lessee with a reasonable op-
12 portunity to be present at the inspection. If the lessee is present, in ad-
13 dition to the notice required by subparagraph (C), the lessor shall provide
14 the lessee at the time of the inspection with a written statement of the
15 mileage and of the excess wear to the motor vehicle identified through
16 the visual inspection. If the lessee is not present at the inspection, the
17 lessor is only required to provide the lessee with the notice required by
18 subparagraph (C);
19 (C) within 30 days after obtaining possession of the motor vehicle,
20 the lessor shall deliver or mail to the lessee at the lessee's last known
22 (i) An itemized list of excess wear to the motor vehicle and the esti-
23 mated or actual cost of repairing or replacing each item listed; and
24 (ii) a statement of the number of miles above the amount permitted
25 by the lease and the total charge to the lessee for the excess mileage.
26 (2) A lessor may not charge fees for excess and use or excess mileage
27 if the lessee exercises an option to purchase the leased motor vehicle.
28 New Sec. 6. (a) (1) The provisions of this act apply only to the lease
29 of a motor vehicle where the lessee has signed or been offered the lease
30 in this state.
31 (2) This act does not apply to a fleet lease of five or more motor
33 (b) A lessor, manufacturer, factory branch, distributor or dealer may
34 not exclude or limit the operation of this act.
35 New Sec. 7. (a) Except as otherwise provided in this act, a lessor who
36 fails to comply with any requirement imposed by this act with respect to
37 a person shall be liable to the person for:
38 (1) Any actual damage sustained by the person as a result of the fail-
39 ure; and
40 (2) an amount equal to 25% of the total amount of monthly payments
41 under the lease, but not less than $100 nor greater than $1,000.
42 (b) (1) A court may award reasonable attorney fees to a prevailing
43 party under this act.
HB 2177 11
1 (2) If it appears to the satisfaction of the court that an action is
2 brought in bad faith or is of a frivolous nature, the court may order the
3 offending party to pay the other party reasonable attorney fees.
4 (c) A lessee may not recover damages in an action under this act for
5 any failure to comply with any provision of this act if, within 60 days after
6 discovering an error and prior to the institution of an action under this
7 act or the receipt of written notice of the error from the lessee, the lessor
8 notifies the lessee of the error and makes whatever adjustments are nec-
9 essary to correct the error.
10 (d) The penalty provided under subsection (a)(2) does not apply
11 where a lessor:
12 (1) Unintentionally and in good faith fails to comply with this act; and
13 (2) corrects the error or violation and makes the lessee whole for all
14 losses, including reasonable attorney fees and interest, where appropriate,
15 within 10 days after the lessor receives notice of the error or violation.
16 (e) A lessor who knowingly violates any provision of this act shall be
17 liable to the lessee for three times the amount of fees and charges col-
18 lected in excess of that authorized by this act.
19 New Sec. 8. (a) (1) A lessor may repossess a leased motor vehicle if
20 the lessee is in default or a law enforcement agency has seized the motor
21 vehicle and will not unconditionally return the motor vehicle to the lessor.
22 (2) The lessor may repossess the leased motor vehicle from a lessee
23 only by:
24 (A) Legal process; or
25 (B) self-help, without use of force.
26 (b) Nothing in this section authorizes a violation of criminal law.
27 (c) (1) At least 10 days before a lessor repossesses any leased motor
28 vehicle, the lessor may serve a written notice on the lessee of the intention
29 to repossess the motor vehicle.
30 (2) The notice shall:
31 (A) State the default and any period at the end of which the leased
32 motor vehicle will be repossessed; and
33 (B) briefly state the rights of the lessee in case the leased motor ve-
34 hicle is repossessed.
35 (d) The notice may be delivered to the lessee personally or sent to
36 the lessee at the lessee's last known address by registered or certified
38 (e) Within five days after the lessor repossesses the leased motor ve-
39 hicle, the lessor shall deliver to the lessee personally or send to the lessee
40 at the lessee's last known address by registered or certified mail a written
41 notice which states:
42 (1) The right of the lessee to redeem the leased motor vehicle and
43 the amount payable for it;
HB 2177 12
1 (2) the rights of the lessee as to a sale of the motor vehicle and the
2 lessee's liability for a deficiency; and
3 (3) the exact location where the leased motor vehicle is stored and
4 the address where any payment is to be made.
5 (f) For 15 days after the lessor gives the notice required by subsection
6 (e), the lessor shall retain the repossessed motor vehicle.
7 (g) During the period provided for in subsection (f), the lessee may:
8 (1) Redeem and retake possession of the motor vehicle; and
9 (2) resume the performance of the lease.
10 (h) To redeem the leased motor vehicle, the lessee shall:
11 (1) Tender the amount due under the lease at the time of redemp-
12 tion, without giving effect to any provision which allows acceleration of
13 any amounts otherwise payable after that time;
14 (2) tender performance of any other promise for the breach of which
15 the motor vehicle was repossessed; and
16 (3) if the discretionary notice provided for in subsection (c) was given,
17 pay the actual and reasonable expenses of retaking and storing the motor
19 (i) This section does not apply, and the lessor shall have the right to
20 enforce the lease according to its terms, including the default and early
21 termination provisions of the lease and any provision that requires the
22 lessee to pay an amount due at early termination, if:
23 (1) The date of the default under the lease that led to the present
24 repossession occurred within 18 months after the last repossession; or
25 (2) the lessee was guilty of fraudulent conduct, intentionally and
26 wrongfully concealed, removed, damaged or destroyed the motor vehicle,
27 or attempted to do so, and the motor vehicle was repossessed because of
28 that conduct.
29 New Sec. 9. (a) This section applies if the lease provides that the
30 motor vehicle is to be sold after repossession and the lessee is to be
31 responsible for any deficiency arising from the sale of the motor vehicle.
32 (b) (1) The lessor shall sell the motor vehicle that was repossessed
34 (A) Subject to subsection (c), a private sale; or
35 (B) a public auction.
36 (2) At least 10 days before the sale, the lessor shall notify the lessee
37 in writing of the time and place of the sale, by certified mail, return
38 receipt requested, sent to the lessee's last known address.
39 (3) Any sale of a repossessed motor vehicle must be accomplished in
40 a commercially reasonable manner.
41 (c) In all cases of a private sale of a repossessed motor vehicle under
42 this section, a full accounting shall be made to the lessee in writing. This
43 accounting shall contain the following information:
HB 2177 13
1 (1) The unpaid balance at the time the motor vehicle was
3 (2) the refund credit of unearned insurance premiums, if any;
4 (3) the remaining net balance;
5 (4) the proceeds of the sale of the motor vehicle;
6 (5) the remaining deficiency balance, if any, or the amount due to
7 the lessee; and
8 (6) all expenses incurred as a result of the sale.
9 (d) (1) The proceeds of a sale to which this section applies shall be
10 applied, in the following order, to:
11 (A) The actual and reasonable costs of the sale;
12 (B) the actual and reasonable costs of retaking and storing the prop-
13 erty; and
14 (C) the unpaid balance owing under the lease agreement at the time
15 the property was repossessed.
16 (2) The lessor shall furnish to the lessee a written statement which
17 shows the distribution of the proceeds.
18 (3) If the provisions of this act, including the requirement of furnish-
19 ing a notice following repossession, are not followed, the lessor shall not
20 be entitled to any deficiency judgment to which it would be entitled under
21 the lease agreement.
22 New Sec. 10. Any penalties or charges set forth in the lease or
23 claimed by the lessor in the event of early termination or default must
24 comply with the standards set forth in the consumer leasing act.
25 New Sec. 11. Any violation of this act is an unconscionable act or
26 practice under the provisions of the Kansas consumer protection act and
27 shall be subject to any and all of the enforcement provisions of the Kansas
28 consumer protection act.
29 New Sec. 12. The provisions of sections 1 through 11 shall apply to
30 all consumer motor vehicle leasing contracts entered into on or after the
31 effective date of this act.
32 New Sec. 13. Sections 1 through 13 shall be known and may be cited
33 as the Kansas consumer motor vehicle leasing contracts act.
34 Sec. 14. K.S.A. 1998 Supp. 50-645 is hereby amended to read as
35 follows: 50-645. (a) As used in this act:
36 (1) "Consumer" means the original purchaser or lessee, other than
37 for purposes of resale, of a motor vehicle; and
38 (2) "motor vehicle" means a new motor vehicle which is sold
39 in this state, and which is registered for a gross weight of 12,000 pounds
40 or less, and does not include the customized parts of motor vehicles which
41 have been added or modified by second stage manufacturers, first stage
42 converters or second stage converters as defined in K.S.A. 8-2401, and
43 amendments thereto.
HB 2177 14
1 (b) If a motor vehicle does not conform to all applicable warranties,
2 and the consumer reports the nonconformity to the manufacturer, its
3 agent or its authorized dealer during the term of any warranties or during
4 the period of one year following the date of original delivery of the motor
5 vehicle to a consumer, whichever is the earlier date, the manufacturer,
6 its agent or its authorized dealer shall make such repairs as are necessary
7 to conform the vehicle to such warranties, notwithstanding the fact that
8 such repairs are made after the expiration of any such term or such one-
9 year period.
10 (c) If the manufacturer, or its agents or authorized dealers, are unable
11 to conform the motor vehicle to any applicable warranty after a reasonable
12 number of attempts, the manufacturer shall replace the motor vehicle
13 with a comparable motor vehicle under warranty or accept return of the
14 vehicle from the consumer and refund to the consumer the full purchase
or lease price including all collateral charges, less a reasonable allowance
16 for the consumer's use of the vehicle as calculated from the most recent
17 edition of Your Driving Costs, published by the American automobile
18 association. Refunds shall be made to the consumer, and lienholder if
19 any, as their interests may appear. A reasonable allowance for use shall
20 be that amount directly attributable to use by the consumer and any
21 previous consumer prior to the first report of the nonconformity to the
22 manufacturer, agent or dealer and during any subsequent period when
23 the vehicle is not out of service by reason of repair. It shall be an affir-
24 mative defense to any claim under this act that:
25 (1) An alleged nonconformity does not substantially impair such use
26 and value; or
27 (2) a nonconformity is the result of abuse, neglect or unauthorized
28 modifications or alterations of a motor vehicle by a consumer.
29 (d) If the manufacturer receives actual notice of the nonconformity,
30 it shall be presumed that a reasonable number of attempts have been
31 undertaken to conform a motor vehicle to the applicable warranties, if:
32 (1) The same nonconformity which substantially impairs the use and
33 value of the motor vehicle to the consumer has been subject to repair
34 four or more times by the manufacturer or its agents or authorized dealers
35 within the term of any warranty or during the period of one year following
36 the date of original delivery of the motor vehicle to a consumer, whichever
37 is the earlier date, but such nonconformity continues to exist;
38 (2) the vehicle is out of service by reason of repair for a cumulative
39 total of 30 or more calendar days during such term or period, whichever
40 is the earlier date; or
41 (3) there have been 10 or more attempts to repair any nonconform-
42 ities which substantially impair the use and value of the motor vehicle to
43 the consumer and such attempts to repair have been attempts by the
HB 2177 15
1 manufacturer or its agents or authorized dealers.
2 The term of any warranty, such one-year period and such thirty-day
3 period shall be extended by any period of time during which repair serv-
4 ices are not available to the consumer because of war, invasion, strike,
5 fire, flood or other natural disaster.
6 (e) If a manufacturer has established an informal dispute settlement
7 procedure which complies in all respects with the provisions of title 16,
8 code of federal regulations, part 703, as from time to time amended, the
9 provisions of subsection (c) concerning refunds or replacement shall not
10 apply to any consumer who has not first resorted to such procedure.
11 (f) The attorney general shall have jurisdiction to enforce this section.
12 Sec. 15. K.S.A. 84-2a-104 is hereby amended to read as follows: 84-
13 2a-104. (1) A lease, although subject to this article, is also subject to any
15 (a) Certificate of title statute of this state: (List any certificate of title
16 statutes covering automobiles, trailers, mobile homes, boats, farm trac-
17 tors, and the like);
18 (b) certificate of title statute of another jurisdiction (K.S.A. 84-2a-
19 105); or
20 (c) consumer protection statute of this state, or final consumer pro-
21 tection decision of a court of this state existing on the effective date of
22 this article.
23 (2) In case of conflict between this article, other than K.S.A. 84-2a-
24 105, 84-2a-304(3) and 84-2a-305(3), and a statute or decision referred to
25 in subsection (1), the statute or decision controls.
26 (3) Failure to comply with an applicable law has only the effect spec-
27 ified therein.
28 (4) The provisions of article 2a of chapter 84 of the Kansas Statutes
29 Annotated shall not apply to consumer motor vehicle leasing contracts
30 subject to the provisions of sections 1 through 13.
31 Sec. 16. K.S.A. 84-2a-104 and K.S.A. 1998 Supp. 50-645 are hereby
33 Sec. 17. This act shall take effect and be in force from and after its
34 publication in the statute book.