SENATE BILL No. 462
An Act concerning the uniform consumer credit
code; relating to definitions of certain
terms; amending K.S.A. 16a-2-304 and 16a-2-309
and K.S.A. 1997 Supp. 16a-1-301 and
repealing the existing sections.
Be it enacted by the Legislature of the State of Kansas:
Section 1. K.S.A. 1997 Supp. 16a-1-301 is hereby amended
as follows: 16a-1-301. In addition to definitions appearing in
articles, in K.S.A. 16a-1-101 through 16a-9-102, and amendments
(1) ``Actuarial method'' means the method, defined by rules
ulations adopted by the administrator, of allocating payments made
debt between the amount financed and the finance charge pursuant
which a payment is applied first to the accumulated finance charge
the balance is applied to the unpaid amount financed.
(2) ``Administrator'' means the consumer credit commissioner
pointed pursuant to K.S.A. 16-403, and amendments thereto.
(3) ``Agreement'' means the bargain of the parties in fact as
their language or by implication from other circumstances
course of dealing or usage of trade or course of performance.
(4) ``Amount financed'' means the total of the following
(a) In the case of a sale, the cash price of the goods,
interest in land, less the amount of any down payment whether made
cash or in property traded in, and the amount actually paid or to
by the seller pursuant to an agreement with the buyer to discharge
security interest in, a lien on, or a debt with respect to property
(b) in the case of a loan, the net amount paid to, receivable
paid or payable for the account of the debtor, plus the amount of
discount excluded from the finance charge (paragraph (b) of
(18) of K.S.A. 16a-1-301); and
(c) in the case of a sale or loan, to the extent that payment
and the amount is not otherwise included and is authorized and
to the customer:
(i) Amounts actually paid or to be paid by the creditor for
certificate of title, or license fees, and
(ii) permitted additional charges ( K.S.A. 16a-2-501).
(5) ``Billing cycle'' means the time interval between periodic
(6) ``Cash price'' of goods, services, or an interest in land
price at which they are offered for sale by the seller to cash
buyers in the
ordinary course of business and may include (a) the cash price of
sories or services related to the sale, such as delivery,
ations, modifications, and improvements, and (b) taxes to the
posed on a cash sale of the goods, services, or interest in land.
price stated by the seller to the buyer in a disclosure statement
sumed to be the cash price.
(7) ``Closing costs'' with respect to a debt secured by an
(a) The actual fees paid a public official or agency of the
federal government, for filing, recording or releasing any
lating to the debt; and
(b) reasonable expenses not included in the origination fee
to an assignee incurred by the lender in connection with the
closing, disbursing, extending, readjusting or renewing the debt
are payable to third parties not related to the lender, except that
able fees for an appraisal made by the lender or related party are
(8) ``Conspicuous'': A term or clause is conspicuous when it
written that a reasonable person against whom it is to operate
have noticed it. Whether a term or clause is conspicuous or not is
decision by the trier of fact.
(9) ``Consumer'' means the buyer, lessee, or debtor to whom
is granted in a consumer credit transaction.
(10) ``Consumer credit sale'':
(a) Except as provided in paragraph (b), a ``consumer credit
a sale of goods, services, or an interest in land in which:
(i) Credit is granted either by a seller who regularly engages
as a seller
in credit transactions of the same kind or pursuant to a credit
than a lender credit card,
(ii) the buyer is a person other than an organization,
(iii) the goods, services, or interest in land are purchased
for a personal, family or household purpose,
(iv) either the debt is by written agreement payable in
or a finance charge is made, and
(v) with respect to a sale of goods or services, the amount
does not exceed $25,000.
(b) A ``consumer credit sale'' does not include:
(i) A sale in which the seller allows the buyer to purchase
services pursuant to a lender credit card; or
(ii) unless the sale is made subject to K.S.A. 16a-1-101
102, and amendments thereto, by agreement ( K.S.A. 16a-1-109), a
of an interest in land, other than sales governed by subsection
of this section, if the finance charge does not exceed 12% per year
culated according to the actuarial method on the unpaid balances of
amount financed on the assumption that the debt will be paid
to the agreed terms and will not be paid before the end of the
(iii) a sale by contract for deed of real estate the interest
rate of which
is governed by subsection (b) or (h) of K.S.A. 16-207, and
(11) ``Consumer credit transaction'' means a consumer credit
consumer lease, or consumer loan or a modification thereof
refinancing, consolidation, or deferral.
(12) ``Consumer lease'' means a lease of goods:
(a) Which a lessor regularly engaged in the business of
to a person, other than an organization, who takes under the lease
marily for a personal, family or household purpose;
(b) in which the amount payable under the lease does not
(c) which is for a term exceeding four months; and
(d) which is not made pursuant to a lender credit card.
(13) ``Consumer loan'':
(a) Except as provided in paragraph (b), a ``consumer loan''
is a loan
made by a person regularly engaged in the business of making loans
(i) The debtor is a person other than an organization;
(ii) the debt is incurred primarily for a personal, family or
(iii) either the debt is payable in installments or a finance
(iv) either the amount financed does not exceed $25,000 or the
is secured by an interest in land.
(b) Unless the loan is made subject to K.S.A. 16a-1-101
9-102, and amendments thereto, by agreement ( K.S.A. 16a-1-109),
``consumer loan'' does not include:
(i) A loan secured by a first real estate mortgage; or
(ii) a loan secured by a second or other subordinate mortgage
second or other subordinate mortgage is granted to the same lender
the first mortgage; or
(iii) a loan made by a qualified plan, as defined in section
401 of the
internal revenue code, to an individual participant in such plan or
member of the family of such individual participant.
(14) ``Credit'' means the right granted by a creditor to a
defer payment of debt or to incur debt and defer its payment.
(15) ``Credit card'' means any card, plate or other single
that may be used from time to time to obtain credit. Since this
the possibility of repeated use of a single device, checks and
struments that can be used only once to obtain a single credit
are not credit cards.
(16) ``Creditor'' means a person who regularly extends credit
consumer credit transaction which is payable by a written agreement
more than four installments or for which the payment of a finance
is or may be required and is the person to whom the debt arising
the consumer credit transaction is initially payable on the face of
evidence of indebtedness or, if there is no such evidence of
by written agreement. In the case of credit extended pursuant to a
card, the creditor is the card issuer and not another person
(17) ``Earnings'' means compensation paid or payable to an
or for such individual's account for personal services rendered or
rendered by such individual, whether denominated as wages, salary,
mission, bonus, or otherwise, and includes periodic payments
to a pension, retirement, or disability program.
(18) ``Finance charge'':
(a) ``Finance charge'' means the sum of:
(i) All charges payable directly or indirectly by the consumer
imposed directly or indirectly by the creditor as an incident to or
condition of the extension of credit, including any of the
of charges which are applicable; interest or any amount payable
point, discount or other system of charges, however denominated;
price differential, service, carrying or other charge, however
nated; premium or other charge for any guarantee or insurance
the creditor against the consumer's default or other credit loss;
(ii) charges incurred for investigating the collateral or
ness of the consumer.
(b) The term does not include:
(i) Charges as a result of default, additional charges (
501) or delinquency charges ( K.S.A. 16a-2-502), or
(ii) if a lender makes a loan to a debtor by purchasing or
obligations of the debtor pursuant to a lender credit card and the
or satisfaction is made at less than the face amount of the
(iii) closing costs as defined in K.S.A. 16a-1-301(7), and
(19) ``Goods'' includes goods not in existence at the time the
action is entered into and merchandise certificates, but excludes
chattel paper, documents of title, and instruments.
(20) Except as otherwise provided, ``lender'' includes an
the lender's right to payment but use of the term does not in
on an assignee any obligation of the lender with respect to events
ring before the assignment.
(21) ``Interest bearing'' means the finance charge on a
credit transaction is computed on the unpaid principal balances by
(22) ``Lender credit card'' means a credit card issued by a
(a) Except as provided in paragraph (b), a ``loan''
(i) The creation of debt by the lender's payment of or
pay money to the debtor or to a third party for the account of the
(ii) the creation of debt either pursuant to a lender credit
card or by
a cash advance to a debtor pursuant to a credit card other than a
(iii) the creation of debt by a credit to an account with the
upon which the debtor is entitled to draw immediately; and
(iv) the forbearance of debt arising from a loan.
(b) A ``loan'' does not include the payment or agreement to
money to a third party for the account of a debtor if the debt of
debtor arises from a sale or lease and results from use of either a
card issued by a person primarily in the business of selling or
goods or services or any other credit card which may be used for
purchase of goods or services and which is not a lender credit
(24) ``Merchandise certificate'' means a writing issued by a
redeemable in cash and usable in its face amount in lieu of cash
exchange for goods or services.
(25) ``Official fees'' means:
(a) Fees and charges prescribed by law which actually are or
paid to public officials for determining the existence of or for
releasing, or satisfying a security interest related to a consumer
sale, consumer lease, or consumer loan; or
(b) premiums payable for insurance in lieu of perfecting a
interest otherwise required by the creditor in connection with the
lease, or loan, if the premium does not exceed the fees and charges
scribed in paragraph (a) which would otherwise be payable.
(26) ``Open end credit'' means an arrangement pursuant to
(a) A creditor may permit a consumer, from time to time, to
goods or services on credit from the creditor or pursuant to a
or to obtain loans from the creditor or pursuant to a credit
(b) the unpaid balance of amounts financed and the finance and
appropriate charges are debited to an account;
(c) the finance charge, if made, is computed on the
paid balances of the consumer's account from time to time; and
(d) the consumer has the privilege of paying the balances in
(27) ``Organization'' means a corporation, government or
mental subdivision or agency, trust, estate, partnership,
(28) ``Origination fee'' means a fee associated with the
or disbursing of a consumer credit transaction by a lender or
the lender which is intended to compensate the lender or
assignee of the
lender for all costs incurred in making, closing or disbursing a
credit transaction, exclusive of: Closing costs defined in
301(7) and amendments thereto, interest rate reduction charges
the consumer at closing and broker fees paid to third parties
to the lender or assignee of the lender.
(28) (29) ``Payable in installments''
means that payment is required
or permitted by agreement to be made in (a) two or more periodic
ments, excluding a down payment, with respect to a debt arising
consumer credit sale pursuant to which a finance charge is made,
or more periodic payments, excluding a down payment, with respect
a debt arising from a consumer credit sale pursuant to which no
charge is made, or (c) two or more periodic payments with respect
debt arising from a consumer loan. If any periodic payment other
the down payment under an agreement requiring or permitting two
more periodic payments is more than twice the amount of any
periodic payment, excluding the down payment, the consumer
transaction is ``payable in installments.''
(29) (30) ``Person'' includes a
natural person or an individual, and an
(30) (31) ``Person related to'' with
respect to an individual means (a)
the spouse of the individual, (b) a brother, brother-in-law,
in-law of the individual, (c) an ancestor or lineal descendant of
vidual or the individual's spouse, and (d) any other relative, by
adoption or marriage, of the individual or such individual's spouse
shares the same home with the individual. ``Person related to''
spect to an organization means (a) a person directly or indirectly
trolling, controlled by or under common control with the
(b) an officer or director of the organization or a person
ilar functions with respect to the organization or to a person
the organization, (c) the spouse of a person related to the
and (d) a relative by blood, adoption or marriage of a person
the organization who shares the same home with such person.
(31) (32) ``Presumed'' or
``presumption'' means that the trier of fact
must find the existence of the fact presumed unless and until
introduced which would support a finding of its nonexistence.
(32) (33) ``Principal'' means the
total of the amount financed and the
prepaid finance charges as authorized by subsection (9) of K.S.A.
401, and amendments thereto.
(33) (34) ``Sale of goods'' includes
any agreement in the form of a
bailment or lease of goods if the bailee or lessee agrees to pay as
pensation for use a sum substantially equivalent to or in excess of
aggregate value of the goods involved and it is agreed that the
lessee will become, or for no other or a nominal consideration has
option to become, the owner of the goods upon full compliance with
bailee's or lessee's obligations under the agreements.
(34) (35) ``Sale of an interest in
land'' includes a lease in which the
lessee has an option to purchase the interest and all or a
of the rental or other payments previously made by the lessee are
to the purchase price.
(35) (36) ``Sale of services'' means
furnishing or agreeing to furnish
services and includes making arrangements to have services
(36) (37) ``Seller'': Except as
otherwise provided, ``seller'' includes an
assignee of the seller's right to payment but use of the term does
itself impose on an assignee any obligation of the seller with
events occurring before the assignment.
(37) (38) ``Services'' includes (a)
work, labor, and other personal serv-
ices, (b) privileges with respect to transportation, hotel and
accommodations, education, entertainment, recreation, physical
hospital accommodations, funerals, cemetery accommodations, and
like, and (c) insurance.
(38) (39) ``Supervised financial
organization'' means a person, other
than an insurance company or other organization primarily engaged
(a) Organized, chartered, or holding an authorization
der the laws of this state or of the United States which authorize
person to make loans and to receive deposits, including a savings,
certificate or deposit account; and
(b) subject to supervision by an official or agency of this
state or of
the United States.
(39) (40) ``Supervised lender'' means
a person authorized to make or
take assignments of supervised loans, either under a license issued
administrator (K.S.A. 16a-2-301 and amendments thereto) or
as a super-
vised financial organization (K.S.A.
(38)(39) and amendments
(40) (41) ``Supervised loan'' means a
consumer loan, including a loan
made pursuant to open end credit, in which the rate of the finance
calculated according to the actuarial method, exceeds 12% per
(41) (42) ``Written agreement'' means
an agreement such as a prom-
issory note, contract or lease that is evidence of the
indebtedness. A letter
that merely confirms an oral agreement does not constitute a
agreement for purposes of this subsection.
(42) (43) ``Written administrative
interpretation'' means any written
communication from the consumer credit commissioner which is the
ficial interpretation as so stated in said written communication by
consumer credit commissioner of the Kansas uniform consumer
code and rules and regulations pertaining thereto.
Sec. 2. K.S.A. 16a-2-304 is hereby amended to read as
304. (1) Every licensee and any assignee or servicer of a
transaction shall maintain records in conformity with
accounting principles and practices in a manner that will enable
ministrator and, in the case of a supervised financial organization
pervisory official or agency, to determine whether the licensee,
or servicer is complying with the provisions of K.S.A.
16a-9-102, and amendments thereto. The record keeping system of
licensee, assignee or servicer shall be sufficient if the
or servicer makes the required information reasonably
available. The re-
cords need not be kept in the place of business where supervised
are made, if the administrator or supervisory official or agency is
free access to the records wherever located. Every licensee and
signee of a consumer credit transaction shall provide the
with the name, address, telephone number, contact person and any
reasonable information regarding the location and availability
records of a consumer credit transaction. The records
pertaining to any
loan need not be preserved for more than two years after making
final entry relating to the loan, but in the case of a revolving
the two years is measured from the date of each entry.
(2) On or before April 15 of each year every licensee shall
the administrator and, in the case of a supervised financial
with its supervisory official or agency, a composite annual report
form prescribed by the administrator relating to all supervised
by such licensee. The administrator shall consult with comparable
in other states for the purpose of making the kinds of information
quired in annual reports uniform among the states. Information
in annual reports shall be confidential and may be published only
Sec. 3. K.S.A. 16a-2-309 is hereby amended to read as
(a) A licensee may conduct the business of
making loans under K.S.A.
16a-1-101 through 16a-9-102 within any office, room or place of
in which any other business is solicited or engaged in, or in
or conjunction therewith, unless the commissioner shall find, after
ing, that the other business is of such nature that such conduct
conceal evasion of such portion of this act or of the rules and
made thereunder and shall order such licensee in writing to desist
(b) (1) Except as provided in subsection (2), no
to make supervised loans pursuant to section 16a-2-301 may
the business of selling or leasing of goods, at a location
loans are made. In this section, ``location'' means the
entire space in which
supervised loans are made and must be separated from any
goods are sold, leased, or displayed by walls which may be
by a passageway to which the public is not
(2) This section does not apply to
(a) sales or leases of goods or services pursuant to a
lender credit card
made at a place of business other than that of a
(b) occasional sales of property used in the ordinary
course of busi-
ness of the licensee;
(c) sales of items of collateral of which the licensee
has taken pos-
(d) sales of items by a licensee who is also
authorized by law to op-
erate as a pawnbroker.
Sec. 4. K.S.A. 16a-2-304 and 16a-2-309 and K.S.A. 1997
1-301 are hereby repealed.
Sec. 5. This act shall take effect and be in force from
and after its
publication in the Kansas register.
Approved April 10, 1998
Published in the Kansas Registers April 23, 1998