NY-PEP Personal Property Law NY

Section 1. Short title. This chapter shall be known as the "Personal

Property Law."

Definitions. As used in this article, the term "transfer"

includes sale, assignment, conveyance, deed and gift, and the term

"agreement" includes promise and undertaking.

Fraudulent intent a question of fact. The question of the

existence of fraudulent intent in cases arising under this article, is a

question of fact and not of law.

Transfers or charges without consideration. A transfer or charge

shall not be adjudged fraudulent as against creditors or purchasers,

solely on the ground that it was not founded on a valuable

consideration.

Successors to rights of creditors and purchasers. A transfer,

charge, sale or assignment, or proceeding declared by this article, to

be void, as against creditors or purchasers, is equally void as against

the heirs, successors, personal representatives or assignees of such

creditors or purchasers.

Bona fide purchasers. This article does not affect or impair the

title of a purchaser or incumbrancer for a valuable consideration,

unless it appear that such purchaser or incumbrancer had previous notice

of the fraudulent intent of his immediate vendor, or of the fraud

rendering void the title of such vendor.

Salary or earnings of public officer or employee. 1. No

assignment of, or power of attorney to collect or other instrument

affecting, the whole or any part of his salary or earnings by an officer

or employee of the state or of any political subdivision thereof or of

any public authority or public corporation, or of any board, body,

office or agency supported by public funds, unless approved in writing

by the head of the department, authority, court, corporation, board,

body, office or agency in which such officer or employee is employed,

and unless given either as security for or as a manner or method of the

repayment of, money actually advanced to or at the request of such

officer or employee by any bank, trust company or credit union doing

business in the State of New York, shall in any way operate to prevent

the payment of such salary or earnings directly to such officer or

employee. In the event of the payment of such salary or earnings

directly to such officer or employee, notwithstanding the existence of

an assignment of, or power of attorney to collect or other instrument

affecting, the whole or part thereof, which was not approved by the head

of the department, authority, court, corporation, board, body, office or

agency in which such officer or employee is employed, or which was not

given in favor of any such bank, trust company or credit union as

hereinabove stated, no person shall have any cause of action therefor

against the state or such political subdivision thereof or such

authority, court, corporation, board, body, office or agency for the

recovery of any moneys by virtue of such assignment, power of attorney

to collect or other instrument which was not so approved, or which was

not given in favor of any such bank, trust company or credit union.

2. Any such assignment, power of attorney or other instrument which

may be filed hereafter shall contain the name of the officer or

employee, his title or position and the department, authority, court,

corporation, board, body, bureau, agency, office and subdivision thereof

in which he is employed.

3. The state or any political subdivision thereof or any authority,

court, corporation, board, body, office or agency to which such

assignment, power of attorney or other instrument shall be presented for

filing, shall be entitled to receive the sum of two dollars. In the

event, however, that such assignment, power of attorney or other

instrument contains a provision to the effect that the same is

ineffective unless subsequent written notice is given to make

deductions, the filing fee shall be fifty cents; and the filing fee of

any subsequent written notice to make deductions in accordance with the

terms of any such assignment, power of attorney or other instrument

shall be one dollar and fifty cents. The filing fee of any other notice

or paper relating to any such assignment, power of attorney or other

instrument shall be one dollar.

Definitions. In this article unless the context or subject

matter otherwise requires:

1. "Assignment" means any assignment of or order for payment of any

earnings, whether given outright or as security. "Assignment" shall not

include a payroll deduction, nor any part of earnings required by law to

be withheld in payment of taxes, nor such sums as may be deducted by the

employer for payment to a labor union or to a trust fund for the benefit

of employees, pursuant to agreement in writing either with the employee

or with a labor union of which the employee is a member.

2. "Payroll deductions" means only such sums as an employee may in

writing authorize his employer to pay out on the employee's behalf,

where the authorization is revocable, and does not purport to create any

enforceable right in any third party.

3. "Earnings" means any salary, wages, commissions, or other

compensation for services. "Future earnings" means earnings which become

payable by an employer, to the assignor or persons claiming under him,

after the execution of the instrument of assignment.

4. "Indebtedness" means any obligation to pay money, whether as

principal, guarantor or surety, including such obligations arising out

of loans, purchases of real or personal property, services rendered, or

any other transaction whatsoever.

5. "Employer" means any person owing earnings to an assignor, whether

such earnings were due when the assignment was executed, or later became

due, and whether the employment was existing when an assignment was

made, or did not commence until later.

6. "Assignor" means one who executes an assignment.

7. "Assignee" means one to whom any sum is payable under an

assignment.

8. "Garnishment" means any levy on execution, attachment,

sequestration, proceedings to enforce a judgment or other legal process

by which a creditor or other claimant to any portion of an employee's

earnings stops payment by an employer to an employee or obtains payment

due the creditor. "Garnishment" shall not include an order for

installment payments to a judgment creditor.

No implied repeal. Nothing in this article shall be deemed to

limit any other statutory provision. Any express statutory provision, in

force at the time this article takes effect, and which is inconsistent

with any provision of this article, shall prevail.

Assignments of future earnings collectible only as prescribed.

Assignments of future earnings shall be collectible only as prescribed

in sections forty-eight to forty-eight-d, inclusive, of this chapter.

Formal requisites of assignments of less than one thousand

dollars and of assignments securing certain guarantees amounting to

fifteen hundred dollars or less. No assignment of future earnings,

securing or relating to any indebtedness aggregating less than one

thousand dollars, shall be valid for any purpose whatsoever unless:

(a) such assignment shall be contained in a separate written

instrument in which all printed matter is in at least eight point type

and which shall have written or printed thereon in a size equal to at

least ten point bold type the following title: "Assignment of Wages,

Salary, Commissions or other Compensation for Services," and shall have

written or printed at the bottom thereof just above the place reserved

for the signature of the assignor in a size equal to at least ten point

bold type the following: "This is an Assignment of Wages, Salary,

Commissions or Other Compensation for Services";

(b) such assignment shall, either in its text or in a writing

permanently attached thereto, identify specifically and describe fully

the transaction to which it relates, said description to include the

name and address of the assignee, the identity of the merchandise sold

or services rendered or other basis of the indebtedness secured by, or

consideration given for the assignment, and the date on and place at

which payments are to be made; and on the face or back of the instrument

there shall be a summary of sections forty-six-c, forty-six-e,

forty-six-f, forty-seven-e, forty-eight, forty-eight-a, forty-eight-b,

forty-eight-c and forty-nine of the personal property law;

(c) such assignment, if given as security, is security only for the

transaction or series of transactions identified specifically and

described therein, or a renewal thereof, and no other valid and legally

enforceable assignment exists in connection with the same transaction or

series of transactions; provided, however, that nothing in this

paragraph shall invalidate an assignment securing a guarantee of the

payment of the purchase price of goods, wares or merchandise amounting

to fifteen hundred dollars or less sold for a use other than a

commercial or business use, notwithstanding the fact that such

assignment secures subsequent transactions in addition to that

originally secured, where the liability of the guarantor is limited to a

period of two years from the date of the assignment, and where the

assignment sets forth the maximum amount for which the guarantor shall

be liable; provided further that no assignment of future earnings shall

be valid with respect to any transaction or series of transactions for

the purchase of goods, wares or merchandise for a price of fifteen

hundred dollars or less sold for a use other than a commercial or

business use, when such assignment is executed by a guarantor or by one

of two or more purchasers, unless such goods are purchased for the

common use of the assignor and the purchaser or co-purchaser.

Guarantee of certain purchases secured by assignment of

earnings. No guarantee given to the seller to secure the payment of

goods, wares or merchandise amounting to fifteen hundred dollars or less

sold for any use other than a commercial or business use, the payment of

which is secured by an assignment of future earnings, shall be valid

unless such instrument of guarantee identifies specifically and

describes fully the transaction or series of transactions secured. If

the instrument of guarantee is given to secure subsequent transactions

in addition to the transaction or series of transactions secured by such

assignment, the liability of the guarantor under such instrument of

guarantee as to subsequent transactions shall be limited to transactions

within a period of two years from the date of its execution, and shall

set forth the maximum amount for which the guarantor shall be liable.

Each instrument of guarantee shall be executed in duplicate, and one

copy shall be given to the guarantor immediately upon its execution.

Personal execution of assignment by assignor; delivery of

copies of papers. No assignment of future earnings shall be valid for

any purpose whatever unless such assignment is personally executed by

the assignor. A copy thereof and of any papers attached thereto together

with a copy or copies of any papers executed by the assignor pertaining

to the transaction or series of transactions described in the assignment

shall be delivered to the assignor before such assignment is filed with

the employer.

Limit on interest and other charges. Except as provided in

article nine of the banking law, no person shall directly or indirectly

receive or accept, whether by discount or otherwise, for the use and

sale of his personal credit or for making or continuing any advance or

loan of money (1) in anticipation of earnings assigned outright, or (2)

on the security of an assignment of any earnings assigned as security, a

greater sum than at the rate of eighteen per centum per annum on the

amount of such loan or advance, either as a bonus, interest or

otherwise, or under the guise of a charge for investigating the status

of a person applying for such loan or advance, or drawing of papers or

other service in connection with such loan or advance, except such

charges as are now permitted by section 5-531 of the general obligations

law. Any assignment, whether outright or as security, which is made

wholly or partly in consideration of or as security for a loan or

advance which violates this section, shall be void, and invalid for any

purpose whatsoever. Every person, firm, corporation, director, agent,

officer or member thereof who shall violate any provision of this

section, directly or indirectly, or assent to such violation shall be

guilty of a misdemeanor.

Public filing of assignment before filing with employer. Except

as provided in section forty-nine of this chapter, an assignment of

future earnings or a true copy thereof, must be filed with the county

clerk as provided for in section forty-seven-a before such assignment or

a copy thereof is filed with the assignor's employer.

Place of filing. An assignment of future earnings or a true

copy thereof authenticated by a notary public or commissioner of deeds,

together with an itemized statement setting forth the amount then due

the assignee and the date and amount of payments theretofore made upon

the indebtedness, may be filed in the office of the county clerk of the

county in which the assignor resides at the time of the filing thereof,

if he resides within the state, and if he resides without the state or

his residence is unknown, in the county where the assignor is employed

at the time of the filing thereof. If the assignor is employed without

the state and his residence is without the state or is unknown, the

assignment or authenticated true copy thereof and accompanying statement

may be filed in the county where the assignor resided at the time of the

execution thereof.

Filing, entering and indexing. 1. The filing officer shall

mark upon the assignment or true copy thereof filed with him the date of

its filing and shall file such assignment or true copy thereof in his

office for public inspection. He shall keep a separate book in which he

shall enter the names of the assignor and assignee, the date of its

filing, its filing number and the date of cancellation thereof, or of

its vacation by order of the court. Such book shall be indexed

alphabetically under the names and changed names, if any, of both

assignor and assignee.

2. A county clerk may adopt a new indexing system utilizing

electro-mechanical, electronic or any other method he deems suitable for

maintaining the indexes.

Refiling. The filing of assignments shall be valid for a

period of two years only. The validity of the filing may in each case

be extended for successive additional periods of one year from the date

of refiling by filing in the office of the county clerk of the county in

which the original assignment or duly authenticated copy thereof was

filed a true copy of the original assignment within thirty days next

preceding the expiration of each period, with a statement attached

signed and verified by or on behalf of the assignee, setting forth that

the assignment is in force and stating the amount remaining unpaid. Such

copy, with statement attached, shall be filed and entered in the same

manner as an assignment or copy thereof filed and entered for the first

time, and the filing officer shall be entitled to a like fee as upon the

original filing.

Cancellation of assignment. Upon the payment or satisfaction

of the indebtedness, and upon written demand delivered personally or by

registered mail by the assignor, the assignee shall execute and

acknowledge or prove, and deliver to the assignor a certificate setting

forth that the indebtedness has been paid or otherwise satisfied and

discharged. Such certificate must recite the date of the assignment, the

names of the parties thereto, the amount of the original indebtedness,

the filing number, the date of filing thereof, including every

assignment of said assignment, if any, specifying in the recital of each

assignment the date thereof, the names of the parties thereto, the

filing date and the serial number thereof.

If for ten days after such demand the assignee fails to mail or

deliver such a statement of satisfaction, he shall forfeit to the

assignor five dollars, and be liable for all damages suffered. Upon

presentation of such statement of satisfaction the filing officer shall

file the same and note the cancellation of the assignment and the date

thereof on the margin of the page where the assignment has been entered.

Vacating of an assignment, by order of a court. 1. An

assignment may be vacated by a judgment of a court of record upon a

special proceeding brought by the assignor, his employer or any person

having an interest therein. Before such judgment shall be granted an

order to show cause and the petition upon which it was granted shall be

served upon the assignee, specifying the grounds upon which such relief

is sought and requiring the assignee to show cause, at a time and place

specified therein, why the assignment should not be vacated. If the

application is made by a person other than the assignor, a copy of the

order to show cause and the petition upon which it was granted shall be

served upon the assignor, as the court shall direct. Such order shall be

returnable at a special term of a court of record in the county where

the assignment is filed, if it has been filed, or, whether or not the

assignment has been filed, in the county where the assignor resides or

the county where the assignee resides, and shall be returnable at a time

not less than eight days from the service thereof unless the court to

whom the application is made shall find that a greater or lesser time is

appropriate in the circumstances.

The order to show cause and the petition upon which it was granted

shall be served upon the assignee either (1) by personal service, or (2)

by leaving them at his or its place of business with a person of

suitable age and discretion with directions to deliver them to the

assignee and mailing a copy by certified mail to the assignee directed

to the address specified in the assignment or if none is specified in

the assignment to his or its last known address, or (3) as the court may

direct. Proof of such service shall be made by affidavit. If the

assignee is a co-partnership consisting of two or more partners service

on one partner shall constitute service on the co-partnership.

2. Upon presentation of a transcript of a judgment pursuant to this

section, vacating an assignment, and upon payment of fees provided

therefor, a county clerk in whose office the assignment is filed shall

file the transcript of the judgment and shall enter on the margin of the

page where the assignment is entered, and against the assignment to

which the judgment relates, the words "Vacated by order of the court."

3. This section does not enlarge the territorial limits of the

jurisdiction of any court.

4. No assignment purporting upon its face or otherwise shown to have

been made in compliance with the direction of the court in an action or

proceeding in a family court or in a matrimonial action or proceeding in

a court of this state shall be vacated by an order pursuant to this

section.

5. In any proceeding under this section the court shall have

jurisdiction to consider any and all defenses to the assignment and the

debt secured thereby. The court may grant such interim relief as may be

appropriate. The burden of proving the assignment and the debt secured

thereby shall be on the assignee.

Notice to be mailed to assignor prior to filing with employer.

1. No assignment of future earnings shall be filed with the assignor's

employer until twenty days shall have elapsed after a written notice

shall have been mailed to the assignor by certified mail, return receipt

requested, addressed to his last known place of residence stating that

unless the amounts in default are paid within twenty days from the date

of the mailing, the assignment will be filed with the assignor's

employer. If the aforesaid notice is returned undelivered it may be

mailed to the assignor by certified mail, return receipt requested,

addressed to the assignor at the address where he is employed or, in the

alternative, it may be served in the same manner as a summons.

Such written notice shall not be mailed by the assignee until at least

twenty-one days shall have elapsed after default by the assignor in a

payment due on the indebtedness and such written notice shall contain

substantially the following language: "Bring this notice with you when

making any payment on account of your indebtedness and have the payment

endorsed on this notice."

2. If a payment in any amount is accepted by the assignee after the

mailing of said notice and if the fact of such payment is noted in

writing by the assignee at the time of the acceptance of the payment,

either upon the notice or upon some other paper bearing a reference to

said notice, the assignor shall no longer be considered in default for

the purpose of permitting an assignment to be filed with the assignor's

employer. In the event, however, of any subsequent default, the assignee

may file the assignment upon compliance with the provisions of the

preceding paragraph of this section as though no prior default had

occurred.

3. The written notice required by subdivision one of this section

shall be accompanied by copies of the papers required to be delivered by

section forty-six-e of this article and by a written notice which shall

contain substantially the following language:

"If you believe that you have a defense to the aforesaid wage

assignment or the debt secured thereby you are entitled to follow either

of the following procedures designed as (a) and (b).

(a) You are entitled to a hearing before a court of record in

accordance with the provisions of section forty-seven-e of the personal

property law which reads as follows:

(insert provisions of section forty-seven-e of the personal property

law)

(b) Within ten days after receipt of the aforesaid notice, you are

entitled to mail to the assignee, by certified mail return receipt

requested, a written notice containing your name, residence address and

substantially the following language:

'I (insert name) residing at (insert address) hereby affirm that I

have a bona fide defense to the claim in your notice dated (insert date

of notice) and to the wage assignment given as security therefor, based

upon the following facts (state the facts constituting the basis of your

defense)'"

4. Upon receipt of such notice the assignee shall be precluded from

filing such wage assignment with the employer until it obtains an order

of a court of record authorizing such filing. The assignee shall be

entitled to institute a special proceeding in a court of record to

obtain such an order. At least eight days' notice of the application for

such order shall be given to the assignor in the manner prescribed in

subdivision one of this section and if a hearing is held the assignor

shall have all the rights prescribed by section forty-seven-e of this

article.

Manner of collection; percentage of earnings deductible;

restriction against multiple deductions. Subject to subdivision two of

this section, any assignment of future earnings shall be collectible

from the assignor's employer at the time of each payment of such

earnings commencing with the first payment thereof made after the

expiration of ten days from the date of filing with the employer of a

true copy of such assignment, authenticated by a notary public or a

commissioner of deeds, together with an itemized statement of the amount

then due the assignee, which statement shall set forth the following

information (1) the date and amount of each payment theretofore made

upon the indebtedness and (2) in case public filing is required, the

date upon which such assignment or true copy thereof was filed with the

filing officer as described in section forty-seven-a, of this chapter.

2. The following limitations set forth in paragraphs (a), (b) and (c)

of this subdivision shall apply to the collection of assignments of

future earnings securing or relating to any indebtedness aggregating

less than one thousand dollars;

(a) the amount collectible in any month shall not exceed ten per

centum of the assignor's future earnings payable in such month;

(b) if at the time of the filing with the employer (1) any other

assignment of future earnings is subject to payment, or (2) any

garnishment against such earnings or order against the assignor for

installment payments to a judgment creditor, is in force, no amount

shall be collectible while such other assignment is subject to payment

or such garnishment or order is in force;

(c) no portion of future earnings shall be withheld from the assignor

or paid to satisfy such assignment in whole or in part while any portion

of the indebtedness secured by any valid assignment securing or relating

to an indebtedness aggregating less than one thousand dollars,

previously filed with the employer in accordance with this section,

shall remain unpaid.

3. No portion of future earnings shall be withheld from the assignor

or paid to satisfy in whole or in part any subsequent garnishment while

any portion of the indebtedness secured by any valid assignment securing

or relating to an indebtedness aggregating less than one thousand

dollars filed with the employer in accordance with this section shall

remain unpaid, but nothing contained herein shall exempt the earnings of

a judgment debtor from the application of an order for installment

payments to a judgment creditor.

Amount of exempt earnings. Notwithstanding anything contained

in this article, no portion of the assignor's future earnings shall be

withheld by reason of any assignment, unless such earnings exceed the

sum of eighty-five dollars per week.

Assignment of future earnings by person unemployed; effect of

loss of employment. If the assignor is not employed at the time he makes

an assignment of future earnings, but is thereafter employed, his future

earnings shall nevertheless become collectible by the assignee as

provided in this article upon the filing of the prescribed documents

with the employer. No assignment of future earnings shall become invalid

by reason of the cessation of employment, or cessation of payment of

earnings, but shall continue in effect, and may be applied to the

payment of any future earnings from the same or other employment, in

accordance with the provisions of this article, so long as the

indebtedness secured by the assignment shall remain unpaid in whole or

in part. If the assignor is re-employed by the same employer before the

expiration of ninety days from the termination of employment, the

assignment shall continue to be collectible without further filing of

papers. If the employee is re-employed on or after the expiration of

such ninety days, the assignment shall again become collectible from the

employer as provided in section forty-eight-a only after copies of the

assignment and the other documents specified in such section have been

filed with the employer following the re-employment.

Payroll deductions not included. Payroll deductions may be

made by the employer notwithstanding any restriction in this article,

and shall be deductible in addition to the payments under any wage

assignment permitted by this article; provided however that in any case

where payroll deductions and a payment due under an assignment will more

than equal an installment of earnings due, the assignment shall have

priority over any payroll deductions.

Certain provisions not applicable to banks, trust companies or

credit unions. 1. The provisions of section forty-seven of this article

shall not be applicable to any bank, trust company or credit union doing

business in the state of New York.

2. The provisions of section forty-eight of this article in so far as

they require any delay by an assignee, before filing with the employer,

shall not apply to assignments given either as security for or as a

manner or method of the repayment of money actually advanced to or at

the request of the assignor by any bank, trust company or credit union

doing business in the state of New York; provided, however, that every

such assignment must have printed on the face thereof the following

words: "This assignment is executed as security for, or as a manner or

method of the repayment of, money advanced by a bank, trust company or

credit union doing business in New York." No assignment, however,

received by any bank, trust company or credit union pursuant to any

agreement between it and a person who has sold merchandise or furnished

services to, or at the request of, the assignor, shall be deemed to have

been given as security for, or as a manner or method of repayment of,

money actually advanced to, or at the request of, the assignor within

the meaning of this section.

Statement to be filed by lenders upon assignment. 1. Every

person, firm or corporation engaged in or seeking to engage in the

business of lending money upon security of an assignment of, or of

purchasing upon discount future or accrued earnings, shall file with the

clerk of the county in which said person, firm or corporation has its

place of business or transacts business a statement under oath

containing the name and residence of the individual; or in case of a

firm, the names and residences of the partners; or in the case of a

corporation, the names and residences of the officers and directors,

managers or trustees of such corporation; and the place or places where

said business is transacted by such an individual, firm or corporation.

It shall be unlawful to engage in the business of lending money in the

manner set forth in this section without, prior to engaging in such

business, filing a statement as provided in this section.

2. The several county clerks of the state shall keep an alphabetical

index of all persons, firms or corporations filing certificates provided

for in this section; and for the indexing and filing of such

certificates, the fee shall be as provided in the civil practice law and

rules. A copy of such certificate, duly certified to by the county clerk

in whose office the same was filed, shall be presumptive evidence of the

facts contained therein in all courts of the state.

Exemption of exhibits at international exhibitions. No process

of attachment, execution, sequestration, replevin, distress or any kind

of seizure shall be served or levied upon articles, goods, wares,

merchandise or property of any description while the same is enroute to

or from, or while on exhibition or deposited by exhibitors at any

international exhibition held under the auspices or supervision of the

United States, within any city or county of this state, nor shall such

property be subject to attachment, seizure, levy or sale, for any cause

whatever, in the hands of the authorities of such exhibition or

otherwise.

Definitions. 1. The term "property" as used in this article

means money, instruments payable, drawn or issued to bearer or to cash,

goods, chattels and tangible personal property other than (a)

"instruments" as defined in subdivision two of this section, (b)

animals, (c) wrecks governed by the provisions of the navigation law,

(d) logs and other property governed by section three hundred

twenty-three of the town law and (e) vehicles governed by the vehicle

and traffic law.

2. The term "instrument" as used in this article means a check, draft,

promissory note, bond, bill of lading, warehouse receipt, stock

certificate or other paper or document, other than those payable, drawn

or issued to bearer or to cash and other than money, evidencing,

representing or embodying a chose in action or a right with respect to

property or a share, participation or other interest in property or in

an enterprise.

3. The term "lost property" as used in this article includes lost or

mislaid property. Abandoned property, waifs and treasure trove, and

other property which is found, shall be presumed to be lost property and

such presumption shall be conclusive unless it is established in an

action or proceeding commenced within six months after the date of the

finding that the property is not lost property.

4. The term "owner" as used in this article means any person entitled

to possession of the lost property as against the finder and against any

other person who has made a claim.

5. The term "finder" as used in this article means the person who

first takes possession of lost property.

6. "Transportation facility" as used in this article means a railroad

car or coach, Pullman car, street surface railroad car, subway car,

motor bus, motor coach, taxicab, aircraft or steamship, and any other

vehicle or conveyance used for carriage of persons whether or not such

use is in the course of a business of transporting persons.

"Transportation company" as used in this article means the person

carrying on a business of operating a transportation facility. A taxi

driver is a "transportation company" with respect to a taxicab which he

owns and operates as owner.

Found property and found instruments to be deposited with

police; penalty for failure to deliver to police; delivery to persons in

possession of premises where found. 1. Except as provided in subdivision

five of section two hundred fifty-six of this chapter or as otherwise

prescribed pursuant to section two hundred fifty of the general

municipal law, any person who finds lost property of the value of twenty

dollars or more or comes into possession of property of the value of

twenty dollars or more with knowledge that it is lost property or found

property shall, within ten days after the finding or acquisition of

possession thereof, either return it to the owner or report such finding

or acquisition of possession and deposit such property in a police

station or police headquarters of the city where the finding occurred or

possession was acquired, but if the finding occurred or possession was

acquired in buildings or on grounds or premises under the control and

supervision of the commissioner of general services as described in

article two of the public buildings law, then the property may also be

deposited in a station of the capital buildings police. If the finding

occurred or possession was acquired outside a city, then such property

shall be deposited in a station or substation of the state police or in

a police station or police headquarters, including a sheriff's office,

of the county, town, or village where the finding occurred or possession

was acquired. If the finding occurred or possession was acquired in

buildings or on grounds or premises constituting a state park, parkway,

recreational facility or historic site under the jurisdiction of the

commissioner of parks, recreation and historic preservation, then such

property may also be deposited in a station of the regional state park

police. If the finding occurred or possession was acquired in buildings

or on the grounds or premises of the state-operated institutions in the

state university of New York, then such property may also be deposited

with a security officer or police officer appointed by the state

university. Property so deposited shall be retained and disposed of in

accordance with procedures set forth in sections two hundred fifty-three

through two hundred fifty-seven of this chapter except that the powers

and duties in said sections mentioned to be performed by the police

shall be performed by security officers or police officers appointed by

the state university.

2. Except as provided in subdivision five of section two hundred

fifty-six of this chapter or as otherwise prescribed pursuant to section

two hundred fifty of the general municipal law, any person who finds an

instrument or comes into possession of an instrument with knowledge that

it has been found shall, within ten days after the finding or

acquisition of possession thereof, either return it to a person entitled

thereto or report the finding or acquisition of possession and deposit

the instrument in a police station or police headquarters, as provided

in subdivision one of this section, as if such instrument were lost

property having a value of ten dollars or more.

3. Except as provided in subdivision four of this section, any person

who shall refuse or wilfully neglect to comply with the provisions of

subdivision one or subdivision two of this section shall be guilty of a

misdemeanor and upon conviction thereof shall be punished by a fine of

not more than one hundred dollars or imprisonment not exceeding six

months or both.

4. A person shall not be subject to criminal prosecution for failure

to report a finding or acquisition of possession of found property or of

a found instrument to the police and deposit such property or instrument

with the police if, in lieu thereof, he delivers the property or

instrument to the person in possession of the premises where the

property or instrument was found, provided he had no reason to believe

that such person would not comply with subdivision one or subdivision

two of this section.

A person who delivers found property or a found instrument to the

person in possession of the premises where the property or instrument

was found is not liable to the owner or person entitled thereto for such

delivery if he had no reason to believe that such person in possession

of the premises would not comply with subdivision one or subdivision two

of this section.

Duties of police. 1. Unless otherwise prescribed in accordance

with section two hundred fifty of the general municipal law or section

two hundred twenty-five-a of the executive law and unless otherwise

provided by law applicable specifically to matters prescribed in this

section, the police with whom found property or a found instrument is

deposited shall accept and retain custody of the property or instrument,

or proceeds of the property in the event of a sale pursuant to

subdivision five of this section, and shall give notice of such custody,

as provided in this section.

The police with whom found property or a found instrument is deposited

as provided in this article shall give to the person depositing it a

receipt identifying the transaction of deposit and identifying the

property or instrument. Such identification may be by description and

recital of the facts of the transaction or by reference numbers,

duplicate copies of records, or other method connecting the receipt with

the records of the police with respect to the property or instrument and

the transaction.

2. Such property or instrument shall be transmitted, together with the

report of the person who deposited it with the police, to the police

officer or other official designated to hold such property or

instrument, who shall make entry in his records of such deposit and the

report of the person depositing such property or instrument with the

police.

3. If the report of the person who deposited the property or

instrument shows that the property or instrument was found in a place

other than a public street or highway, the police with whom it is

deposited shall give notice of the finding and deposit, including the

location of the office to which the property or instrument is

transmitted, to the occupant of the premises where the property or

instrument was found or to the person in charge of such premises.

The police with whom an instrument is deposited shall give notice of

the deposit to each person whose name and address appears upon the

instrument or whose name so appears and whose address is known to the

police.

4. If at any time the police have reason to believe that a person has

an interest in found property or in a found instrument in their

possession and reason to know his whereabouts, they shall give notice of

the finding and deposit and the location of the office to which the

property or instrument is transmitted to such person.

5. (a) Property having salvage value only may be sold by the police in

such manner as may be reasonable in the circumstances. Perishable

property shall be sold by the police as soon as possible in such manner

as may be reasonable in the circumstances.

(b) Property which requires special care may be kept by the police in

public or private facilities which the police deem appropriate for the

purpose of preserving it.

(c) Any property may be sold by the police at public auction when the

expenses reasonably incurred in dealing with it, including expenses of

taking of custody, transportation, storage and appraisal, any special

expense incurred in giving notice, and any other special expense

attributable to administration of this article with respect to the

particular property, amount to more than one-half the amount reasonably

estimated as the net sum likely to be realized by sale at public

auction.

(d) If property is sold as provided in this subdivision the proceeds

remaining after deducting the amount of reasonable expenses of the sale

and reasonable expenses of dealing with the property prior to the sale,

including any items of expense mentioned in paragraph (c), shall be

dealt with as lost property having the value of the property sold.

6. Subject to subdivision three of section two hundred fifty-six of

this chapter and to section thirteen hundred ten or other applicable

section of the abandoned property law, instruments shall be retained in

the custody of the police with whom they were deposited until delivered

to the person entitled thereto as provided in section two hundred

fifty-five of this chapter.

7. Except as provided in subdivision three of section two hundred

fifty-six of this chapter, lost property, and the proceeds of sale

pursuant to subdivision five of this section remaining after deduction

of expenses as provided in that subdivision, shall be kept in the

custody of the police for the following periods, unless sooner delivered

to the owner as provided in section two hundred fifty-four:

Property having a value of less than one hundred dollars or proceeds

of property having such value, three months; property having a value of

one hundred dollars or more but less than five hundred dollars or

proceeds of property having such value, six months; property having a

value of five hundred dollars or more but less than five thousand

dollars or proceeds of property having such value, one year; property

having a value of five thousand dollars or more or proceeds of property

having such value, three years.

8. Three months before the expiration of the period applicable to the

property in question, as specified in subdivision seven of this section,

if the property has not been delivered to the owner as provided in

section two hundred fifty-four, the police shall give notice to the

owner, if known, and to any person they have reason to believe has an

interest in the property, if the address or a former address of such

owner or person is known, and to all persons who have made claim to the

property, and to the finder and any person who has filed notice

asserting the right of the finder as provided in section two hundred

fifty-six. Such notice shall be in writing and shall be served

personally or sent by certified mail to the last known address of the

person to whom it is sent and shall state, in substance: (a) that if

within three months after the date of personal service or mailing of the

notice the owner does not claim the property, and if at the end of such

three months no action is pending to determine rights to such property,

written notice of which action was served upon the police having custody

of the property, the property will be delivered to the finder or, if he

establish his right, to a person entitled to assert the right of the

finder as provided in section two hundred fifty-six; and (b) that if at

the expiration of three months and ten days after the date of the

personal service or mailing of the notice, the owner has not claimed the

property and the finder, or a person entitled to assert the right of the

finder as provided in section two hundred fifty-six, has not demanded

delivery of it, and no action is pending to determine rights to such

property, notice of which was served upon the police having custody of

the property, it will be sold at public auction; and (c) in the case of

property in the custody of the state police, that the proceeds of the

sale will be deposited in the abandoned property fund of the state and

in the case of property in the custody of other police that the proceeds

will become the property of the city, county, town or village.

Disposition of lost property. Except as provided in section two

hundred fifty-six of this chapter, lost property deposited with the

police, and the money constituting proceeds of lost property sold as

provided in subdivision five of section two hundred fifty-three

remaining after deduction of expenses as therein provided, shall be

disposed of as follows:

1. It shall be delivered to the owner, upon his demand and upon

payment of all reasonable expenses incurred in connection therewith, if

no written notice of any other claim to the property has been served

upon the police having custody, and the time specified in subdivision

seven of section two hundred fifty-three of this chapter has not expired

or, if such period has expired, no demand has been made by the finder or

a person entitled to assert the right of the finder as provided in

section two hundred fifty-six of this chapter.

2. If at the end of the period specified in subdivision seven of

section two hundred fifty-three of this chapter the owner has not

claimed the property, it shall be delivered to the finder, or person

entitled to assert the rights of the finder as provided in section two

hundred fifty-six of this chapter, upon his demand therefor, and upon

payment of all reasonable expenses incurred in connection therewith.

3. If at the end of ten days after expiration of the period specified

in subdivision seven of section two hundred fifty-three, the owner has

not claimed it, and no demand has been made by the finder or a person

entitled to assert the right of the finder as provided in section two

hundred fifty-six of this chapter, property consisting of money shall be

paid as provided in section two hundred fifty-eight of this chapter and

other property shall be sold at public auction and the proceeds shall be

paid as provided in such section two hundred fifty-eight. Where the

property was deposited with the state police, such sale shall be held in

accordance with rules of the comptroller.

Disposition of instruments. 1. An instrument deposited with the

police shall be delivered to the person entitled thereto upon payment of

all reasonable expenses incurred in connection therewith.

2. No instrument deposited with the police shall be destroyed or sold.

Except as provided in subdivision three of section two hundred

fifty-six, no such instrument shall be returned to the finder, or his

employer, or the person who deposited it with the police, or the person

upon whose premises it was found.

Exceptions. 1. If a finder takes possession of lost property

while he is upon premises with respect to which his presence is a crime,

the person in possession of the premises where the lost property was

found shall have the rights of the finder as provided in section two

hundred fifty-four of this chapter, if, before the property is delivered

to the finder by the police, he files with the police having custody of

the property a written notice asserting his rights.

2. If the finder is an officer or employee of the state or of a public

corporation and takes possession of the property in the course of his

official duty, the state or public corporation shall be deemed to be the

finder for the the purposes of section two hundred fifty-four and

section two hundred fifty-seven of this chapter. If, in any other case,

the finder is an employee under a duty to deliver the lost property to

his employer, the employer shall have the rights of the finder as

provided in section two hundred fifty-four if, before the property is

delivered to the finder by the police, he shall file with the police

having custody of the property a written notice asserting such rights.

3. If either lost property deposited with the police or an instrument

deposited with the police was discovered upon the enclosed safe deposit

premises of a safe deposit company or safe deposit department of a bank,

the police shall return it to the safe deposit company or bank at the

expiration of six months from the date of deposit. Upon receipt thereof

the safe deposit company or bank shall hold the property or instrument

as bailee for the person entitled thereto. If such person has not

claimed it at the expiration of fifteen years from the date it was

returned by the police and the property or instrument has not been

delivered to the state comptroller pursuant to an order of the supreme

court as provided in section thirteen hundred ten of the abandoned

property law, the safe deposit company or bank shall pay that portion of

such property which consists of money to the comptroller as unclaimed

property. The safe deposit company or bank shall sell such property as

does not consist of money and shall sell such instrument at a public

sale, and the proceeds from such sale, less the expenses of such sale,

including the costs of any advertising, shall be paid to the state

comptroller as unclaimed property. Any such property or instrument

determined to be valueless at such sale shall be delivered to the

comptroller as unclaimed property.

4. A person who finds or comes into possession of property or an

instrument while he is in or on a transportation facility while it is

being operated as such shall be subject to the provisions of this

article if he leaves the transportation facility at any place in this

state taking with him at the time of such departure property or an

instrument found by him in or upon the transportation facility or found

property or a found instrument of which he acquired possession while in

or upon the transportation facility. In such case the place where he

leaves the transportation facility taking the found property or

instrument with him shall be deemed for the purposes of this article to

be the place where the finding occurred or possession was acquired.

For the purposes of subdivision four of section two hundred fifty-two

of this chapter, a transportation facility shall be deemed "premises"

and "person in possession of the premises" shall include any person

actually operating a transportation facility and any officer, agent or

employee of the transportation company actually or apparently authorized

to receive delivery of the property or instrument.

For the purposes of subdivision three of section two hundred

fifty-three, a transportation facility operated by a transportation

company shall be deemed "premises" and the transportation company, or

its officer, agent or employee authorized to act with respect to custody

of lost and found property, shall be deemed to be the person in charge

of such premises.

5. Except as otherwise prescribed pursuant to section two hundred

fifty of the general municipal law, if the person who reports the

finding or acquisition of possession of found property or an instrument

is (a) a transportation company subject to the provisions of an act of

congress known as the "interstate commerce act," as amended, or engaged

in air transportation pursuant to certificate or permit of the civil

aeronautics board issued pursuant to an act of congress known as the

"civil aeronautics act of nineteen hundred thirty-eight," as amended,

and the property or instrument was found on a transportation facility

operated by such transportation company or (b) a safe deposit company or

bank and the property or instrument was found on enclosed safe deposit

premises of such safe deposit company or of the safe deposit department

of such bank, such transportation company, safe deposit company or bank

shall not be required to deposit such property or instrument at the time

the report is made, but shall within sixty days after it acquired

possession of the property or instrument deposit such property or

instrument with the police to whom the report was made, unless within

such time the property has been returned to the owner or the instrument

has been returned to a person entitled thereto. Such transportation

company, safe deposit company or bank shall hold such property or

instrument subject to inspection at any time by the police to whom the

report was made or by the police designated by an agreement pursuant to

section two hundred fifty-one of the general municipal law.

A transportation company, safe deposit company or bank retaining

possession of property or an instrument pursuant to this subdivision

after report of its acquisition of possession thereof shall (a) give

notice of its acquisition of possession of the instrument to each person

whose name and address appears on the instrument or whose name so

appears and whose address is known to it, and (b) if such transportation

company, safe deposit company or bank has reason to believe that a

person has an interest in the property or instrument and reason to know

his whereabouts, shall give notice to him of its possession. But this

paragraph does not require that a transportation company give such

notice or notices with respect to instruments enclosed in an article of

baggage or in a briefcase, purse or like article at the time it acquired

possession of such article.

6. If at any time an action or proceeding shall be commenced to

determine the right to found property or to an instrument and written

notice of such action shall be served upon the police having custody of

the property or instrument, the police shall not thereafter deliver the

property or instrument to any person except pursuant to court order.

7. This article does not supersede or limit any other statute or rule

of law governing custody or disposition of articles in the custody of

the police which constitute evidence of the commission of a crime, or

which may not lawfully be possessed, or which may not lawfully be

possessed without license.

Title to lost property. 1. The title to lost property which has

been deposited with the police shall vest in the finder, or other person

entitled to assert the rights of the finder as provided in section two

hundred fifty-six of this chapter, when the property is delivered to him

in accordance with section two hundred fifty-four of this chapter and

shall vest in the buyer when the property is sold as provided in section

two hundred fifty-three or two hundred fifty-four of this chapter.

2. If the finder of lost property under the value of ten dollars has

made reasonable effort to find the owner and restore it to him, and has

been unable to do so, the title to such property shall vest in the

finder at the end of one year after the finding.

Proceeds to be paid into fund. Proceeds from the sale of lost

property, less lawful deductions, or the money constituting lost

property, shall be paid into the treasury of the county, city, town or

village in the police department of which the property was deposited

unless otherwise provided pursuant to section two hundred fifty of the

general municipal law or other applicable statute, or into the abandoned

property fund of the state if the property was deposited with the state

police, the capital buildings police or the regional state park police

or returned to a safe deposit company or bank pursuant to section two

hundred fifty-six of this chapter, or into a fund established pursuant

to subdivision eight of section three hundred fifty-five of the

education law if the property was deposited with a security officer or

police officer appointed by the state university.

Definitions. As used in this article:

1. The term "bond" means (a) a bond, note or other obligation of any

kind or nature, whether secured or unsecured, which is part of an issue

held by more than one person, or (b) a certificate or other instrument

which is part of an issue held by more than one person evidencing any

interest in any bond, note or other obligation of any kind or nature,

whether secured or unsecured.

2. The term "bondholder" means the owner of a bond.

3. The term "obligor" includes the obligor of a bond as defined in

clause (a) of paragraph one of this section; the obligor of an

obligation, interests in which are evidenced by a bond as defined in

clause (b) of paragraph one of this section; and the owner of any

property securing any bond or any such obligation.

4. The term "trust indenture" means any agreement, conveyance,

transfer, mortgage or other instrument, pursuant to which bonds are

issued, or which affect the rights of bondholders.

5. The term "trustee" includes any person to whom any property has

been transferred as security for an issue; any person who is the obligee

or holder of an obligation, interests in which are evidenced by a bond

as defined in clause (b) of paragraph one of this section; and any

person who, under the terms of a trust indenture, is granted rights or

remedies which may be exercised for the benefit of bondholders.

6. The term "default" means any non-compliance for thirty days or more

by the obligor with any provision of a bond or of a trust indenture,

whether or not under the terms of such bond or such trust indenture such

non-compliance is regarded as a default, and whether or not any period

of grace or other period prescribed in such bond or such trust indenture

as a prerequisite for taking any action has expired.

7. The term "qualified bondholder" means any bondholder who (a) has

acquired a bond by purchase before the default or the institution of

proceedings which is the basis of an application under section two

hundred eighty-six and in any event at least one year before the making

of such application, unless such bondholder shall have been an original

purchaser or (b) who has acquired a bond by gift or inheritance from a

bondholder who acquired the same by purchase before the default or the

institution of proceedings which is the basis of an application under

section two hundred eighty-six and in any event at least six months

before the making of such application; provided, however (a) that such

bond was not purchased for the purpose of making such an application;

(b) that the list of bondholders shall not be for the purpose of

communicating with bondholders in the interests of an object other than

the particular indenture securing the issue of bonds; and (c) that such

petitioner has not within five years sold or offered for sale any list

of stockholders of any corporation, or aided or abetted any person in

procuring any stock list for any such purpose or sold or offered for

sale any list of bondholders of any obligor or aided or abetted any

person in procuring such a list for any such purpose.

Grounds for proceeding. Whenever there has been a default under

a bond or a trust indenture which has not been cured, or whenever

proceedings have been instituted under any federal or state law for the

modification of a bond or a trust indenture or for a reorganization of

the obligor, in connection with which such a modification is

contemplated, any qualified bondholder owning such a bond, or owning a

bond to which such a trust indenture relates, may apply to the supreme

court or the county court, by special proceeding for judgment directing

the trustee of the issue and every obligor of the bond, or any of them,

to furnish to the applicant a list of the names and addresses of all of

the bondholders of the issue so far as they have knowledge or

information with respect to such names and addresses, irrespective of

how such knowledge or information was acquired.

Contents of petition. The petition shall briefly describe the

issue, stating the date, maturity and size thereof so far as known to

the petitioner; shall set forth the default or proceedings upon which

the application is based, and, if based on a default, the fact that such

default has not been cured; shall show the purpose for which the

application is made; and shall contain an allegation that the list is

not intended for sale, and shall further show that such bond was not

purchased for the purpose of making such an application; that the list

of bondholders shall not be for the purpose of communicating with

bondholders in the interests of an object other than the particular

indenture securing the issue of bonds; and that such petitioner has not

within five years sold or offered for sale any list of stockholders of

any corporation, or aided or abetted any person in procuring any stock

list for any such purpose or sold or offered for sale any list of

bondholders of any obligor or aided or abetted any person in procuring

such a list for any such purpose.

Judgment. If the court shall be satisfied that the allegations

of the petition are true, and that the interests of the bondholders of

the issue as a whole will not be adversely affected by the granting of

the application, it shall enter judgment directing the trustee, every

obligor, any receiver appointed by a court, depositary or committee

purporting to act for or on behalf of bondholders, or such of them as

may have been duly served, to furnish to the applicant a list of the

names and addresses of all bondholders of the issue so far as they

respectively have knowledge or information with respect to the same.

Such judgment may contain such terms and conditions as the court may

deem proper with respect to the time when and place where such lists are

to be furnished, and the payment of the expense of furnishing same.

Notwithstanding the foregoing provisions of this section, however, if a

default was the basis of the application and such default has been cured

before the entry of judgment, or if the institution of proceedings was

the basis of the application and such proceedings have finally

terminated before the entry of judgment, the proceeding may, in the

discretion of the court, be dismissed.

Definitions. In this article, unless the context or subject

matter otherwise requires:

1. "Motor vehicle" or "vehicle" means any device propelled or drawn by

any power other than muscular power, upon or by which any person or

property is or may be transported or drawn upon a public highway, road

or street except that it shall not include a "snowmobile" as defined in

subdivision three of section 21.05 of the parks, recreation and historic

preservation law. "Motor vehicle" or "vehicle" also means a "mobile

home" or a "manufactured home". "Mobile home" or "manufactured home"

means a structure, transportable in one or more sections, which in the

traveling mode, is eight body feet or more in width or forty body feet

or more in length, or when erected on site, is three hundred twenty or

more square feet, and which is built on a permanent chassis and designed

to be used as a dwelling with or without a permanent foundation when

connected to required utilities, and includes the plumbing, heating,

air-conditioning and electrical systems contained therein.

2. "Retail buyer" or "buyer" means a person who buys a motor vehicle

from a retail seller and who executes a retail instalment contract in

connection therewith.

3. "Retail seller" or "seller" means a person who sells a motor

vehicle to a retail buyer under or subject to a retail instalment

contract.

4. "Retail instalment sale" or "sale" means a sale, other than for a

commercial or business use or for the purpose of resale, of a motor

vehicle by a retail seller to a retail buyer for a time sale price

payable in two or more instalments, payment of which is secured by a

retail instalment contract. The cash sale price of the motor vehicle,

the amount, if any, included for insurance, official fees and credit

service charge shall together constitute the time sale price.

5. "Retail instalment contract" or "contract" means an agreement,

entered into in this state, pursuant to which the title to, the property

or a security interest in or a lien upon a motor vehicle, which is the

subject matter of a retail instalment sale, is retained or taken by a

retail seller from a retail buyer as security, in whole or in part, for

the buyer's obligation. The term includes such an agreement wherever

entered into if executed by the buyer in this state and if solicited in

person by a salesman or other person acting on his own behalf or that of

the seller. The term also includes a contract whereby a security

interest in favor of the seller is created or retained and a contract

for the bailment or leasing of a motor vehicle by which the bailee or

lessee contracts to pay as compensation for its use a sum substantially

equivalent to or in excess of its value and by which it is agreed that

the bailee or lessee is bound to become, or for no other or for a

nominal consideration has the option of becoming, the owner of the motor

vehicle upon full compliance with the terms of the contract.

6. "Cash sale price" means the cash sale price stated in a retail

instalment contract for which the seller would sell to the buyer, and

the buyer would buy from the seller, the motor vehicle which is the

subject matter of the retail instalment contract if the sale were a sale

for cash instead of a retail instalment sale. The cash sale price may

include any taxes, registration, license and other fees and charges for

insurance, for accessories and their installation and for delivering,

servicing, repairing or improving the motor vehicle and for other

services incidental to the agreement. It also may include the unpaid

balance of any amount financed under an outstanding motor vehicle loan

agreement or motor vehicle retail instalment contract or the unpaid

portion of the early termination obligation under an outstanding motor

vehicle retail lease agreement.

7. "Official fees" means the filing or other fees required by law to

be paid to a public officer to perfect the interest or lien, in or on a

motor vehicle, retained or taken by a seller under a retail instalment

contract, and to file or record a release, satisfaction or discharge of

the contract.

8. "Credit service charge" means that part of the time sale price by

which it exceeds the aggregate of the cash sale price and the amount, if

any, included in a retail instalment sale for insurance and official

fees.

9. "Financing agency" means a person engaged, in whole or in part, in

the business of purchasing retail instalment contracts from one or more

retail sellers. The term includes but is not limited to a bank, trust

company, savings bank, savings and loan association, private banker or

investment company, if so engaged. The term also includes a retail

seller engaged, in whole or in part, in the business of holding retail

instalment contracts acquired from retail buyers.

10. The "holder" of a retail instalment contract means the retail

seller of the motor vehicle under or subject to the contract or, if the

contract is purchased by a financing agency or other assignee, the

financing agency or other assignee.

11. "Person" means an individual, partnership, corporation,

association or other group, however organized.

12. Words in the singular include the plural and vice versa.

Requirements as to retail instalment contracts. 1. A retail

instalment contract shall be in writing, shall contain all the

agreements of the parties and shall be signed by the buyer and the

seller.

2. The printed portion of the contract shall be in at least eight

point type. The contract shall contain printed or written in a size

equal to at least ten-point bold type:

(a) Both at the top of the contract and directly above the space

reserved for the signature of the buyer, the words "RETAIL INSTALMENT

CONTRACT";

(b) A specific statement that liability insurance coverage for bodily

injury and property damage caused to others is not included, if that is

the case; and

(c) One of the following notices: "NOTICE TO THE BUYER: 1. Do not sign

this contract before you read it or if it contains any blank space. 2.

You are entitled to a completely filled in copy of this contract when

you sign it. 3. Under the law, you have the following rights, among

others: (a) To pay off in advance the full amount due and to obtain a

partial refund of the credit service charge; (b) To redeem the property

if repossessed for a default; (c) To require, under certain conditions,

a resale of the property if repossessed. 4. According to law you have

the privilege of purchasing the insurance on the motor vehicle provided

for in this contract from an agent or broker of your own selection," or

"NOTICE TO THE BUYER: 1. Do not sign this agreement before you read it

or if it contains any blank space. 2. You are entitled to a completely

filled in copy of this agreement. 3. Under the law, you have the right

to pay off in advance the full amount due and under certain conditions

to obtain a partial refund of the credit service charge. 4. According to

law you have the privilege of purchasing the insurance on the motor

vehicle provided for in this contract from an agent or broker of your

own selection", or "NOTICE TO THE BUYER: 1. Do not sign this agreement

before you read it or if it contains any blank space. 2. You are

entitled to a completely filled in copy of this agreement. 3. Under the

law, you have the right to pay off in advance the full amount due. If

you do so, you may, depending on the nature of the credit service

charge, either: (a) prepay without penalty, or (b) under certain

circumstances obtain a rebate of the credit service charge. 4. According

to law you have the privilege of purchasing the insurance on the motor

vehicle provided for in this contract from an agent or broker of your

own selection".

3. The seller shall deliver to the buyer, or mail to him at his

address shown on the contract, a copy of the contract signed by the

seller. Until the seller does so, a buyer who has not received delivery

of the motor vehicle shall have an unconditional right to cancel the

contract and to receive immediate refund of all payments made and

redelivery of all goods traded-in to the seller on account of or in

contemplation of the contract. Any acknowledgment by the buyer of

delivery of a copy of the contract shall be printed or written in a size

equal to at least ten point bold type and, if contained in the contract,

shall also appear directly above the legend required above the buyer's

signature by sub-division two (a) of this section.

4. The contract shall contain the names of the seller and the buyer,

the place of business of the seller, the residence or place of business

of the buyer as specified by the buyer and a description of the motor

vehicle including its make, year model, model and identification numbers

or marks.

5. The contract shall contain:

(1) All items required to be disclosed by the act of congress entitled

"Truth in Lending Act" and the regulations thereunder, as such act and

regulations may from time to time be amended;

(2) The amount, if any, included for insurance, specifying and

describing the coverages and the amount included for each type of

coverage; however, if any insurance policy complies with the standard

provisions form for automobile physical damage policy or any other

automobile physical damage policy form which is equally or more

favorable to the insured and which is filed with the superintendent of

financial services, the contract need not contain a description of any

type of coverage under such standard automobile physical damage policy

form or a specification of the amount included in the contract therefor

if it contains a specification of the type or types of coverage and the

total amount included in the contract therefor.

6. The amount, if any, included for insurance, shall not exceed the

premiums chargeable in accordance with rate filings made with the

superintendent of financial services for similar insurance. The seller

or financing agency, if insurance on the motor vehicle is included in a

retail instalment contract, shall within thirty days after execution of

the retail instalment contract send or cause to be sent to the buyer a

policy or policies or certificate of insurance, written by an insurance

company authorized to do business in this state, clearly setting forth

the amount of the premium, the kind or kinds of insurance and the scope

of the coverage and all the terms, exceptions, limitations, restrictions

and conditions of the contract or contracts of insurance. The buyer of a

motor vehicle under a retail instalment contract shall have the

privilege of purchasing such insurance from an agent or broker of his

own selection and of selecting an insurance company acceptable to the

seller; provided, however, that the inclusion of the insurance premium

in the retail instalment contract when the buyer selects the agent,

broker or company, shall be optional with the seller and in such case

the seller or financing agency shall have no obligation to send, or

cause to be sent, to the buyer the policy or certificate of insurance.

Nothing contained in this subdivision however shall be deemed to modify,

limit or in any way contravene the provisions of section two thousand

five hundred two of the insurance law.

If any such policy or certificate of insurance on the motor vehicle is

cancelled, the unearned insurance premium refund received by the holder

of the contract, or, if the amount included therefor in the contract

exceeds the cost to the holder of the contract for such insurance, the

unearned portion of the amount so included, together with the unearned

portion of the credit service charge applicable thereto, shall be

credited to the final maturing instalments of the retail instalment

contract except to the extent applied toward payment for similar

insurance protecting the interests of the buyer and the holder of the

contract or either of them.

The amount, if any, included for group credit life insurance, credit

unemployment insurance, or for insurance other than on the motor vehicle

shall not exceed the premiums chargeable in accordance with rate filings

made with the superintendent of financial services for such insurance by

the insurer. If such group credit life or other insurance is cancelled

the refund for unearned insurance premiums received or receivable by the

holder of the contract, or the excess of the amount included in the

contract for group credit life insurance over the premiums paid or

payable by the holder of the contract therefor, together with, in either

case, the unearned portion of the credit service charge applicable

thereto, shall be credited to the final maturing instalments of the

retail instalment contract, provided that no such credit need be made if

the amount thereof would be less than one dollar.

6-a. If the buyer is obligated under the terms of a retail instalment

contract to maintain insurance on the motor vehicle that is the subject

of the contract and if subsequent to the execution of the contract the

buyer fails to maintain the insurance, the holder may make advances to

procure the equivalent limits of insurance for either the interests of

the buyer and the holder or of either of them, and any amount so

advanced may be the subject of a credit service charge from the date of

such advance as though such amount was part of the amount computed as

provided in the closing paragraph of subdivision one of section three

hundred three of this article. Each amount so advanced shall be secured

by the motor vehicle if so provided in the contract and if the holder

notifies the buyer in writing of the advance of such amount and of his

or her option to repay such amount in any one of the following ways:

(a) Full payment within ten days from the date of giving or mailing

the notice;

(b) Full amortization during the term of the insurance or the

remaining term of the contract, at the option of the holder;

(c) If offered by the holder, as a final balloon payment payable one

month after the last scheduled payment under the contract;

(d) If offered by the holder, full amortization after the term of the

contract, to be payable in instalments which do not exceed the average

instalment payable under the contract; or

(e) If offered by the holder, any other amortization plan.

If the buyer neither pays in full the amount so advanced nor notifies

the holder in writing of his or her choice regarding amortization

options before the expiration of ten days from the date of giving or

mailing of the notice by the holder, the holder shall amortize the

amount so advanced pursuant to paragraph (b) of this subdivision.

7. The holder of a retail instalment contract may, if the contract so

provides, collect a delinquency and collection charge on each instalment

in default for a period not less than ten days in an amount not in

excess of the rate or rates agreed to in the contract. In addition to

such delinquency and collection charge, the retail instalment contract

may provide for the payment of attorneys' fees not exceeding fifteen

percent of the amount due and payable under such contract where such

contract is referred to an attorney not a salaried employee of the

holder of the contract for collection, plus the court costs.

8. No retail instalment contract shall be signed by any party thereto

when it contains blank spaces to be filled in after it has been signed

except that, if delivery of the motor vehicle is not made at the time of

the execution of the contract, the identifying numbers or marks of the

motor vehicle or similar information and the due date of the first

instalment may be inserted in the contract after its execution. The

buyer's written acknowledgment, conforming to the requirements of

subdivision three of this section, of delivery of a copy of a contract

shall be conclusive proof of such delivery and of compliance with this

subdivision in any action or proceeding by or against an assignee of the

contract without knowledge to the contrary when he purchases the

contract.

9. (a) No retail instalment contract shall contain any provision by

which the buyer agrees not to assert against an assignee a claim or

defense arising out of the sale or require or entail the execution of

any note or series of notes, which when separately negotiated will cut

off as to third parties any right of action or defense which the buyer

may have against the seller. The assignee of a retail installment

contract or obligation shall be subject to all claims and defenses of

the buyer against the seller arising from the sale notwithstanding any

agreement to the contrary, but the assignee's liability under this

subdivision shall not exceed the amount owing to the assignee at the

time the claim or defense is asserted against the assignee.

(b) Limitations on assignee liability referred to in paragraph (a) of

this subdivision shall be exclusive of any reasonable costs and

attorney's fees the court may award.

10. Notwithstanding any contrary provision of the personal property

law, lien law, banking law or other law: (a) a financing agency may

purchase a retail instalment contract from a seller on such terms and

conditions and for such price as may be mutually agreed upon; and (b) no

filing of the assignment, no notice to the buyer of the assignment, and

no requirement that the seller be deprived of dominion over payments

upon the contract or over the vehicle if repossessed by or returned to

the seller, shall be necessary to the validity of a written assignment

of a retail instalment contract as against creditors, subsequent

purchasers, pledgees, mortgagees or encumbrancers of the seller.

11. Unless the buyer has notice of actual or intended assignment of a

retail instalment contract, payment thereunder made by the buyer to the

last known holder of such contract shall be binding upon all subsequent

holders or assignees.

12. Upon written request from the buyer, the holder of a retail

instalment contract shall give or forward to the buyer a written

statement of the dates and amounts of payments and the total amount

unpaid under such contract. A buyer shall be given a written receipt for

any payment when made in cash.

13. No retail instalment contract shall contain any provision by

which:

(a) in the absence of the buyer's default, the holder may, arbitrarily

and without reasonable cause, accelerate the maturity of any part or all

of the amount owing thereon;

(b) a power of attorney is given to confess judgment in this state, or

an assignment of wages is given;

(c) the seller or holder of the contract or other person acting on his

behalf is given authority to enter upon the buyer's premises unlawfully,

or to commit any breach of the peace in the repossession of the motor

vehicle;

(d) the buyer waives any right of action against the seller or holder

of the contract, or other person acting on his behalf, for any illegal

act committed in the collection of payments under the contract or in the

repossession of the motor vehicle;

(e) the buyer executes a power of attorney appointing the seller or

holder of the contract, or other person acting on his behalf, as the

buyer's agent in collection of payments under the contract or in the

repossession of the motor vehicle; provided, however, that this

paragraph shall not prohibit the inclusion in a retail instalment

contract of a limited power of attorney or other provision authorizing

the holder to execute in the name of the buyer any proofs of insurance

claims or losses or to endorse the name of the buyer on any insurance

settlement draft or check;

(f) the seller is relieved from liability for any legal remedy which

the buyer may have had against the seller under the contract, or any

separate instrument executed in connection therewith;

(g) the maturity of any part or all of the amount owing thereon is

accelerated where, following a default consisting solely of the failure

to make timely instalment payments and the subsequent repossession of

the motor vehicle, the buyer makes timely tender of an amount which

would be sufficient to redeem the vehicle in the absence of such

provision;

(h) the buyer waives any right to a trial by jury in any action or

proceeding arising out of the contract.

14. Any such prohibited provision shall be void but shall not

otherwise affect the validity of the contract.

Total loss notice and waiver of the gap amount. 1. If the

retail instalment contract provides that the buyer shall be responsible

upon a total loss of the vehicle occasioned by its theft, confiscation

or physical damage for the gap amount as defined in paragraph fifty-two

of subsection (a) of section one hundred seven of the insurance law, the

holder, prior to the execution of the contract, shall by a notice on a

separate document conspicuously disclose that fact and the obligations

for which the buyer would remain liable in the event of a theft,

confiscation or total loss of the vehicle. If the holder is required

under subdivision two of this section to offer to waive its contractual

right to hold the buyer liable for the gap amount in the event of a

total loss of the vehicle occasioned by its theft or physical damage,

the notice shall also: (a) state that for a separate charge disclosed in

the notice the holder will waive its contractual right to hold the buyer

liable for the gap amount in the event of a total loss of the vehicle

occasioned by its theft or physical damage; (b) contain a provision

informing the buyer 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 motor vehicle debtor gap insurance in this

state; and (c) contain a provision permitting the buyer to indicate

whether he or she wants the holder to waive its contractual right to

hold the buyer liable for the gap amount in the event of a total loss of

the vehicle occasioned by its theft or physical damage. The notice shall

be signed by the buyer. The holder shall provide a copy of the signed

notice to the buyer and shall maintain a copy in the holder's files for

at least the term of the contract. Failure to provide the notice and to

obtain the buyer's signature as required by this subdivision shall

invalidate any provision of the agreement which otherwise would obligate

a buyer to pay to the holder, after a total loss of the motor vehicle

occasioned by its theft, confiscation or physical damage, the gap

amount. No retail installment contract shall be conditioned upon the

buyer's obtaining of motor vehicle debtor gap insurance as set forth in

subparagraph (B) of paragraph twenty-six of subsection (a) of section

one thousand one hundred thirteen of the insurance law.

2. If the retail instalment contract provides that the buyer shall be

responsible upon a total loss of the vehicle occasioned by its theft or

physical damage for the gap amount, the holder, prior to the execution

of the agreement, shall offer to waive its contractual right to hold the

buyer liable for the gap amount in the event of a total loss of the

vehicle occasioned by its theft or physical damage, only if motor

vehicle creditor gap insurance coverage is available to the holder 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 motor vehicle creditor gap insurance in this state.

This offer may be made contingent upon the payment by the buyer of a

separate charge that shall not exceed the cost of motor vehicle creditor

gap insurance covering the retail instalment contract. Nothing contained

in this section shall be construed to authorize a waiver, in connection

with a transaction with respect to which motor vehicle creditor gap

insurance has not been obtained, of a contractual right to hold the

buyer liable for the gap amount in the event of a total loss of the

vehicle occasioned by its theft or physical damage.

3. A holder shall not be obligated under subdivision two of this

section to offer to waive its contractual right to hold the buyer 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 holder has received motor

vehicle creditor 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 motor vehicle

creditor gap insurance in this state. Evidence of these declinations

shall be retained by such a holder of such a holder for a period of six

years after the expiration of the calendar year in which they were

issued.

4. In order to enable holders 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 motor vehicle creditor gap insurance coverage in

this state.

5. Nothing in this section shall be construed to apply to the holder,

under a retail instalment contract under which the buyer is not liable

upon a total loss of the vehicle occasioned by its theft, confiscation

or physical damage for the gap amount.

Credit service charge limitation. 1. A retail seller may

contract for in a retail instalment contract and charge, receive and

collect the credit service charge authorized by this article at the rate

or rates agreed to by the retail seller and the buyer.

The credit service charge authorized by this subdivision shall be

computed on an amount equal to the total of the difference between the

cash sale price of the motor vehicle and the amount of the buyer's down

payment and the amount of official fees, and such charge may be made on

the amount included in the contract for insurance as determined under

subdivision six of section three hundred two of this chapter.

2. The credit service charge at the rate or rates authorized in

subdivision one shall be computed on the amounts on which they are

respectively required to be computed as specified in subdivision one on

contracts payable in successive monthly instalments substantially equal

in amount extending for a period of one year. On contracts providing for

instalments extending for a period less than or greater than one year,

the credit service charge shall be computed proportionately.

3. When a retail instalment contract provides for unequal or irregular

instalments, the credit service charge shall be at the effective rates

provided in subdivision one, having due regard for the schedule of

instalments.

4. As an alternative to the credit service charge provided for above,

a retail seller may contract for in a retail instalment contract and

charge, receive and collect a credit service charge calculated on the

unpaid balances of an amount computed as provided in the second

paragraph of subdivision one above, for the time outstanding according

to a generally accepted actuarial method at rates that may vary from

time to time and in accordance with the provisions of the contract. On

any contract with a variable rate credit service charge made pursuant to

this subdivision the rate shall be determined at regular intervals as

set forth in the contract and in accordance with such regulations as the

superintendent of financial services shall prescribe but said rate shall

not vary more often than once in any three month period and shall be

based on a published index that is (a) readily available, (b)

independently verifiable, (c) beyond the control of the retail seller

and (d) approved by the superintendent.

The superintendent shall adopt regulations with respect to retail

installment contracts that provide for a variable rate of credit-service

charge, including but not limited to: (a) providing for disclosure to

the buyer by the retail seller of the circumstances under which the rate

may increase, any limitations on the increase, the effect of an increase

and an example of the payment terms that would result from an increase;

(b) providing for disclosure to the buyer by the retail seller of a

history of the fluctuations of the index over a reasonable period of

time; and (c) providing for notice to the buyer by the retail seller

prior to any rate increase or change in the terms of payment.

5. The credit service charge shall be inclusive of all charges

incident to investigating and making the contract, and for the extension

of the credit provided for in the contract and no fee, expense or other

charge whatsoever shall be taken, received, reserved or contracted for

except as provided in this section, in subdivision seven of section

three hundred two and three hundred six and, if expressly provided for

in the retail instalment contract the amount of official fees as defined

in section three hundred one and the amount, if any, included for

insurance pursuant to subdivision five of section three hundred two.

6. Notwithstanding the maximum credit service charge authorized by

this article, such maximum credit service charge shall not apply to any

retail installment sale insured or guaranteed in whole or in part by the

Federal Housing Administration, the Veterans Administration, or any

other department or agency of the United States government.

Cancellation of contract. After the payment of all sums for

which the buyer is obligated under a retail instalment contract, and

upon written demand made by the buyer, the holder of such contract shall

mail to the buyer at his last known address, good and sufficient

instruments to indicate payment in full and to release all security in

the motor vehicle.

Credit upon anticipation of payments. 1. Notwithstanding the

provisions of any retail instalment contract to the contrary, any buyer

may pay it in full at any time before the maturity of the final

instalment of the time balance thereof and if he does so shall receive

and be entitled to receive a refund credit thereon and if the contract

included an amount for group credit life insurance, the further refund

credit thereon for such anticipation, whether or not the maturity of the

time balance of the contract was accelerated by the holder by reason of

the buyer's default or otherwise. The amount of any such refund credit

shall be the unearned portion of the credit service charge, after first

deducting an acquisition cost of fifteen dollars, or, if the contract

has been extended, deferred or refinanced, the additional charge

therefor, determined according to a generally accepted actuarial method.

Where the amount of the credit for anticipation of payment is less than

one dollar, no refund need be made.

If the credit service charge imposed on the retail instalment contract

is computed pursuant to subdivision four of section three hundred three

of this article the contract may, after deduction of the acquisition

cost of fifteen dollars, be prepaid in full without penalty.

2. The amount of the further refund credit for group credit life

insurance shall be equal to the excess of the amount included in the

contract for group credit life insurance over the premiums paid or

payable by the holder of the contract for such insurance, if such

premiums were paid or payable periodically, or the refund for unearned

group credit life insurance premium received or receivable by the holder

of the contract, if such premium was paid or payable in a lump sum,

provided that no such further refund credit need be made if the amount

thereof would be less than one dollar.

3. In the event (i) the maturity of the contract is accelerated due to

the default of the buyer or otherwise and judgment is obtained, or (ii)

repayment is made pursuant to group credit life insurance, the buyer or

his legal representative, as the case may be, shall be entitled to the

same refund credits as if the contract had been prepaid in full on the

date of acceleration or repayment.

Refinancing. 1. The holder of a retail instalment contract may,

upon agreement with the buyer, extend the scheduled due date or defer

the scheduled payment of all or any part of any instalment or

instalments payable thereunder. The agreement for such extension or

deferment must be in writing and signed by the parties thereto. The

holder may charge and contract for the payment of an extension or

deferred charge by the buyer and collect and receive the same, at the

rate or rates agreed to by the holder and the buyer on the amount of the

instalment or instalments, or part thereof, extended or deferred for the

period of extension or deferral. Such period shall not exceed the period

from the date when such extended or deferred instalment or instalments,

or part thereof, would have been payable in the absence of such

extension or deferral, to the date when such instalment or instalments,

or part thereof, are made payable under the agreement of extension or

deferment; except that a minimum charge of one dollar for the period of

extension or deferral may be made in any case where the extension or

deferral charge, when computed at such rate or rates, amounts to less

than one dollar. Such agreement may also provide for the payment by the

buyer of the additional cost to the holder of the contract of premiums

for continuing in force, until the end of such period of extension or

deferral, any insurance coverages provided for in the contract, subject

to the provisions of subdivision six of section three hundred two.

2. The holder of a retail instalment contract may, upon agreement in

writing with the buyer, refinance the payment of the unpaid time balance

of the contract by providing for a new schedule of instalment payments.

The holder may charge and contract for the payment of a refinance charge

by the buyer at the rate or rates agreed to by the holder and the buyer

and collect and receive the same, but such refinance charge shall be

based upon the amount refinanced, plus any additional cost of insurance

and of official fees incident to such refinancing and any accrued

collection and delinquency charges, after the deduction of a refund

credit in an amount equal to that to which the buyer would have been

entitled under section three hundred five of this chapter if he had

prepaid in full his obligations under the contract but, in computing

such refund credit, there shall not be allowed such an amount as will

bring the earned credit service charge up to fifteen dollars. Such

agreement for refinancing may also provide for the payment by the buyer

of the additional cost to the holder of the contract of premiums for

continuing in force, until the maturity of the contract as refinanced,

any insurance coverages provided for therein, subject to the provisions

of subdivision six of section three hundred two. The refinancing

agreement shall set forth all items required to be disclosed by the act

of congress entitled "Truth in Lending Act" and the regulations

thereunder, as such act and regulations may from time to time be

amended.

Penalties. 1. Any person who shall wilfully violate any

provision of this article shall be guilty of a misdemeanor and upon

conviction shall be punished by a fine not exceeding five hundred

dollars.

2. A wilful violation of sections three hundred two or three hundred

three by any person shall bar his recovery of any credit service charge,

delinquency or collection charge or refinancing charge on the retail

instalment contract involved.

3. Notwithstanding the provisions of this section any failure to

comply with any provision of this article may be corrected within ten

days after the holder is notified thereof in writing by the buyer, or,

in the absence of such notice, the seller or holder may voluntarily

correct any such failure to comply and, if so corrected, neither the

seller nor the holder shall be subject to any penalty under subdivision

two of this section.

Waiver. Any waiver of the provisions of this article by the

buyer shall be unenforceable and void.

Exceptions. The provisions of section three hundred six and of

subdivision ten of section three hundred two shall apply to an

instalment sale of a motor vehicle for any use.

Severability. If any provision of this article or the

application thereof to any person or circumstance is held

unconstitutional, the remainder of the article and the application of

such provision to other persons or circumstances shall not be affected

thereby.

Short title. This article may be cited as "The Motor Vehicle

Retail Instalment Sales Act."

Refund credit on cancellation of credit related insurance or

prepayment of contract. The provisions of this article requiring refunds

and refund credits with respect to group credit life insurance, in cases

of cancellation of group credit life insurance or of prepayment of a

retail instalment contract shall also require refunds and refund credits

with respect to credit unemployment insurance, group credit accident,

group credit health or group credit accident and health insurance in

cases of cancellation of such insurance or prepayment of a retail

instalment contract which included such insurance.

Guaranties to sellers of liabilities of buyers under retail

instalment contracts. No guaranty given to the seller or to the seller

and the seller's assignee of the liabilities of a buyer under a retail

instalment contract shall be valid unless the guaranty is incorporated

in or endorsed on the contract or identifies the contract and specifies

the time balance thereof or, if the guaranty relates to one or more

future retail instalment contracts, it limits the liability of the

guarantor to contracts dated within a period of two years from the date

of the guaranty and sets forth the maximum amount for which the

guarantor shall be liable. A copy of the guaranty shall be given or

mailed to the guarantor upon or immediately after the execution and

delivery of the original guaranty by the guarantor.

As used in this section, "retail instalment contract" and "contract"

include a retail instalment contract as defined in the retail instalment

sales act, constituting article ten of this chapter. This section does

not apply to a guaranty made by a seller or a holder of a retail

instalment contract.

Security interest in other property. No retail instalment

contract, or any other agreement executed in connection therewith, shall

provide for the creation of a security interest in any personal or real

property, other than the motor vehicle which is the subject matter of

the retail instalment sale (or accessories therefor or special or

auxiliary equipment used in connection therewith), to secure the payment

of the time sale price under such contract or any part thereof,

provided, however, that the prohibition of this section shall not be

applicable to the taking of a mortgage or other security interest upon

or in connection with real property to secure the payment of the time

sale price of a retail installment sale, if the subject matter of the

retail installment sale is a mobile home or trailer which is to be

annexed to or situated on such real property. Any such prohibited

provision shall be void but shall not otherwise affect the validity of

such contract.

Claim for deficiency after default and repossession. If a buyer

defaults on any instalment of the time sale price and the holder obtains

possession of the motor vehicle and disposes of it as provided by

section 9--610 of the uniform commercial code, the buyer shall be liable

to the holder for any deficiency to the extent provided in that section;

provided, however, that in calculating such deficiency there shall be

deducted from the amount thereof as prescribed by such section 9--610,

an amount equal to that portion of the refund credit to which the buyer

would have been entitled under section three hundred five of this

chapter if, at the time the holder disposed of the motor vehicle, the

buyer had not been in default and had prepaid in full the balance of the

time sale price as the amount realized upon the disposition of the motor

vehicle bears to the balance of the time sale price.

Notice of buyer's redemption rights. The holder of any motor

vehicle installment contract who repossesses or accepts a voluntary

surrender of a motor vehicle pursuant to the provisions of article nine

of the uniform commercial code, or any contract, shall within

seventy-two hours of such repossession or surrender, personally deliver

or mail to the buyer at his last known address a written notice setting

forth the right of such buyer to redeem such motor vehicle, the dollar

amount necessary to redeem, and the name, address and telephone number

of the holder from which information may be obtained regarding such

redemption.

Short title. This article may be cited as the "Motor Vehicle

Retail Leasing Act".

Definitions. In this article, unless the context or subject

matter otherwise requires:

1. "Motor vehicle" or "vehicle" means any device propelled or drawn by

any power other than muscular power, upon or by which any person or

property is or may be transported or drawn upon a public highway, road

or street. The term does not include a "snowmobile" as defined in

subdivision three of section 21.05 of the parks, recreation and historic

preservation law or other vehicles not designed primarily for highway

transportation, but which may incidentally transport persons or property

on a public highway.

2. "Retail lessee" or "lessee" means a natural person who leases a

motor vehicle from a retail lessor primarily for personal, family or

household use and who executes a retail lease agreement in connection

therewith. For purposes of section three hundred thirty-four and

subdivisions two and three of section three hundred forty-six of this

article, the term also includes a person who makes a payment to a lessor

or leaves his vehicle with a lessor pending the execution of a retail

lease agreement. Except as provided in sections three hundred

forty-eight and three hundred forty-nine of this article, the term does

not include a person who leases a motor vehicle primarily for

agricultural, business or commercial use or for the purpose of

subleasing.

3. "Retail lessor" or "lessor" means a person regularly engaged in the

business of leasing or selling motor vehicles who leases a motor vehicle

to a retail lessee under or subject to a retail lease agreement.

4. "Retail lease" or "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. 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 nine of this chapter or the retention or creation of

a security interest in a motor vehicle.

5. "Retail lease agreement" or "agreement" means an agreement, entered

into in this state, for the lease of a motor vehicle, and which may

include the purchase of goods or services incidental thereto, by a

retail 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 vehicle 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 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 nine and

eleven of this chapter. An agreement that substantially complies with

this article does not create a security interest in a motor vehicle as

the term "security interest" is defined in paragraph thirty-five of

subsection (b) of section 1--201 of the uniform commercial code.

6. "Additional early termination charge" means the initial dollar

amount of the early termination charge the portion of which is

recoverable by the holder upon early termination in addition to the

amounts specified in paragraphs (a) through (e) of subdivision one of

section three hundred forty-one of this article. The additional early

termination charge may only include amounts which are reasonable in

light of the anticipated or actual harm caused by the delinquency,

default or early termination, the difficulties of proof of loss and the

inconvenience or nonfeasibility of otherwise obtaining an adequate

remedy. Any fees or charges included in the additional early termination

charge may not also be included in the capitalized cost.

* 7. "Initial early termination charge" means the sum of the adjusted

initial lease value and the additional early termination charge, which

would be recoverable under the lease agreement if the agreement were to

be terminated before any of the periodic rental payments had become due.

The term does not include any vehicle disposition fee or any other

components of a lessee's early termination liability which could not

have been incurred by the lessee at lease inception.

* NB There are 2 sb 7's

* 7. "Adjusted capitalized cost" means the capitalized cost less any

capitalized cost reduction payments made by the lessee at the inception

of the lease and any net trade-in allowance granted by the lessor.

* NB There are 2 sb 7's

8. "Anticipated assignee" means the person to whom the lessor

anticipates that the agreement will be assigned and to whom the

agreement subsequently is assigned by the lessor.

9. "Base rental payment" means that portion of the monthly or other

periodic rental payment which is equal to the sum of: (a) the average

monthly or other periodic lease charge; and (b) the average monthly or

other periodic depreciation. For purposes of this article, the average

monthly or other periodic depreciation may include a monthly or other

periodic charge for any item that the lessor has included in the

capitalized cost.

10. "Conspicuous" means that a term or clause is so written that a

reasonable person against whom it is to operate ought to have noticed

it. Whether or not a term or clause is conspicuous is a question of law

for decision by the court.

11. "Capitalized cost" means the agreed upon amount which serves as

the basis for determining the base rental payment and a portion of the

early termination liability of the lessee. The capitalized cost may

include any taxes, registration, license acquisition, assignment and

other fees and charges for insurance, for a waiver of the contractual

obligation to pay the gap amount, for accessories and their

installation, for delivering, servicing, repairing or improving the

motor vehicle and for other services incidental to the agreement. It

also may include the unpaid balance of any amount financed under an

outstanding motor vehicle loan agreement or motor vehicle retail

instalment contract or the unpaid portion of the early termination

obligation under an outstanding motor vehicle retail lease agreement.

The term does not include any lease charge or any amount included in the

additional early termination charge.

12. "Capitalized cost reduction" means any payments made by cash,

check or similar means that are in the nature of downpayments made by

the lessee at the inception of the lease for the purpose of reducing the

capitalized cost.

13. "Constant yield method" means: (a) in the case of a periodic

payment lease, that method of determining the lease charge portion of

each base rental payment pursuant to which the lease charge for each

computational period is earned in advance by multiplying the constant

rate implicit in the lease times the balance subject to lease charge as

it declines during the lease term. At any given time during the

scheduled term of a periodic payment lease, the balance subject to lease

charge is the difference between the adjusted capitalized cost and the

sum of: (i) all depreciation amounts accrued during the preceding

computational periods; and (ii) the first base rental payment; (b) in

the case of a single or advance payment lease, that method of

determining the periodic earning of lease charges pursuant to which the

lease charge for each computational period is earned in advance by

multiplying the constant rate implicit in the lease times the balance

subject to lease charge as it increases during the scheduled lease term.

At any given time during the scheduled term of a single or advance

payment lease, the balance subject to lease charge is determined by

subtracting from the estimated residual value the total lease charge

scheduled to be earned over the term of the lease and adding to the

difference all lease charges accrued during the preceding computational

periods; (c) in the case of either type of lease, the periodic lease

charge calculations are based on the assumption that the holder will

receive the rental payments on their exact due dates and that the lease

goes to its full term.

14. "Estimated residual value" means the estimated value of the leased

vehicle at the scheduled end of the lease term, used by the lessor in

determining the base rental payment, as established by the lessor at the

time he enters into a retail lease agreement.

15. "Gap amount" has the meaning ascribed to it in paragraph fifty-two

of subsection (a) of section one hundred seven of the insurance law.

16. "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. For purposes of paragraphs (a) and (b) of

subdivision six of section three hundred thirty-seven of this article,

gap insurance shall not be deemed "liability insurance or insurance on

the vehicle".

17. "Group credit insurance" means group credit life insurance, group

credit accident insurance, group credit health insurance, group credit

accident and health insurance or group credit unemployment insurance.

18. "Holder" means the retail lessor of a motor vehicle under or

subject to a retail lease agreement or, if the agreement is purchased by

an assignee, the assignee. Unless and until it realizes upon its

security interest therein, the term does not include a pledgee of one or

more lease agreements to secure a bona fide loan thereon.

19. "Lease charge" means the charge to be paid by the retail lessee

for the privilege of making the rental payments as scheduled under a

retail lease agreement. The term does not include any amount included in

the capitalized cost. The term also does not include any delinquency,

default, disposition, early termination, collection, or reinstatement

charge and the amount, if any, included in a retail lease agreement for

taxes, registration, license acquisition, assignment and other fees and

charges for insurance, for accessories and their installation, for

delivering, servicing, repairing or improving the motor vehicle and for

other services incidental to the agreement, whether or not such amounts

are included in the capitalized cost, paid for separately at lease

inception by cash, check or similar means or paid for on a monthly or

other periodic basis in addition to the base rental payment.

20. "Person" means an individual, partnership, corporation,

association or other group, however organized.

21. "Precomputed lease transaction" means a retail lease transaction

in which the base rental obligation is a sum comprising the total

depreciation estimated to occur during the scheduled term of the lease

and the amount of the lease charge computed in advance. A disclosure

required by the act of Congress entitled "Consumer Leasing Act of 1976"

does not in itself make a lease charge or transaction precomputed.

22. "Realized value" means: (a) the price received by the holder for

the leased vehicle at disposition; (b) the highest offer received by the

holder for disposition of the leased vehicle; or (c) the fair market

value of the vehicle, determined pursuant to subdivision one of section

three hundred forty of this article by a mutually acceptable independent

appraiser, at the scheduled end of the lease term or, if the lease is

terminated prior thereto, at early termination. The realized value of

the vehicle may be its value in the customary wholesale market.

23. "Renegotiation" means the satisfaction of an existing retail lease

agreement and the replacement of the existing agreement by a new lease

agreement undertaken by the same lessor or holder and the same lessee.

The term does not include: (a) the substitution of the leased vehicle or

the addition or return of a vehicle in a multiple-vehicle lease, if in

either case the average payment allocable to a rental period is not

increased by more than twenty-five percent; (b) a deferral or extension

of one or more periodic payments, or portions of a periodic payment; (c)

a reduction in charges in the agreement; (d) an agreement involving a

court proceeding; or (e) any other agreement or event which does not

constitute a "renegotiation" under the act of Congress entitled

"Consumer Leasing Act of 1976" and the regulations thereunder, as such

act and regulations may from time to time be amended.

24. Words in the singular include the plural and vice versa.

Rebate or discount for information or assistance in lease or

sale of motor vehicle. No lessor shall induce or attempt to induce any

person to enter into an agreement subject to this article by offering a

subsequent rebate, discount, commission or other consideration, on the

condition that the lessee provide information or assistance for the

purpose of enabling the lessor to either lease or sell a motor vehicle

to another person.

Pre-lease availability of sample form of agreement. 1. The

lessor of a motor vehicle shall make a blank sample copy of its current

form of retail lease agreement readily available for examination by

prospective lessees by:

(a) Furnishing it upon request prior to the consummation of a retail

lease transaction; and

(b) Posting in its place of business a sign stating that a blank

sample copy of its form of retail lease agreement is available upon

request.

2. An assignee who has prepared a form of retail lease agreement that

is used by a lessor shall provide the lessor with blank sample copies of

that form of agreement which the lessor may use to comply with the

delivery requirement imposed upon it by paragraph (a) of subdivision one

of this section. An assignee who does so shall have no liability if the

lessor to whom those materials are provided fails to comply with this

section.

Payment or trade-in pending execution of lease agreement;

refund or return upon non-execution. 1. Any payment made by cash, check

or similar means to a lessor pending the execution of a retail lease

agreement shall be refunded to the lessee in the event the lease

agreement is not executed. Any refund required by this subdivision shall

be made by the lessor within fifteen business days after the lease

application is rejected by the lessor or the prospective assignee.

2. If a lessee is required to make a payment to a lessor by cash,

check or similar means pending the execution of a retail lease

agreement, the lessor shall notify the lessee in writing that the lessee

has the right, if the lease application is not approved, to have any

traded-in vehicle returned promptly and receive a prompt refund of any

payments made.

3. If a lessee leaves his motor vehicle with the lessor in lieu of or

in addition to a payment by cash, check or similar means, and the lessor

and lessee agree that the parties shall enter into a retail lease

agreement, the lessor shall not sell or transfer the vehicle traded-in

until the lessee and the lessor execute a retail lease agreement. In the

event a lease agreement is not executed, the lessor shall promptly

return to the lessee the vehicle traded-in.

4. The provisions of this section shall not apply to any fee charged,

received or collected by a holder in connection with the assumption of

an existing retail lease agreement.

5. The provisions of this section shall not apply to the sale of a

motor vehicle by a prospective lessee to a prospective lessor under a

separate contract of sale for the price specified in the contract if

such contract is executed before the parties have consummated a retail

lease agreement, is in writing, is dated as of the date of the sale and

is signed by the parties. To be exempt under the provisions of this

subdivision, such agreement shall also:

(a) clearly and conspicuously disclose to the seller that the sale

price for the vehicle establishes its value for purposes of determining

the amount the lessor will credit as a "capitalized cost reduction"

under any retail lease agreement subsequently consummated by the parties

or as the amount due to the lessee for the vehicle in the event the

parties fail to consummate a retail lease agreement;

(b) contain a conspicuous clause that is initialled separately by the

prospective lessee whereby such lessee agrees to leave the amount of the

purchase price on deposit with the prospective lessor pending the

consummation of a retail lease agreement for a currently produced model

year vehicle that is to be ordered specially from the manufacturer or

for a model year vehicle that is not yet in production as of the date of

the sale of the lessee's vehicle; and

(c) stipulate that seventy-five days after the date of the sale, the

prospective lessee shall be entitled on demand to payment of the agreed

upon price for the vehicle unless within that time the parties have

consummated a separate retail lease agreement or have agreed to an

earlier payment of the price to the lessee.

Total loss notice and waiver of the gap amount. 1. If the

retail lease agreement provides that the lessee shall be responsible

upon a total loss of the vehicle occasioned by its 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 vehicle. 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

vehicle occasioned by its 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 vehicle occasioned by

its 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 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 vehicle

occasioned by its 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 to the holder, after a total

loss of the motor vehicle occasioned by its theft, confiscation or

physical damage the gap amount. No retail lease agreement shall be

conditioned upon the lessee's obtaining of motor vehicle lessee gap

insurance as set forth in subparagraph (B) 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 vehicle occasioned by its 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

vehicle occasioned by its theft or physical damage, only if 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 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

vehicle occasioned by its 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 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 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.

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 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 vehicle

occasioned by its theft, confiscation or physical damage for the gap

amount.

Business purpose statement. 1. A preprinted or typewritten

affirmation or other provision indicating that a vehicle is being leased

primarily for agricultural, business or commercial use shall be

inadmissible in evidence in any trial, hearing, action or proceeding on

behalf of a lessor or holder unless the affirmation or other provision

is printed or typewritten in a separate document signed by the lessee

that contains: (a) a space which the lessee must complete in order to

identify the nature of his or her business; and (b) directly above the

space reserved for the signature of the lessee, a conspicuous statement

informing the lessee that important consumer protections will not apply

if the vehicle is being leased primarily for agricultural, business or

commercial use.

2. This section shall not apply if the retail lease agreement

contains: (a) a provision permitting the lessee to specify whether the

vehicle is being leased primarily for personal, family or household use

or primarily for agricultural, business or commercial use; and (b)

either in close proximity to the provisions permitted by paragraph (a)

of this subdivision or directly above the notice required by paragraph

(c) of subdivision two of section three hundred thirty-seven of this

article, a notice printed or written in a size equal to at least

eight-point bold type that is substantially similar to the following

notice: "WARNING: Important consumer protections may not apply if this

agreement indicates that you are leasing the vehicle primarily for

agricultural, business or commercial use."

3. The statement by the lessee of the purpose for which the vehicle is

being leased shall not be dispositive of the issue of whether the

vehicle is being leased primarily for personal, family or household use.

In determining whether the vehicle is being leased primarily for

personal, family or household use, the court shall consider any other

factors relevant to that determination.

Requirements as to retail lease agreements. 1. A retail lease

agreement shall be in a writing and, except as otherwise provided in

subdivision two of section three hundred forty-five of this article,

signed contemporaneously by the lessor and the lessee. Except as

provided in sections three hundred thirty-five and three hundred

thirty-six of this article, a retail lease agreement shall contain in a

single document all the agreements of the parties.

2. The printed portion of the agreement shall be printed in at least

eight-point type in ink that contrasts with the paper used. The

agreement shall contain the following items printed or written in a size

equal to at least ten-point bold type:

(a) Both at the top of the agreement and directly above the space

reserved for the signature of the lessee, the words "LEASE AGREEMENT",

"RETAIL LEASE AGREEMENT" or "MOTOR VEHICLE LEASE AGREEMENT";

(b) A specific statement that physical damage or liability insurance

coverage for bodily injury and property damage caused to others is not

included, if that is the case; and

(c) Directly above the acknowledgment permitted by subdivision three

of this section to appear above the space reserved for the signature of

the lessee, a written notice informing the lessee that: (i) the lessee

should not sign the agreement before he or she reads it or if it

contains any blank space; and (ii) the lessee is entitled to a

completely filled in copy of the agreement when he or she signs it. A

notice substantially similar to the following notice complies with the

requirements of this paragraph: "NOTICE TO THE LESSEE: 1. Do not sign

this agreement before you read it or if it contains any blank space. 2.

You are entitled to a completely filled in copy of this agreement when

you sign it."

3. The lessor shall deliver to the lessee, or mail to him or her at

his or her address shown on the agreement, a copy of the agreement

signed by the lessor. Until the lessor does so, a lessee who has not

received delivery of the motor vehicle shall have an unconditional right

to cancel the agreement and to receive an immediate refund of all

payments made and redelivery of all goods traded-in to the lessor on

account of or in contemplation of the agreement. Any acknowledgment by

the lessee of delivery of a copy of the agreement shall be printed or

written in a size equal to at least eight-point bold type and, if

contained in the agreement, shall appear directly above the legend

required by paragraph (a) of subdivision two of this section to appear

directly above the space reserved for the signature of the lessee.

4. The agreement shall contain the names of the lessor and the lessee,

the place of business of the lessor, the residence or place of business

of the lessee as specified by the lessee and a description of the motor

vehicle including its make, year model, model and identification number

or marks.

5. The agreement shall contain:

(a) All items required to be disclosed by the act of Congress entitled

"Consumer Leasing Act of 1976" and the regulations thereunder, as such

act and regulations may from time to time be amended; provided, however,

that the disclosures required by the "Consumer Leasing Act of 1976"

shall be made in all leasing transactions covered by this article

regardless of the exemption in the "Consumer Leasing Act of 1976" for

lease transactions in which the total contractual obligation exceeds

twenty-five thousand dollars;

(b) The capitalized cost, using the term "capitalized cost" and a

descriptive explanation such as "the sum of the adjusted capitalized

cost and any capitalized cost reduction. The capitalized cost and the

amount of the rental payment may be negotiable";

(c) The adjusted capitalized cost of the vehicle, using the term

"adjusted capitalized cost", a descriptive explanation such as "the

amount which is capitalized in connection with the lease and is used in

determining the amount of your periodic payment" and immediately

thereafter one of the following additional explanatory statements:

(i) In the case of an agreement which provides for an "additional

early termination charge" and whose early termination provisions

expressly refer to the "adjusted capitalized cost," a statement that

"this amount plus the additional early termination charge will be used

in determining your early termination liability";

(ii) In the case of an agreement which provides for an "additional

early termination charge" and whose early termination provisions do not

expressly refer to the "adjusted capitalized cost," a statement that

"this amount plus the additional early termination charge will be used

in determining the legal limit on your early termination liability";

(iii) In the case of an agreement which does not provide for an

"additional early termination charge" and whose early termination

provisions expressly refer to the "adjusted capitalized cost," a

statement that "this amount will be used in determining your early

termination liability"; or

(iv) In the case of an agreement which does not provide for an

"additional early termination charge" and whose early termination

provisions do not expressly refer to the "adjusted capitalized cost," a

statement that "this amount will be used in determining the legal limit

on your early termination liability";

(d) The amount, if any, included for insurance and other benefits,

specifying and describing the coverages and the amount included for each

type of coverage;

(e) In close proximity to the adjusted capitalized cost disclosure

required by paragraph (c) of this subdivision and only as applicable,

any additional early termination charge provided for under the

agreement, using the term "additional early termination charge", and one

of the following descriptive explanations:

(i) In the case of an agreement whose early termination provisions

expressly refer to the "adjusted additional early termination charge," a

descriptive explanation such as "an additional amount the unamortized

portion of which will be used in determining your early termination

liability"; or

(ii) In the case of an agreement whose provisions do not expressly

refer to the "additional early termination charge," a descriptive

explanation such as "an additional amount the unamortized portion of

which will be used in determining the legal limit on your early

termination liability"; and immediately after the descriptive

explanation additional explanatory statements that "this amount

represents the total costs and damages, in addition to the adjusted

capitalized cost, which we would incur if this agreement were to be

terminated before you had made any rental payments."

(f) In close proximity to the "adjusted capitalized cost" and

"additional early termination charge" disclosures required by paragraphs

(c) and (e) of this subdivision, one of the following statements:

(i) In the case of an agreement which provides for an "additional

early termination charge" and whose early termination provisions do not

expressly refer to either the "adjusted capitalized cost" or the

"additional early termination charge," a statement that "although they

are not referred to in the early termination provisions of this lease,

the 'adjusted capitalized cost' and the 'additional early termination

charge' may be used to compare the early termination provisions of

competing lessors";

(ii) In the case of an agreement which provides for an "additional

early termination charge" and whose early termination provisions do not

expressly refer to the "additional early termination charge," a

statement that "although the 'additional early termination charge' is

not referred to in the early termination provisions of this lease, the

'additional early termination charge' and the 'adjusted capitalized

cost' may be used to compare the early termination provisions of

competing lessors";

(iii) In the case of an agreement which provides for an "additional

early termination charge" and whose early termination provisions do not

expressly refer to the "adjusted capitalized cost," a statement that

"although the 'adjusted capitalized cost' is not referred to in the

early termination provisions of this lease, the 'adjusted capitalized

cost' and the 'additional early termination charge' may be used to

compare the early termination provisions of competing lessors";

(iv) In the case of an agreement which provides for an "additional

early termination charge" and whose early termination provisions

expressly refer to both the "adjusted capitalized cost," and the

"additional early termination charge," a statement that "the 'adjusted

capitalized cost' and the 'additional early termination charge' may be

used to compare the early termination provisions of competing lessors";

(v) In the case of an agreement which does not provide for any

"additional early termination charge" and whose early termination

provisions do not expressly refer to the "adjusted capitalized cost," a

statement that "although the 'adjusted capitalized cost' is not referred

to in the early termination provisions of this lease, the 'adjusted

capitalized cost' may be used to compare the early termination

provisions of competing lessors"; or

(vi) In the case of an agreement which does not provide for any

"additional early termination charge" and whose early termination

provisions expressly refer to the "adjusted capitalized cost," a

statement that "the 'adjusted capitalized cost' may be used to compare

the early termination provisions of competing lessors."

(g) A statement in at least eight-point bold type informing the lessee

that he or she has the right to terminate the agreement voluntarily at

any time after the first fifty percent of the total number of months

constituting the full scheduled lease term, or earlier if the agreement

so provides, if he or she is in full compliance with the terms of the

agreement and satisfies his or her early termination obligation;

(h) A statement in at least eight-point bold type to the effect that

"early termination may require you to pay a substantial charge";

(i) A statement in at least eight-point bold type stating that the

lessee shall not be liable for an early termination fee if he or she has

deceased before the end of the lease;

(j) A provision permitting a lessee whose default consists solely of

the failure to make timely rental payments to cure his or her default

and reinstate the agreement, without losing any rights or options

previously acquired under the agreement, by paying all past due rental

and delinquency charges and, if the agreement so provides, a

reinstatement fee not to exceed ten dollars and the actual and

reasonable costs of repossession, storage, pickup and redelivery within

twenty-five days after the lessee is sent written notice of his or her

reinstatement rights. The reinstatement right granted pursuant to this

paragraph may be restricted to a lessee who has not previously been

afforded the opportunity to reinstate the agreement. For purposes of

this paragraph, a rental charge is past due if it is not paid by its

scheduled due date or within any grace period specified in the

agreement;

(k) The estimated residual value of the vehicle, using the term

"estimated residual value";

* (l) In the case of an agreement which does not obligate the lessee

upon a total loss of the vehicle occasioned by its theft or physical

damage for any of the items specified in paragraphs (e) and (f) of

subdivision one of section three hundred forty-one of this article, a

conspicuous notice that the lessee has no such obligation.

* NB There are 2 par (l)'s

* (l) The liability of the lessee in the case of a total loss of the

vehicle or the vehicle is rendered inoperable. Disclosure of liability

pursuant to this paragraph shall include the financial liability of the

lessee and the lessor's rules, policies and procedures in the event the

car is declared a total loss or rendered inoperable during the term of

the lease.

* NB There are 2 par (l)'s

Nothing in this subdivision prevents a holder from attempting to

repossess a vehicle, accepting its voluntary surrender or selling it

during the reinstatement period, but such a repossession, voluntary

surrender, or sale shall not affect the reinstatement right of the

lessee. Upon reinstatement, the holder shall provide the lessee with the

same vehicle leased by the lessee prior to reinstatement or, if that

vehicle is not available, a substitute vehicle of comparable worth,

quality and condition.

6. (a) (i) The amount, if any, included for liability insurance or

insurance on the vehicle, shall not exceed the premiums charged by the

insurance company for such insurance. The holder, if the cost of

liability insurance or insurance on the motor vehicle is included in a

retail lease agreement and the policy or policies are delivered to the

holder, shall within thirty days after execution of the retail lease

agreement, send or cause to be sent to the lessee a copy of the policy

or policies of insurance, issued by an insurance company authorized to

do that kind of insurance business in this state, clearly setting forth

the amount of the premium, the kind or kinds of insurance and the scope

of the coverage and all the terms, exceptions, limitations, restrictions

and conditions of the contract or contracts of insurance.

(ii) The lessee of a motor vehicle under a retail lease agreement

shall have the privilege of purchasing such insurance from an agent or

broker of his or her own selection and of selecting an insurance company

acceptable to the lessor; provided, however, that the inclusion of the

insurance premium in the retail lease agreement when the lessee selects

the agent, broker or company, shall be optional with the lessor and in

such case the lessor or assignee shall have no obligation to send, or

cause to be sent, to the lessee a copy of the policy of insurance.

(b) If any such policy of liability insurance or insurance on the

motor vehicle is cancelled, the unearned insurance premium refund

received or receivable by the holder of the agreement or, if the amount

included therefor in the agreement exceeds the cost to the holder of the

agreement for such insurance, the unearned portion of the amount so

included, shall be either: (i) refunded to the lessee within ten

business days after it is received by the holder; or (ii) credited,

together with the unearned portion of the lease charge applicable

thereto, to the final maturing rental payments or, at the option of the

holder, to the end of term obligations under the retail lease agreement

except to the extent applied toward payment for similar insurance

protecting the interests of the lessee and the holder of the agreement

or either of them, provided that no such credit or refund need be made

if the amount thereof would be less than one dollar.

(c) The amount, if any, included for group credit insurance or for

insurance other than gap insurance, liability insurance or insurance on

the motor vehicle shall not exceed the premiums charged by the insurance

company for such insurance. If such group credit or other insurance is

cancelled the refund for unearned insurance premiums received or

receivable by the holder of the agreement, or the excess of the amount

included in the agreement for group credit or other insurance over the

premiums paid or payable by the holder of the agreement therefor shall

be either: (i) refunded to the lessee within ten business days after it

is received by the holder; or (ii) credited, together with, in either

case, the unearned portion of the lease charge applicable thereto, to

the final maturing rental payments or, at the option of the holder, to

the end of term obligations under the retail lease agreement, provided

that no such credit or refund need be made if the amount thereof would

be less than one dollar.

(d) The amount of any separate charge included for a waiver by the

lessor of its contractual right to hold the lessee liable for the gap

amount shall not exceed the cost of lessor gap insurance covering the

retail lease transaction.

7. (a) If the lessee is obligated in connection with the lease to

maintain liability insurance or insurance on the motor vehicle that is

the subject of the agreement and if subsequent to the execution of the

agreement the lessee fails to maintain the required insurance, the

holder may make advances to procure the equivalent limits of insurance

for either the interests of the lessee and the holder or the interest of

either of them, and any amount so advanced may be the subject of a lease

charge as though such amount was part of the initial lease value.

(b) If under subdivision two of section three hundred thirty-five of

this article, the lessor waives its contractual right to hold the lessee

liable for the gap amount, and lessor gap insurance coverage which the

lessor or holder purchased in connection with the transaction

subsequently is terminated prior to the filing of a claim due to the

insolvency of the insurance company, notwithstanding the provisions of

paragraph three of subsection (b) of section one thousand one hundred

one of the insurance law the holder may make an advance to procure

equivalent limits of lessor gap insurance covering the transaction and

any amount so advanced may be the subject of a lease charge as though

such amount was part of the capitalized cost.

(c) Each amount so advanced shall be subject to the default provisions

of the lease agreement if so provided in the agreement and if the holder

notifies the lessee in writing of the advance of such amount and of his

or her option to repay such amount in any one of the following ways:

(i) Full payment within ten days from the date of giving or mailing

the notice;

(ii) Full amortization during the term of the insurance or the

remaining term of the agreement, at the option of the holder;

(iii) If offered by the holder, as a final balloon payment payable one

month after the last scheduled payment under the agreement;

(iv) If offered by the holder, full amortization after the term of the

agreement, to be made in periodic payments which do not exceed the

average periodic payment under the agreement; or

(v) If offered by the holder, any other amortization plan.

If the lessee neither pays in full the amount so advanced nor notifies

the holder in writing of his or her choice regarding the amortization

options before the expiration of ten days from the date of giving or

mailing the notice by the holder, the holder shall amortize the amount

so advanced pursuant to subparagraph (ii) of paragraph (c) of this

subdivision.

8. (a) The holder of a retail lease agreement may, if the agreement so

provides, collect a delinquency and collection charge on each rental

payment in default for a period not less than ten days in an amount not

in excess of the amount or amounts agreed to in the agreement. In

addition to a delinquency and collection charge, the retail lease

agreement may provide for the payment of reasonable attorneys' fees not

exceeding fifteen percent of the amount due and payable under the

agreement where the agreement is referred to an attorney not a salaried

employee of the holder of the agreement for collection, plus the court

costs.

(b) The holder may not assess or collect a delinquency and collection

charge under paragraph (a) of this subdivision on a rental payment,

which payment is otherwise a full payment for the applicable period and

is paid within ten days after its scheduled or deferred due date, when

the only delinquency is attributable to delinquency and collection

charges assessed on an earlier rental payment or payments.

9. No retail lease agreement shall be signed by any party thereto when

it contains blank spaces to be filled in after it has been signed except

that, if delivery of the motor vehicle is not made at the time of the

execution of the agreement, the identifying numbers or marks of the

motor vehicle or similar information and the due date of the first

payment may be inserted in the agreement after its execution. The

lessee's written acknowledgment, conforming to the requirements of

subdivision three of this section, of delivery of a copy of the

agreement shall be conclusive proof of such delivery and of compliance

with this subdivision in any action or proceeding by or against an

assignee of the agreement without knowledge to the contrary when he or

she purchases the agreement.

10. No retail lease agreement shall contain any provision by which the

lessee agrees not to assert against a holder a claim or defense or

require or entail the execution of any note or series of notes which,

when separately negotiated, will cut off as to third parties any right

of action or defense which the lessee may have against the lessor. The

holder of a retail lease agreement shall be subject to all claims and

defenses of the lessee against the lessor arising from the lease

notwithstanding any agreement to the contrary, but the holder's

liability under this subdivision shall not exceed the amount owing to

the holder at the time the claim or defense is asserted against the

holder. The holder shall have recourse against the lessor to the extent

of any liability incurred by the holder pursuant to this subdivision

regardless of whether the assignment of the agreement was with or

without recourse.

11. Notwithstanding any contrary provision of this chapter, the lien

law, banking law or other law: (a) a person may purchase a retail lease

agreement from a lessor on such terms and conditions and for such price

as may be mutually agreed upon; and (b) no filing of the assignment, no

notice to the lessee of the assignment, and no requirement that the

lessor be deprived of dominion over payments upon the agreement or over

the vehicle if repossessed by or returned to the lessor, shall be

necessary to the validity of a written assignment of a retail lease

agreement as against creditors, subsequent purchasers, pledgees,

mortgagees or encumbrancers of the lessor.

12. Unless the lessee has notice of actual or intended assignment of a

retail lease agreement, payment thereunder made by the lessee to the

last known holder of such agreement shall be binding upon all subsequent

holders or assignees. A notification which does not reasonably identify

the rights assigned is ineffective. If requested by the lessee, the

assignee shall furnish reasonable proof that the assignment has been

made and unless he or she does so the lessee may pay the original

lessor.

13. (a) Upon written request from the lessee, the holder of a retail

lease agreement shall give or forward to the lessee a written statement

of the dates and amounts of the rental payments that have been made

under the agreement and the total amount of the remaining rental

payments. A lessee shall be given a written receipt for any payment when

made in cash.

(b) Upon written request from a lessee who is then entitled to

terminate the agreement early, the holder of a retail lease agreement

shall give or forward to the lessee a written statement of his or her

gross early termination liability under the agreement.

14. No retail lease agreement shall contain any provision applicable

to a natural person who leases a vehicle primarily for personal, family

or household use by which:

(a) in the absence of the lessee's default, the holder may,

arbitrarily and without reasonable cause, accelerate the maturity of any

part or all of the amount owing thereon;

(b) a power of attorney is given to confess judgment, or an assignment

of wages is given;

(c) the lessor or holder of the agreement or other person acting on

his or her behalf is given authority to enter upon the lessee's premises

unlawfully, or to commit any breach of the peace in the repossession of

the motor vehicle;

(d) the lessee waives any right of action against the lessor or holder

of the agreement, or other person acting on his or her behalf, for any

illegal act committed in the collection of payments under the agreement

or in the repossession of the motor vehicle;

(e) the lessee executes a power of attorney appointing the lessor or

holder of the agreement, or other person acting on his or her behalf, as

the lessee's agent in collection of payments under the agreement or in

the repossession of the motor vehicle; provided, however, that this

paragraph shall not prohibit the inclusion in a retail lease agreement

of a limited power of attorney or other provision authorizing the holder

to execute in the name of the lessee any proofs of insurance claims or

losses or to endorse the name of the lessee on any insurance settlement

draft or check;

(f) the lessor is relieved from liability for any legal remedy which

the lessee may have had against the lessor under the agreement, or any

separate instrument executed in connection therewith;

(g) the maturity of any part or all of the amount owing thereon is

accelerated where, following a default consisting solely of the failure

to make timely rental payments, a lessee who has the right to reinstate

the agreement makes timely tender of an amount which would be sufficient

to reinstate the agreement under paragraph (i) of subdivision five of

this section;

(h) the lessee waives any right to a trial by jury in any action or

proceeding arising out of the agreement;

(i) a lessee who is not in default of his or her obligations under the

agreement would be prohibited from terminating the agreement at any time

after the expiration of the first fifty percent of the total number of

months of the lease term. The exercise of this right to terminate early

voluntarily is contingent upon the lessee discharging fully his or her

liability under the early termination provisions of the agreement; or

(j) the lessee would be charged a turn-in fee at the expiration of the

term which constitutes solely an additional fee for administrative,

handling or clerical charges.

15. Any such prohibited provision shall be void but shall not

otherwise affect the validity of the agreement.

16. Where necessary to ensure consistency with the pronoun usage in

the underlying agreement, any language required by this article to be

used in connection with a required disclosure may be modified to refer

to the lessee in the first person and the holder in the second person.

Security interest prohibited. 1. No retail lease agreement, or

any other agreement executed by the lessee in connection therewith,

shall provide for the creation of a security interest in any personal or

real property of the lessee to secure the payment of the debt arising

from the lease. This prohibition shall not apply to: (a) the taking of

a security deposit, advance payment of rent or other prepayment by cash,

check or similar means; (b) the retention or exercise by a banking

organization of a right of set off; or (c) the retention of a security

interest in the proceeds, cancellation refunds or other rights of the

lessee under any insurance, repair or service contract whose cost is

included in the total monthly lease payment.

2. A security interest taken in violation of this section shall be

void but shall not otherwise affect the validity of a retail lease

agreement.

Notice of lessee's reinstatement rights. After a lessee has

been in default for ten days solely by reason of his or her failure to

make timely rental payments, the holder of any retail lease agreement

shall mail or personally deliver to the lessee at his or her last known

address a written notice conspicuously setting forth the right of the

lessee to reinstate the agreement, the dollar amount necessary to

reinstate the agreement and the name, address and telephone number of

the holder from which information may be obtained regarding such

reinstatement. No notice of reinstatement need be given if:

1. The holder does not declare the lessee to be in default under the

agreement because of his or her failure to make timely rental payments;

or

2. The lessee previously was afforded the opportunity to reinstate the

agreement.

Establishment of realized value at lease termination when

purchase option not exercised; notice of intention to sell motor

vehicle. 1. If an agreement is terminated early and there is no option

to purchase the vehicle or the lessee does not exercise any option he or

she may have to purchase the vehicle, or if the lessee's liability at

the scheduled end of the lease term is based upon the estimated residual

value of the vehicle and the lessee does not exercise any option he or

she may have to purchase the vehicle, the holder shall act in a

commercially reasonable manner when disposing of the vehicle or

obtaining cash bids for the purpose of establishing the realized value

of the vehicle, which may be its value in the customary wholesale

market. A lessee whose agreement is terminated early without the

exercise of a purchase option or whose liability at the scheduled end of

the lease term is based upon the estimated residual value of the vehicle

may obtain, at his or her expense, a professional appraisal by an

independent third party agreed to by the lessee and the holder of the

wholesale value which could be realized at sale of the leased vehicle.

If a professional appraisal is obtained by such a lessee, the appraised

value shall be final and binding upon the parties and shall be used as

the realized value in determining the liability of the lessee at early

termination or at the scheduled end of the lease term.

2. If an agreement is terminated early and there is no option to

purchase the vehicle or the lessee does not exercise any option he or

she may have to purchase the vehicle, or if the lessee's liability at

the scheduled end of the lease term is based upon the estimated residual

value of the vehicle and the lessee does not exercise any option he or

she may have to purchase the vehicle, the holder shall give the lessee

at least ten days written notice of its intention to sell the motor

vehicle. A notice of intention to sell the vehicle need not be given if

the holder and lessee have agreed in writing to the amount of the

lessee's liability under the retail lease agreement after the lessee

returns the vehicle to the holder or the lessee has fully satisfied his

or her obligations under the agreement. A holder gives notice to the

lessee under this subdivision when he or she delivers the notice to the

lessee or mails the notice to him or her at his or her last known

address.

3. The notice of intention to sell the vehicle shall set forth

separately any charges or sums due under the agreement and shall clearly

and conspicuously state that the lessee will be liable for the

difference between the estimated residual value of the vehicle and its

realized value, if such liability exists. The notice also shall state

that the lessee has the right to submit a cash bid for the purchase of

the vehicle.

Restriction on early termination liability. 1. If an agreement

is terminated early and there is no option to purchase the vehicle or

the lessee does not exercise any option he or she may have to purchase

the vehicle, the early termination obligation of the lessee may not

exceed an amount equal to the sum of:

(a) any unpaid rental payments that accrued through the date of early

termination;

(b) 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;

(c) any official fees and taxes imposed in connection with lease

termination;

(d) a reasonable disposition fee or, in lieu thereof, the reasonable

costs of retaking, storing, preparing for sale and selling the vehicle;

(e) the difference, if any, between: (i) the adjusted capitalized

cost, and (ii) the sum of all depreciation amounts accrued through the

date of early termination, calculated in accordance with the constant

yield method or any other generally accepted actuarial method, and the

realized value of the vehicle; and

(f) an additional early termination charge which is reasonable in

light of the anticipated or actual harm caused by the default or early

termination, the difficulties of proof of loss and the inconvenience or

nonfeasibility of otherwise obtaining an adequate remedy.

As an alternative to the constant yield and other generally accepted

actuarial methods of determining the depreciation amounts accrued

through the date of early termination of a precomputed lease

transaction, those amounts may be determined under paragraph (e) of this

subdivision by using a retail lease agreement under which the lease

charge is calculated on the adjusted capitalized cost for the time

outstanding according to a generally accepted actuarial method.

2. This section does not limit or restrict the manner of calculating

the early termination liability of a lessee, whether by way of

unamortized capitalized cost, discounted present value of remaining

rental payments, multiples of monthly payments or otherwise, so long as

the early termination liability of the lessee does not exceed that

permitted by this section.

3. Any refundable security deposit or advance rental payment held by

the holder may be retained by the holder and shall be credited against

the early termination obligation of the lessee.

4. There shall be no early termination liability to the lessee if he

or she has deceased before the end of such lease.

Restriction on the reporting of early terminations. The holder

of a retail lease agreement shall not report the voluntary early

termination of the agreement to a consumer reporting agency or any other

person as a derogatory item of information unless the lessee fails to

satisfy his or her early termination obligations.

Assessment of excess wear and damage to the vehicle. 1. (a)

Upon the scheduled termination of a retail lease agreement, the holder

shall not charge, receive or collect a charge for excess wear and damage

to the vehicle which exceeds: (i) the actual cost of repairs, reduced by

all discounts, paid by the holder; or (ii) a true itemized estimate of

the cost of such repairs by an appraiser licensed pursuant to section

three hundred ninety-eight-d of the vehicle and traffic law selected by

the holder, of the cost of such repairs.

(b) Upon early termination of a retail lease agreement, the holder

shall not charge, receive or collect a charge for excess wear and damage

to the vehicle which exceeds the actual costs of repairs, reduced by all

discounts, paid by the holder.

2. In order for a holder to impose a charge for excess wear and damage

to a vehicle subject to a retail lease agreement, such agreement shall

contain a clause describing the excess wear and damage to the vehicle

for which the lessee may be liable. Such holder shall, not more than

forty days nor less than twenty days prior to the scheduled termination

date, or, not more than ten business days after the date of an early

termination of a lease agreement, mail or deliver to the lessee a notice

advising the lessee of the following rights and obligations of the

parties, herein granted and imposed:

(a) Such notice shall include the following statement, as set forth

herein, at the beginning of the notice in at least ten-point bold type:

"YOUR LEASE AGREEMENT ALLOWS (HOLDER) TO ASSESS A

CHARGE FOR EXCESS WEAR AND DAMAGE TO THE VEHICLE.

YOU SHOULD OBTAIN YOUR OWN EVIDENCE OF THE CURRENT

CONDITION OF THE VEHICLE NOT MORE THAN TWENTY (20)

DAYS PRIOR TO THE SCHEDULED TERMINATION OF YOUR

LEASE. YOU ALSO WILL HAVE THE RIGHT TO SUBMIT

DISPUTES TO THE ALTERNATE ARBITRATION MECHANISM

ESTABLISHED UNDER REGULATIONS PROMULGATED BY THE NEW

YORK STATE ATTORNEY GENERAL."

(b) In the case of a scheduled termination, of the lessee's right to

turn the vehicle in with a copy of an itemized appraisal of excess wear

and damage to the vehicle prepared by an appraiser licensed under

section three hundred ninety-eight-d of the vehicle and traffic law,

selected by the lessee and conducted not more than twenty days prior to

the scheduled termination date;

(c) Of the right of the holder to, within thirty days after the date

on which the vehicle comes into the actual physical possession of the

holder, obtain a written itemized appraisal of excessive wear and damage

to the vehicle prepared by an appraiser licensed under section three

hundred ninety-eight-d of the vehicle and traffic law selected by the

holder;

(d) That if the lessee had not previously obtained and submitted to

the holder a written itemized appraisal on the lessee's own behalf in

accordance with paragraph (b) of this subdivision, the lessee will have

the greater of ten business days after the lessee has received or

fourteen business days to do so after the holder has sent, in

conformance with subdivision three of this section, an itemized bill for

excess wear and damage and a copy of the itemized appraisal prepared on

behalf of the holder, unless the lessee does not dispute any of the

items contained therein. In the case where the holder bases the charge

for excess wear and damage on the actual cost of repairs, the notice

shall also inform the lessee that should the lessee fail to obtain an

itemized written appraisal, he or she is entitled to dispute only

whether any items claimed exist and/or are excess wear and damage to the

vehicle, but not the actual cost of making the repairs;

(e) That if the lessee disputes that any of the items claimed for

excess wear and damage to the vehicle exist or are excessive in nature,

the lessee may submit the dispute within sixty days of the date on which

the vehicle comes into the actual physical possession of the holder to

the holder's informal dispute settlement procedure, if any, or, upon the

payment of the prescribed filing fee which is refundable if the

arbitrator finds in the lessee's favor, to an alternative arbitration

mechanism established under regulations promulgated by the attorney

general of the state of New York;

(f) That if there exists a discrepancy between the itemized appraisals

obtained by the holder and the lessee, if any, the holder shall submit

the dispute within sixty days of the date on which the vehicle comes

into the actual physical possession of the holder to the holder's

informal dispute settlement procedure, if any, unless the lessee

exercises the option granted by paragraph (b) of subdivision five of

this section; provided, however, that in the event the holder has

complied with the provisions of this subdivision, a lessee who has

failed to obtain an itemized appraisal of the excessive wear and damage

to the vehicle in accordance with either paragraph (b) or (c) of this

subdivision may dispute only the existence of any item or whether the

wear is excessive in nature, but may not dispute the actual cost of

repairs.

3. (a) Itemized bill. (i) In the event that the holder wishes to

impose a charge for excess wear and damage to the vehicle, the holder

shall send by registered mail or hand-deliver to the lessee a bill

containing an itemized list of the estimated or actual cost of repairing

or replacing each item as to which an excess wear and damage charge is

claimed and specifying the address to which any response must be mailed.

The bill shall be mailed or hand-delivered to the lessee within thirty

days after the date on which the vehicle comes into the actual

possession of the holder.

(ii) The itemized bill shall include the following statements printed

in at least ten-point type: "You are being asked to pay an amount

claimed for excess wear and damage to the vehicle. If you wish to

contest this amount, you must obtain an itemized appraisal from an

appraiser licensed by the New York State Department of Motor Vehicles,

and mail or deliver a copy of such appraisal to (NAME AND ADDRESS OF

HOLDER) within the greater of fourteen business days after (NAME OF

HOLDER) has sent, or ten business days of receipt of this bill and (NAME

OF HOLDER'S) itemized appraisal. If you fail to do so, you will forfeit

your right to contest in arbitration any actual repair costs incurred by

the (HOLDER) for excess wear and damage; however, you do not forfeit

your right to contest the existence of any item or whether the wear is

excessive in nature."

(iii) The itemized bill shall also notify lessees of their material

rights and obligations for dispute resolution in arbitration.

(b) Itemized appraisal. (i) A holder who imposes a charge for excess

wear and damage to the vehicle shall send by registered mail or

hand-deliver, within thirty days after the date on which the vehicle

comes into actual physical possession of the holder, a written itemized

appraisal prepared by an appraiser licensed under section three hundred

ninety-eight-d of the vehicle and traffic law. The appraisal shall be

dated, signed by the holder or its agent, and identify by type each item

of excess wear and damage.

(ii) The following notice shall be included at the beginning of the

itemized appraisal prepared on behalf of the holder and furnished to the

lessee,

"ALL ITEMS OF DAMAGE FOR WHICH A CHARGE FOR

EXCESSIVE WEAR OR DAMAGE WILL BE CLAIMED BY THE

HOLDER MUST BE NOTED IN THIS APPRAISAL. IF YOU

DISPUTE THE EXISTENCE OR NATURE OF ANY ITEM OF

DAMAGE IDENTIFIED IN THIS NOTICE, YOU MAY SUBMIT THE

DISPUTE TO THE ALTERNATE ARBITRATION MECHANISM

ESTABLISHED UNDER REGULATIONS PROMULGATED BY THE NEW

YORK STATE ATTORNEY GENERAL."

4. (a) The itemized bill and appraisal required by subdivision three

of this section may be combined into a single document. Mere

acknowledgement by the lessee of receipt of an itemized bill, an

appraisal, or a combination of the two shall not operate as an admission

of the existence, nature or amount of any of the items therein.

(b) (i) The holder shall grant the lessee access to the vehicle at a

reasonable time and place in order for the lessee to obtain an itemized

appraisal on the lessee's own behalf. The holder shall not be required,

however, to deliver the vehicle to, or produce the vehicle at, a

destination designated by the lessee for such purpose.

(ii) A holder may not fail to provide, either intentionally or by

actions or omissions, reasonable access to the vehicle by the licensed

appraiser chosen by the lessee within the period during which a lessee

must obtain and submit an appraisal. If the holder fails to so provide

reasonable access to the vehicle, the holder shall be deemed to have

forfeited its contractual right to charge, receive or collect any charge

for excessive wear and damage to the vehicle from the lessee.

(c) A lessor or holder of a retail lease agreement shall not report an

unsatisfied claim for excess wear and damage to a credit reporting

agency as a derogatory item of information until: (i) the expiration of

the time granted under article seventy-five of the civil practice law

and rules for the filing of a petition to vacate or modify an

arbitrator's award; (ii) the issue has been a subject of a final

judgment; or (iii) where the holder and the lessee execute a settlement,

thirty days after the date a payment is due under the settlement if no

payment has been made.

5. (a) Arbitration and enforcement. If a holder has established or

participates in an informal dispute settlement procedure which is

consistent in all respects with the provisions of part seven hundred

three of title sixteen of the code of federal regulations, any dispute,

disparity or conflict between any appraisal report prepared by an

appraiser licensed by the state department of motor vehicles on behalf

of the holder and one prepared on behalf of the lessee shall be decided

by such informal dispute settlement procedure. Holders utilizing

informal dispute settlement procedures pursuant to this subdivision

shall insure that the arbitrators participating in such informal dispute

settlement procedures are familiar with the provisions of this section.

(b) Upon the payment of a prescribed filing fee, a consumer shall have

the option of submitting any dispute arising under this section to an

alternate arbitration mechanism established pursuant to regulations to

be promulgated hereunder by the attorney general. Upon application of

the consumer and payment of the filing fee, the holder shall submit to

such alternate arbitration. Such alternate arbitration shall be

conducted by a professional arbitrator or arbitration firm appointed by

and under regulations established by the attorney general. Such

alternate arbitration mechanism shall ensure the personal objectivity of

its arbitrators and the right of each party to present its case, to be

in attendance during any presentation made by the other party and to

rebut or refute such presentation. In all other respects, such alternate

arbitration mechanism shall be governed by article seventy-five of the

civil practice law and rules. Holder or lessee shall have thirty days

from the date of mailing of a copy of the arbitrator's decision to such

holder or lessee to comply with the terms of such decision.

(c) In no event shall any person who has participated in an informal

dispute settlement procedure be precluded from seeking the rights or

remedies available to such person under applicable law.

(d) Nothing in this section shall be deemed to prohibit: (i) the

holder and the lessee from agreeing upon termination of the agreement to

the payment by the lessee, in satisfaction of his or her obligation

under the provisions of the agreement, of an amount which the lessor and

the lessee agree is a reasonable figure to compensate for damage to the

vehicle; (ii) the holder from retaining any portion of a security

deposit in satisfaction of amounts owed to the holder that are not

attributable to excess wear and tear; or (iii) to restrict or otherwise

regulate the assessment of charges for excess mileage.

Cancellation of agreement. After the payment of all sums for

which the lessee is obligated under a retail lease agreement, and upon

written demand made by the lessee, the holder of such agreement shall

mail to the lessee at his or her last known address good and sufficient

documentation to indicate payment in full. This documentation shall not

operate to release the lessee from liability for events discovered by

the holder subsequent to the mailing of such documentation.

Renegotiations and extensions. 1. A renegotiation is a new

lease which is subject to the disclosure requirements of section three

hundred thirty-seven of this article.

2. The disclosure requirements of section three hundred thirty-seven

of this article are not applicable to any extension of a retail lease

agreement. An extension of a retail lease agreement need not be signed

contemporaneously by the holder and the lessee if the extension is

transacted by mail, is for a period of twenty-four months or less and is

first signed by the holder prior to signature by the lessee.

Penalties. 1. A lessee who has suffered a loss due to a

violation of any provision of this article by a lessor or holder is

entitled to recover his or her actual damages from the lessor or holder.

2. Any lessor who fails to refund any payment made pending the

execution of a retail lease agreement within the time required by

subdivision one of section three hundred thirty-four of this article

shall be liable to the lessee for twice the amount of the payment not

refunded within the time required.

3. Any lessor who fails to return a vehicle which the lessee left with

the lessor pending the execution of a retail lease agreement, or who

sells or transfers such a vehicle contrary to the provisions of

subdivision three of section three hundred thirty-four of this article,

shall be liable to the lessee for the value of the vehicle traded-in and

all costs and expenses incurred by the lessee because of the loss of the

vehicle.

4. In an action in which it is determined that a lessor or holder has

violated this article, the court shall award to the lessee a civil

penalty of one hundred dollars.

5. (a) In an action in which it is determined that a lessor or holder

has violated this article, the court also shall award to the lessee the

costs of the action and to his or her attorneys their reasonable fees.

In determining the award of attorney's fees, the amount of the recovery

on the behalf of the lessee is not controlling.

(b) In an action for the recovery of an amount claimed for excess wear

and tear, the court shall award to the lessee the costs of the action

and to his or her attorneys their reasonable fees if the holder is

awarded an amount less than an amount that the lessee offered, in

writing and prior to the institution of the action, to pay in

satisfaction of the contested portion of the amount claimed for excess

wear and tear.

6. A violation of subdivision fourteen of section three hundred

thirty-seven of this article is a deceptive trade practice under section

three hundred forty-nine of the general business law.

7. Whenever there shall be a violation of this article 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.

8. (a) Notwithstanding the provisions of this section, and except as

provided in subdivisions two and three of this section, any failure to

comply with the substantive provisions of this article may be corrected

within sixty days after the holder is notified thereof in writing by the

lessee or, in the absence of such notice, the lessor or holder may

voluntarily correct any such failure to comply and, if so corrected,

neither the lessor nor the holder shall be liable to a lessee for any

penalty under this section. Within sixty days after discovering a

violation of the disclosure provisions of this article, and prior to the

institution of an action under this section or the receipt of written

notice of the violation from the lessee, the lessor or holder may

correct the disclosure violation and, if so corrected, neither the

lessor nor the holder shall be subject to any penalty under this

section.

(b) Nothing in this subdivision shall be construed so as to nullify or

impair the right of the attorney general to proceed, under subdivision

seven of this section or subdivision twelve of section sixty-three of

the executive law, against a lessor or holder who has violated this

article.

9. A lessor or holder may not be held liable in an action brought

under this article for a violation of this article that was

unintentional and resulted from a bona fide error notwithstanding the

maintenance of procedures reasonably adapted to avoid any such error.

Examples of a bona fide error include, but are not limited to, clerical,

calculation, computer malfunction and programming, and printing errors,

except that an error of legal judgment with respect to a person's

obligations under this article is not a bona fide error.

10. An action shall not be brought under this article more than four

years after the occurrence of the act, method or practice which is the

subject of the action or more than one year after the last payment in a

transaction involving the method, act or practice which is the subject

of the action, whichever is later.

Liability of assignees. Except where the assignment is

involuntary or as otherwise specifically provided in this article, any

civil action for a violation of this article which may be brought

against a lessor may be maintained against any subsequent assignee of

the lessor only if the violation for which the action or proceeding is

brought is apparent on the face of the lease application or the retail

lease agreement. For purposes of this section, a violation is apparent

on the face of these documents if:

1. The agreement contains a disclosure which can be determined to be

incomplete or inaccurate from the face of the agreement or other

documents assigned; or

2. The agreement or application either contains a prohibited provision

or does not contain the notices, legend or items required by this

article.

Transactions subject to article by agreement. Parties to a

motor vehicle lease agreement that is not a retail lease agreement, as

defined in subdivision five of section three hundred thirty-one of this

article, because the vehicle is not being leased by a natural person

primarily for personal, family or household use may agree in a writing

signed by them that the agreement is subject to this article. If the

parties so agree, the agreement is a retail lease agreement for the

purposes of this article.

Applicability of certain provisions hereof to retail lease of a

motor vehicle for any use. The provisions of subdivision one of section

three hundred thirty-five, section three hundred thirty-six and

subdivision eleven of section three hundred thirty-seven of this article

shall apply to a retail lease of a single motor vehicle for any use.

Waiver void. Any waiver of the provisions of this article by

the lessee shall be unenforceable and void.

Supplementary general principles of law applicable. Unless

displaced by the particular provisions of this article, other statutes

of this state applicable to personal property leases and the principles

of law and equity, including the law relative to capacity to contract,

principal and agent, estoppel, fraud, misrepresentation, duress,

coercion, mistake, bankruptcy, or other validating or invalidating cause

supplement its provisions. In the event of an inconsistency between

another statute of this state applicable to personal property leases and

this article, the provisions of this article shall control.

Construction against implicit repeal. This article being a

general act intended as a unified coverage of its subject matter, no

part of it shall be construed to be impliedly repealed by subsequent

legislation if that construction can reasonably be avoided.

Severability. If any provision of this article or the

application thereof to any person or circumstances is held invalid, the

invalidity does not affect other provisions or applications of this

article which can be given effect without the invalid provision or

application, and to this end the provisions of this article are

severable.

Definitions. In this article, unless the context or subject

matter otherwise requires:

1. "Goods" means all chattels personal, other than things in action or

money, sold for other than a commercial or business use or for purpose

of resale. The term includes goods which, at the time of the sale 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 or nine-A of this chapter, nor any goods sold

or leased with such a vehicle if they are sold under a retail instalment

contract governed by article nine of this chapter or leased under a

retail lease agreement governed by article nine-A of this chapter.

In the case of a retail instalment credit agreement, the term also

includes all chattels personal, other than things in action or money,

sold for a commercial or business use.

2. "Services" means: (a) In the case of a retail instalment contract,

work, labor and services furnished, or agreed to be furnished, for other

than a commercial or business use, in the delivery, installation,

servicing, repair or improvement of goods or repairs, alterations or

improvements upon or in connection with real property, except that such

services shall not mean or include any services sold in connection with

the sale or lease of a motor vehicle which is evidenced by a retail

instalment contract governed by article nine of this chapter or a retail

lease agreement governed by article nine-A of this chapter;

(b) In the case of a retail instalment obligation, services of any

kind furnished or rendered or agreed to be furnished or rendered, for

other than a commercial or business use, except that such services shall

not mean nor include (1) services for which the tariffs or the rates,

charges, cost or expense is required by law to be filed with or

determined or approved by the state or federal government or any

official department, division, commission or agency of the state of New

York or of the United States, or (2) services by an institution of the

university of the state of New York, an elementary school which provides

the education required by the state of New York, a nursery school or a

kindergarten; and

(c) In the case of a retail instalment credit agreement, services of

any kind rendered or furnished or agreed to be rendered or furnished by

a retail seller; and, in the case of a retail instalment credit

agreement entered into under paragraph (b) of subdivision eleven of

section four hundred thirteen of this chapter, a contract or contracts

of insurance issued to a retail buyer.

3. "Retail seller" or "seller" means a person who sells goods or

furnishes or renders or agrees to furnish or render services to a retail

buyer. The term includes the lessor under a lease of a department in a

shop, store or other establishment if the lessor is liable to customers

in respect to goods sold or services furnished or rendered by the leased

department and the other operations thereof.

4. "Retail buyer" or "buyer" means a person who buys goods or obtains

services from a retail seller. When used in subdivision eleven of

section four hundred thirteen of this chapter, the term also means any

person who is liable for the payment of a fine, tax, civil penalty,

rent, rate, fee, charge, revenue, financial obligation or other amount,

including a penalty, special assessment or interest, to a municipal

corporation or the New York city water board, and any person who is

liable for the payment of any fee, rate, rent or other charge of the

White Plains parking authority.

5. "Retail instalment sale" or "sale" means a sale of goods, or the

furnishing or rendering of services, or an agreement to furnish or

render services, by a retail seller to a retail buyer for a time sale

price payable in instalments.

6. "Retail instalment contract" or "contract" means an agreement

entered into in this state, pursuant to which the title to, the property

or a security interest in or a lien upon goods, which are the subject

matter of a retail instalment sale, is retained or taken by a retail

seller from a retail buyer as security, in whole or in part, for the

buyer's obligation. The term includes such an agreement wherever entered

into if executed by the buyer in this state and if solicited in person

by a salesman or other person acting on his own behalf or that of the

seller. The term also includes a contract whereby a security interest

in favor of the seller is created or retained and a contract for the

bailment or leasing of goods by which the bailee or lessee contracts to

pay as compensation for their use a sum substantially equivalent to or

in excess of their value and by which it is agreed that the bailee or

lessee is bound to become, or has the option of becoming, the owner of

the goods upon full compliance with the terms of the contract. The term

does not include a contract which is intended to be and is ultimately

insured or guaranteed under title three of the act of Congress entitled

"Servicemen's Readjustment Act of 1944".

7. "Retail instalment obligation" or "obligation" means an agreement,

entered into in this state, pursuant to which the buyer promises to pay,

in instalments, the time sale price or prices of goods and/or services,

or any part thereof. The term includes such an agreement wherever

entered into if executed by the buyer in this state and if solicited in

person by a salesman or other person acting on his own behalf or that of

the seller. The term does not include (a) a retail instalment contract,

(b) a retail instalment credit agreement, or (c) an obligation which is

intended to be and is ultimately insured or guaranteed until title three

of the act of Congress entitled "Servicemen's Readjustment Act of 1944".

8. "Retail instalment credit agreement" or "credit agreement" means an

agreement entered into in this state, pursuant to which the buyer

promises to pay, in instalments, his outstanding indebtedness from time

to time to a retail seller, not evidenced by a retail instalment

contract or obligation, for one or more items of goods or services, or

merchandise certificates to be used solely in exchange for goods and

services with a cash sale price in the face amount of such certificates

and not redeemable in cash, whenever purchased or obtained, which

provides for a service charge and under which instalment payments apply

to his outstanding indebtedness from time to time. The term includes

such an agreement wherever entered into if executed by the buyer in this

state and if solicited in person by a salesman or other person acting on

his own behalf or that of the seller. The term also includes a retail

instalment credit agreement entered into by a financing agency with a

retail buyer as provided in subdivision eleven of section four hundred

thirteen of this article.

8-a. "Retail instalment note" or "note" means a promissory note

required by the provision of a retail instalment obligation and

conforming to the requirements of subdivision two of section four

hundred three of this article.

9. "Cash sale price" means the cash sale price stated in a retail

instalment contract or obligation for which the seller would sell or

furnish to the buyer and the buyer would buy or obtain from the seller

the goods or services which are the subject matter of a retail

instalment contract or obligation if the sale were a sale for cash

instead of a retail instalment sale. The cash sale price may include any

taxes and cash sale prices for accessories and services, if any,

included in a retail instalment sale.

10. "Time sale price" means the total of the cash sale price of the

goods or services and the amounts, if any, included for insurance,

official fees and credit service charge.

11. "Credit service charge" means that part of the entire amount

agreed to be paid for the goods or services which exceeds the aggregate

of the cash sale price thereof and the amounts, if any, included in a

retail instalment sale for insurance and official fees.

12. "Service charge" means all charges incident to investigating and

making a retail instalment credit agreement and for the extension of

credit thereunder.

13. "Principal balance" means the cash sale price of the goods or

services which are the subject matter of the retail instalment sale,

plus the amounts, if any, included in a retail instalment sale for

insurance and official fees, minus the amount of the buyer's

down-payment in money or goods.

14. "Time balance" means the total of the principal balance and the

amount of the credit service charge, if any.

15. "Holder" means the retail seller who acquires a retail instalment

contract, obligation or credit agreement, or note, executed, incurred or

entered into by a retail buyer, or if the contract, obligation, credit

agreement or note is purchased by a financing agency or other assignee

or endorsee, the financing agency or other assignee or endorsee.

16. "Official fees" means the fees or taxes required by law and

actually to be paid to the appropriate public officer to perfect the

lien or other security interest, on or in goods, retained or taken by a

seller under a retail instalment contract or to record a mortgage on

real property taken by a seller or holder to secure a retail instalment

contract or obligation or note.

17. "Person" means an individual, partnership, corporation,

association or other group, however organized.

18. "Financing agency" means a person engaged in this state, in whole

or in part, in the business of purchasing retail instalment contracts,

obligations or credit agreements or indebtedness of buyers under credit

agreements from one or more retail sellers or entering into credit

agreements with retail buyers as provided in subdivision eleven of

section four hundred thirteen of this article but shall not include a

retail seller. The term includes but is not limited to a bank, trust

company, savings bank, savings and loan association, private banker or

investment company, if so engaged, but shall not include a retail

seller.

19. Words in the singular include the plural and vice versa.

20. "Boat" shall mean any vessel or craft designed to transport

persons or cargo on the water surface.

21. "New York city water board" means the public benefit corporation

established pursuant to section one thousand forty-six of the public

authorities law.

22. "Municipal corporation" means a local government, as that term is

defined in section ten of the general municipal law.

23. "White Plains parking authority" means the corporation created by

section one thousand four hundred twenty-seven of the public authorities

law.

Provisions of retail instalment contracts and obligations. 1. A

retail instalment contract or obligation shall be dated and in writing;

the printed portion thereof shall be in at least eight point type.

2. A contract or obligation shall contain the entire agreement of the

parties with respect to the goods and services, including any promise,

whether made in writing or orally, by the seller, made as an inducement

to the buyer to become a party to the contract or which is part of the

contract or which is made incidental to negotiations between the seller

and the buyer with respect to the sale of the goods or services that are

the subject of the contract, that the seller will compensate the buyer

for referring customers or prospective customers to the seller for goods

or services which the seller has for sale or for referring the seller to

such customers or prospective customers. In any case in which, pursuant

to the preceding provisions, the contract contains a promise to

compensate the buyer for referring customers or prospective customers to

the seller or the seller to such customers, the contract must contain a

provision to the effect that the amount otherwise owing under the

contract at any time is reduced by the amount of compensation owing

pursuant to such promise, and:

(a) Both at the top of the contract or obligation and directly above

the space reserved for the signature of the buyer, the words RETAIL

INSTALMENT CONTRACT or RETAIL INSTALMENT OBLIGATION, as the case may be,

in at least ten point bold type; and

(b) Either a notice in at least eight point bold type reading as

follows: NOTICE TO THE BUYER: 1. Do not sign this agreement before you

read it or if it contains any blank space. 2. You are entitled to a

completely filled in copy of this agreement. 3. Under the law, you have

the right to pay off in advance the full amount due and under certain

conditions to obtain a partial refund of the credit service charge or a

notice in at least eight point bold type reading as follows: NOTICE TO

THE BUYER: 1. Do not sign this agreement before you read it or if it

contains any blank space. 2. You are entitled to a completely filled in

copy of this agreement. 3. Under the law, you have the right to pay off

in advance the full amount due. If you do so, you may, depending on the

nature of the credit service charge, either: (a) prepay without penalty,

or (b) under certain circumstances obtain a rebate of the credit service

charge.

3. A contract or obligation shall:

(a) Contain the names of the seller and the buyer, the place of

business of the seller, the residence or place of business of the buyer

as specified by the buyer and an adequate description of the services

and goods (including the make and model, if any, in the case of goods

customarily sold by make and model); and

(b) Set forth the following items:

(1) All items required to be disclosed by the act of congress entitled

"Truth in Lending Act" and the regulations thereunder, as such act and

regulations may from time to time be amended;

(2) If any instalment substantially exceeds in amount any prior

instalment other than the down-payment, contain the following legend

printed in ten point bold type or typewritten: THIS CONTRACT IS NOT

PAYABLE IN INSTALMENTS OF EQUAL AMOUNTS: followed, if there be but one

larger instalment, by: AN INSTALMENT OF $..........WILL BE DUE ON

..........or, if there be more than one larger instalment, by: LARGER

INSTALMENTS WILL BE DUE AS FOLLOWS.........(insert the amount or amounts

of every larger instalment and its due date.) In the case of a retail

instalment obligation, OBLIGATION shall be substituted for CONTRACT in

the required legend. If the credit service charge with respect to the

contract or obligation is calculated pursuant to subdivision four of

section four hundred four of this article, the disclosure provided for

in this subparagraph may be omitted.

4. No contract or obligation shall be signed by the buyer when it

contains blank spaces to be filled in after it has been signed; however,

if delivery of the goods is not made at the time of the execution of the

contract or obligation and it so provides, the identifying numbers or

marks of the goods and the due date of the first instalment may be left

blank and later inserted by the seller in the seller's counterpart of

the contract or obligation after it has been signed by the buyer.

5. If the cost of any credit unemployment, group credit life or other

insurance is included in the contract or obligation and a separate

charge is made to the buyer for such insurance:

(a) The contract or obligation shall state whether the insurance is to

be procured by the buyer or the seller;

(b) The amount, if any, so included for such insurance, shall not

exceed the premiums chargeable in accordance with rate filings made with

the superintendent of financial services for such insurance by the

insurer; and, if such group credit life or other insurance is cancelled,

the refund for unearned insurance premiums received or receivable by the

holder of the contract, or the excess of the amount included in the

contract for group credit life insurance over the premiums paid or

payable by the holder of the contract therefor, together with, in either

case, the unearned portion of the credit service charge applicable

thereto, shall be credited to the final maturing instalments of the

retail instalment contract, provided that no such credit need be made if

the amount thereof would be less than one dollar; and

(c) If the insurance is to be procured by the seller or holder, he

shall, within thirty days after delivery of the goods or furnishing of

the services under the contract or obligation, deliver, mail or cause to

be mailed to the buyer, at his address as specified in the contract or

obligation, a notice thereof or a copy of the policy or policies of

insurance or a certificate or certificates of the insurance so procured.

6. A contract or obligation may provide for the payment by the buyer

of a delinquency and collection charge on each instalment in default for

a period of not less than ten days in an amount not in excess of the

rate provided for in the contract or obligation on such instalment

provided that only one such delinquency and collection charge may be

collected on any such instalment regardless of the period during which

it remains in default.

6-a. A provision in a contract or obligation which provides for the

payment of attorney's fees or the costs of attorney's services incurred

in a legal action or proceeding for collection shall be null and void.

6-b. A provision in a contract or obligation which provides for waiver

of the right to impose any counterclaim or offset arising out of a

breach of that contract or obligation by the seller shall be void and

unenforceable.

7. All of the terms of an obligation need not be contained in a single

document but if they are not then there shall be an original document

executed by the parties containing provisions making it applicable to

purchases of goods or services, which may not exceed a cash sale price

of one hundred seventy-five dollars on each purchase, to be made by the

buyer from time to time from a retail seller, which document, together

with other written statements relating to the sale of such goods or

services shall constitute a retail instalment obligation and shall

contain the entire agreement of the parties. In such cases, the original

document shall contain those items required to be disclosed by the act

of congress entitled "Truth in Lending Act" and the regulations

thereunder, as such act and regulations may from time to time be amended

and shall further contain:

(i) a legend as provided in paragraph (a) of subdivision two hereof,

(ii) a notice to the buyer as provided in paragraph (b) of subdivision

two hereof,

(iii) the names of the seller and the buyer,

(iv) the place of business of the seller and the residence or place of

business of the buyer as specified by the buyer,

(v) the number of instalment payments, and

(vi) the amount or rate of the credit service charge applicable to

purchases thereunder.

At the time of each purchase under such document, the seller shall

give the buyer statements which shall contain at the top thereof a

legend in at least eight-point bold type: PART OF A RETAIL INSTALMENT

OBLIGATION and an adequate description of the goods, accessories and

services sold or furnished (including the make and model, if any, in the

case of goods customarily sold by make and model) and shall further

contain those items required to be disclosed by the act of congress

entitled "Truth in Lending Act" and the regulations thereunder, as such

act and regulations may from time to time be amended. If the seller does

not deliver to the buyer at the time of each purchase under such

original document a statement in compliance with the act of congress

entitled "Truth in Lending Act" and the regulations thereunder, as such

act and regulations may from time to time be amended, the seller shall

promptly thereafter, and in any event within ten days from the date of

such purchase, deliver, mail or cause to be mailed to the buyer at his

address shown on the seller's records, such statement. Unless the seller

does so, the buyer shall have an unconditional right to cancel such

purchase and to receive an immediate refund of any payments made and

re-delivery of all goods traded in to the seller on account of or in

contemplation of such purchase; upon the written request of the buyer

the seller shall prove the accuracy of the calculations in such

statement.

Such statement with respect to the first such purchase shall, combined

with the original document, constitute the obligation for such purchase;

and, on each succeeding purchase pursuant to such original document, the

obligation therefor as represented by such original document and such

statement shall constitute a subsequent obligation under section four

hundred ten.

Merchandise certificates and obligations therefor. 1. A

retail seller may issue merchandise certificates to a retail buyer, to

be paid for in instalments and to be used solely in exchange for goods

and services with a cash sale price in the face amount of such

certificates and not redeemable in cash, pursuant to a document executed

by the parties as hereinafter provided, which document, notwithstanding

the definition of obligations contained in subdivision seven of section

four hundred one, shall constitute a retail instalment obligation for

the purpose of this article, shall contain the entire agreement of the

parties, and shall be subject to all of the provisions of sections four

hundred three to four hundred twelve, inclusive, except the provisions

of the second sentence of section four hundred five.

2. On each issue of merchandise certificates, the document evidencing

the obligation therefor shall set forth a legend as provided in

paragraph (a) of subdivision two of section four hundred two, a notice

to the buyer as provided in paragraph (b) of subdivision two of section

four hundred two, the names of the seller and the buyer, the residence

or place of business of the buyer as specified by the buyer, the face

amount of the merchandise certificates issued, and all items required to

be disclosed by the act of congress entitled "Truth in Lending Act" and

the regulations thereunder, as such act and regulations may from time to

time be amended.

3. A seller may, in such a document, contract for and, if so

contracted for charge, receive and collect a credit service charge at

rates not exceeding those provided under section four hundred four of

this article. Such credit service charge shall be computed on the face

amount of merchandise certificates issued to the buyer, less

down-payment, if any.

4. The buyer shall have the right to return to the seller at any time

all merchandise certificates which have not been exchanged for goods and

services, and the seller shall thereupon credit the buyer with the full

face amount of such unused merchandise certificates returned and the

amount of the pro rata credit service charge thereon, which shall be

computed as of the date of issuance of the merchandise certificates so

returned. Where the amount of the refund of such credit charge is less

than one dollar no refund need be made.

5. (a) Merchandise certificates issued under this section or the cover

of the booklet in which they are bound, shall bear:

(i) A legend in at least eight-point bold type stating that the buyer

may return unused merchandise certificates so purchased at any time and

that the seller will give the buyer credit for the full face amount of

any certificates so returned and credit for the pro rata credit service

charge if the same is one dollar or more;

(ii) A legend in at least eight point bold type reading substantially

as follows: If you wish to purchase, with merchandise certificates a

single item of goods or services of greater value than the merchandise

certificates you now hold, you may save credit service charge by

returning your unused merchandise certificates for credit and purchasing

new certificates; and

(iii) In the event the statements required by subparagraphs (i) and

(ii) hereof are set forth on the cover of a booklet in which the

merchandise certificates are bound, each certificate shall bear a

notice, "NOT GOOD IF DETACHED".

(b) If a retail seller issues merchandise gift certificates to a

retail buyer to be paid for in instalments (1) in good faith, and (2) in

reliance upon a retail buyers statement that the buyer intends to

transfer it to another as a gift, then such certificate need not set

forth the legends required by subparagraphs (i) and (ii) above; provided

the certificate shall bear the legend "GIFT CERTIFICATE" and the seller

shall give the buyer at the time of issuance of such certificate a

statement, or facsimile of such certificate, which shall identify such

certificate, and shall contain the legend required by subparagraphs (i)

and (ii) above.

6. Notwithstanding the provisions of subdivision three of section four

hundred three of this article, the buyer shall have the right to return

to the holder of a retail instalment obligation executed on or after

October first, nineteen hundred sixty-two, for merchandise certificates,

at any time all merchandise certificates which have not been exchanged

for goods and services, and the holder shall thereupon credit to the

obligation to the extent of the amount owing by the buyer thereon the

full face amount of such unused merchandise certificates returned and

the amount of the pro rata credit service charge thereon, which shall be

computed as of the date of issuance of the merchandise certificates so

returned. Where the amount of the refund of such credit service charge

is less than one dollar no refund need be made.

Total loss notice and waiver of the gap amount. 1. If the

retail instalment contract provides that the buyer shall be responsible

upon a total loss of the goods occasioned by theft, confiscation or

physical damage for the gap amount as defined in paragraph fifty-two of

subsection (a) of section one hundred seven of the insurance law, the

holder, prior to the execution of the contract, shall by a notice on a

separate document conspicuously disclose that fact and the obligations

for which the buyer would remain liable in the event of a theft,

confiscation or total loss of the goods. If the holder is required under

subdivision two of this section to offer to waive its contractual right

to hold the buyer 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

holder will waive its contractual right to hold the buyer 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 buyer 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 debtor gap insurance in this state; and (c)

contain a provision permitting the buyer to indicate whether he or she

wants the holder to waive its contractual right to hold the buyer 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 buyer.

The holder shall provide a copy of the signed notice to the buyer and

shall maintain a copy in the holder's files for at least the term of the

contract. Failure to provide the notice and to obtain the buyer's

signature as required by this subdivision shall invalidate any provision

of the agreement which otherwise would obligate a buyer to pay to the

holder, after a total loss of the goods occasioned by theft,

confiscation or physical damage, the gap amount. No retail instalment

contract shall be conditioned upon the buyer's obtaining of non-motor

vehicle debtor 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 instalment contract provides that the buyer shall be

responsible upon a total loss of the goods occasioned by theft or

physical damage for the gap amount, the holder, prior to the execution

of the contract, shall offer to waive its contractual right to hold the

buyer 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

creditor gap insurance coverage is available to the holder 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 creditor gap insurance in this state.

This offer may be made contingent upon the payment by the buyer of a

separate charge that shall not exceed the cost of non-motor vehicle

creditor gap insurance covering the retail instalment contract. Nothing

contained in this section shall be construed to authorize a waiver, in

connection with a transaction with respect to which non-motor vehicle

creditor gap insurance has not been obtained, of a contractual right to

hold the buyer liable for the gap amount in the event of a total loss of

the goods occasioned by theft or physical damage.

3. A holder shall not be obligated under subdivision two of this

section to offer to waive its contractual right to hold the buyer 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 holder has received non-motor

vehicle creditor 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 creditor gap insurance in this state. Evidence of these

declinations shall be retained by such a holder for a period of six

years after the expiration of the calendar year in which they were

issued.

4. In order to enable holders 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 creditor gap insurance coverage in this state.

5. Nothing in this section shall be construed to apply to the holder

under a retail instalment contract under which the buyer is not liable

upon a total loss of the goods occasioned by theft, confiscation or

physical damage for the gap amount.

Restrictions on retail instalment contracts and obligations.

1. No contract or obligation shall require or entail the execution of

any note or series of notes by the buyer, which when separately

negotiated, will cut off as to third parties any right of action or

defense which the buyer may have against the seller.

2. No contract or obligation shall contain any provision by which:

(a) The buyer agrees not to assert against an assignee a claim or

defense arising out of the sale, but it may contain such a provision as

to an assignee who acquires the contract or obligation on the sale of a

boat, where the principal balance at the time of sale exceeds five

thousand dollars, and to whom the buyer has not mailed written notice of

the facts giving rise to the claim or defense within ten days after such

assignee mails to the buyer, at his address shown on the contract or

obligation, notice of the assignment, indicating or containing in the

notice or in an enclosure with the notice: the name and address of the

assignee, the names of the seller and the buyer and a description of the

boat which is the subject matter of the contract or obligation

(including the make and model), the time balance of the contract, the

number and amount of installments in which the time balance is payable

and the due date or period thereof, together with the following legend

printed or typewritten in a size equal to at least eight point bold

type:

NOTICE:

1. IF THE WITHIN STATEMENT OF YOUR TRANSACTION WITH THE SELLER IS NOT

CORRECT IN EVERY RESPECT, OR

2. IF THE BOAT DESCRIBED IN OR IN AN ENCLOSURE WITH THIS NOTICE HAS

NOT BEEN DELIVERED TO YOU BY THE SELLER OR IS NOT NOW IN YOUR

POSSESSION, OR

3. IF THE SELLER HAS NOT FULLY PERFORMED ALL OF HIS AGREEMENTS WITH

YOU: YOU MUST NOTIFY THE ASSIGNEES IN WRITING AT THE ADDRESS INDICATED

IN OR IN AN ENCLOSURE WITH THIS NOTICE WITHIN TEN DAYS FROM THE DATE OF

THE MAILING OF THIS NOTICE, OTHERWISE, YOU WILL LOSE YOUR RIGHT TO

ASSERT AGAINST THE ASSIGNEE ANY RIGHT OF ACTION OR DEFENSE ARISING OUT

OF THE SALE WHICH YOU MIGHT OTHERWISE HAVE AGAINST THE SELLER.

(b) In the absence of the buyer's default, the holder may, arbitrarily

and without reasonable cause, accelerate the maturity of any part or all

of the amount owing thereunder.

(c) A power-of-attorney is given to confess judgment in this state, or

an assignment of wages is given.

(d) The seller or holder of the contract or obligation or other person

acting on his behalf is given authority to enter upon the buyer's

premises unlawfully or to commit any breach of the peace in the

repossession of goods.

(e) The buyer waives any right of action against the seller or holder

of the contract or obligation, or other person acting on his behalf, for

any illegal act committed in the collection of payments under the

contract or obligation or in the repossession of goods.

(f) The buyer executes a power-of-attorney appointing the seller or

holder of the contract or obligation, or other person acting on his

behalf, as the buyer's agent in collection of payments under the

contract or obligation or in the repossession of goods; provided,

however, that this paragraph shall not prohibit the inclusion in a

contract or obligation of a limited power of attorney or other provision

authorizing the holder to execute in the name of the buyer any proofs of

insurance claims or losses or to endorse the name of the buyer on any

insurance settlement draft or check.

(g) The buyer relieves the seller from liability for any legal

remedies which the buyer may have against the seller under the contract

or obligation or any separate instrument executed in connection

therewith.

(h) The buyer waives any right to a trial by jury in any action or

proceeding arising out of the contract or obligation.

Any such prohibited provision shall be void but shall not otherwise

affect the validity of the contract or obligation.

3. No retail instalment contract shall contain any provision by which

the maturity of any part or all of the amount owing thereon is

accelerated where, following a default consisting solely of the failure

to make timely instalment payments and the subsequent repossession of

the goods, the buyer makes timely tender of an amount which would be

sufficient to redeem the goods in the absence of such provision.

4. Except as provided in paragraph (a) of subdivision two of this

section, the assignee of a retail installment contract or obligation

shall be subject to all claims and defenses of the buyer against the

seller arising from the sale notwithstanding any agreement to the

contrary, but the assignee's liability under this subdivision shall not

exceed the amount owing to the assignee at the time the claim or defense

is asserted against the assignee.

Credit service charge limitation. 1. A seller may, in a retail

instalment contract or obligation, contract for and, if so contracted

for, the holder thereof may charge, receive and collect a credit service

charge computed on the principal balance of the contract or obligation

from the date thereof to and including the date when the final

instalment is payable, at the rate or rates agreed to by the buyer.

2. Except as provided in subdivision three of this section, such

credit service charge shall be computed on the principal balance on

contracts or obligations payable in successive monthly instalments

substantially equal in amount for a period of one year. On contracts or

obligations providing for instalments extending for a period less than

or greater than one year, the credit service charge shall be computed

proportionately.

3. When a retail instalment contract or obligation provides for

unequal or irregular instalments, the credit service charge shall be at

the effective rate provided for in subdivision one of this section,

having due regard for the schedule of instalments.

4. As an alternative to the credit service charge provided for above,

a seller may, in a retail instalment contract or obligation, contract

for and, if so contracted for, the holder may charge, receive and

collect a credit service charge calculated on the unpaid principal

balances of the contract for the time each is outstanding, according to

a generally accepted actuarial method at rates that may vary from time

to time and in accordance with the provisions of the contract or

obligation. On any contract or obligation with a variable rate credit

service charge made pursuant to this subdivision, each rate shall be

determined at regular intervals as set forth in the contract or

obligation and in accordance with such regulations as the superintendent

of financial services shall prescribe but said rate shall not vary more

often than once in any three month period and shall be based on a

published index that is (a) readily available, (b) independently

verifiable, (c) beyond the control of the holder, and (d) approved by

the superintendent.

The superintendent of financial services shall adopt regulations with

respect to retail installment contracts or obligations that provide for

a variable rate of credit service charge, including but not limited to:

(a) providing for disclosure to the buyer by the holder of the

circumstances under which the rate may increase, any limitations on the

increase, the effect of an increase and an example of the payment terms

that would result from an increase; (b) providing for disclosure to the

buyer by the holder of a history of the fluctuations of the index over a

reasonable period of time; and (c) providing for notice to the buyer

from the holder prior to any rate increase or change in the terms of

payment.

5. The credit service charge shall be inclusive of all charges

incident to investigating and making the contract or obligation, and for

the extension of the credit provided for in the contract or obligation,

and no fee, expense or other charge whatsoever shall be taken, received,

reserved or contracted for except as otherwise provided in this article.

Delivery of copy of contract or obligation; buyer's

acknowledgment. The seller shall deliver to the buyer, or mail to him

at his address shown on the contract or obligation, an executed copy

thereof. Until the seller does so, a buyer who has not received the

goods or services shall have an unconditional right to cancel the

contract or obligation and to receive immediate refund of all payments

made and redelivery of all goods traded-in to the seller on account of

or in contemplation of the contract or obligation. Any acknowledgment by

the buyer of delivery of a copy of the contract or obligation shall be

printed or written in a size equal to at least ten point bold type and,

if contained in the contract or obligation, shall also appear directly

above the space reserved for the buyer's signature. The buyer's written

acknowledgment, conforming to the requirements of this section, of

delivery of a copy of a contract or obligation shall be presumptive

evidence of such delivery and of compliance with this section and

subdivision four of section four hundred two in any action or proceeding

by or against an assignee of the contract or obligation without

knowledge to the contrary when he purchases the contract or obligation.

Notice of assignment; payments. Unless the buyer has notice of

actual or intended assignment of a contract, obligation, or credit

agreement payment thereunder made by the buyer to the last known holder

of such contract, obligation or credit agreement shall be binding upon

all subsequent holders or assignees.

Statements of account; receipts. At any time after its

execution, but not later than one year after the last payment

thereunder, the holder of a contract or obligation shall, upon written

request of the buyer, give or forward to the buyer a written statement

of the dates and amounts of payments and the total amount, if any,

unpaid thereunder. Such a statement shall be supplied by the holder once

each year without charge; if any additional statement is requested by

the buyer, the holder shall supply such statement to the buyer at a

charge not exceeding one dollar for each additional statement supplied

to the buyer. A buyer shall be given a receipt for any payment when made

in cash.

Credit upon anticipation of payments. 1. Notwithstanding the

provisions of any contract or obligation to the contrary, any buyer may

pay it in full at any time before the maturity of the final instalment

of the time balance thereof and if he does so shall receive and be

entitled to receive a refund credit thereon and if the contract or

obligation included an amount for group credit life insurance a further

refund credit thereon for such anticipation, whether or not the maturity

of the time balance of the contract was accelerated by the holder by

reason of the buyer's default.

2. The amount of any such refund credit shall be determined according

to a generally acceptable actuarial method.

If the credit service charge imposed on the retail instalment contract

or obligation is computed pursuant to subdivision four of section four

hundred four of this article, the contract or obligation may be prepaid

in full without penalty.

3. Where the amount of the credit for anticipation of payment is less

than one dollar no refund need be made. Where the earned credit service

charge amounts to less, there may be retained an amount equal to the

minimum credit service charge applicable.

4. The amount of the further refund credit for group credit life

insurance shall be equal to the excess of the amount included in the

contract for group credit life insurance over the premiums paid or

payable by the holder of the contract for such insurance, if such

premiums were paid or payable periodically, or the refund for unearned

group credit life insurance premium paid or payable in a lump sum,

provided that no such further refund credit need be made if the amount

thereof would be less than one dollar.

5. In the event (i) the maturity of a contract or obligation is

accelerated due to the default of the buyer or otherwise and judgment is

obtained, or (ii) repayment is made pursuant to group credit life

insurance, the buyer or his legal representative, as the case may be,

shall be entitled to the same refund credits as if the contract had been

prepaid in full on the date of acceleration or repayment.

Refinancing. 1. The holder of a retail instalment contract or

obligation or note may, upon agreement with the buyer, extend the

scheduled due date or defer the scheduled payment of all or of any part

of any instalment or instalments payable thereunder. The agreement for

such extension or deferment must be in writing and signed by the parties

thereto. The holder may charge and contract for the payment of an

extension or deferral charge by the buyer and collect and receive the

same, at the rate or rates agreed to by holder and the buyer on the

amount of the instalment or instalments, or part thereof, extended or

deferred for the period of extension or deferral. Such period shall not

exceed the period from the date when such extended or deferred

instalment or instalments, or part thereof, would have been payable in

the absence of such extension or deferral, to the date when such

instalment or instalments, or part thereof, are made payable under the

agreement of extension or deferment; except that a minimum charge of one

dollar for the period of extension or deferral may be made in any case

where the extension or deferral charge, when computed at such rate,

amounts to less than one dollar. Such agreement may also provide for the

payment by the buyer of the additional cost to the holder of the

contract or obligation or note of premiums for continuing in force,

until the end of such period of extension or deferral, any insurance

coverages provided for in the contract or obligation, subject to the

provisions of subdivision five of section four hundred two.

2. The holder of a retail instalment contract or obligation or note

may, upon agreement in writing with the buyer, refinance the payment of

the unpaid time balance of the contract or obligation or note by

providing for a new schedule of instalment payments. The holder may

charge and contract for the payment of a refinance charge by the buyer

and collect and receive the same, but such refinance charge (1) shall be

based upon the amount refinanced, plus any additional cost of insurance

and of official fees incident to such refinancing, after the deduction

of a refund credit in an amount equal to that to which the buyer would

have been entitled under section four hundred eight if he had prepaid in

full his obligations under the contract or obligation or note, but in

computing such refund credit there shall not be allowed the minimum

earned credit service charge as authorized by such section, and (2) may

not exceed the rate of credit service charge provided under section four

hundred four of this chapter. Such agreement for refinancing may also

provide for the payment by the buyer of the additional cost to the

holder of the contract or obligation or note of premiums for continuing

in force, until the maturity of the contract or obligation or note as

refinanced, any insurance coverages provided for therein, subject to the

provisions of subdivision five of section four hundred two of this

chapter. The refinancing agreement shall set forth all items required to

be disclosed by the act of congress entitled "Truth in Lending Act" and

the regulations thereunder, as such act and regulations may from time to

time be amended.

Add-ons to and consolidations of retail instalment contracts

and obligations. 1. A retail instalment contract or obligation which

otherwise conforms to the requirements of this article may contain the

promise or agreement of the buyer to pay in substantially equal periodic

instalments the consolidated total of the principal balance thereof and

the unpaid time balance or balances owing by the buyer under one or more

previous contracts or obligations, together with a credit service

charge; if it does so:

(a) The contract or obligation shall set forth all items required to

be disclosed by the act of congress entitled "Truth in Lending Act" and

the regulations thereunder, as such act and regulations may from time to

time be amended.

(b) Subject to the provisions of section four hundred four and to the

provisions of paragraph (c) of this subdivision, the credit service

charge to be included in such consolidated total may equal but shall not

exceed the larger of the amounts determined by applying the credit

service charge at the rate or rates agreed to by the buyer:

(1) to the total of the principal balance of the subsequent contract

or obligation and the principal balance of any previous contract or

obligation included in the consolidated total determined by deducting

from the then unpaid time balance thereof any then unearned credit

service charge in an amount not less than the refund credit for

anticipation provided for in section four hundred eight (computed,

however, without the allowance of any minimum earned credit service

charge), for the period from the date thereof to and including the date

when the final instalment of such consolidated total is payable; or

(2) to the principal balance of the subsequent contract or obligation

for the period from the date thereof to and including the date when the

final instalment of such consolidated total is payable and, if the due

date of the final instalment of such consolidated total is later than

the due date of the final instalment of any previous contract or

obligation included in the consolidated total, on the time balance then

unpaid on such previous contract or obligation from the date when the

final instalment thereof was payable to the date when the final

instalment of such consolidated total is payable.

(c) A consolidation of a retail instalment contract or obligation

entered into after the effective date of this paragraph with a retail

instalment contract or obligation entered into prior to the effective

date of this paragraph shall be governed by the limitations on maximum

credit service charges contained in subdivision one of this section and

section four hundred four as they were in effect immediately prior to

the effective date of this paragraph.

2. Where a buyer makes any subsequent purchase of goods under a

contract from a seller from whom he had previously purchased goods under

one or more contracts and the amounts due under such previous contract

or contracts have not been fully paid, and where the total of the time

balance of the subsequent contract and the unpaid time balances owing by

the buyer under the previous contracts does not exceed three thousand

dollars, such contract, if it otherwise conforms to the requirements of

this article, may provide that the goods purchased under the previous

contract or contracts shall be security for the goods purchased under

the subsequent contract but only until such time as (a) the purchase

price under the previous contract or contracts is fully paid, or (b)

twenty per centum of the time sale price of the goods purchased under

the subsequent contract has been paid, whichever event first occurs.

3. When such subsequent purchase is made, the entire amount of all

payments made previous thereto shall be deemed to have been applied

toward the payment of the previous purchase or purchases. Each payment

thereafter received shall be deemed to be allocated to all of the

various purchases in the same proportion or ratio as the original cash

sale prices of the various purchases bear to one another; where the

amount of each instalment payment is increased in connection with the

subsequent purchase, the subsequent payments (at the seller's election)

may be deemed to be allocated as follows: an amount equal to the

original rate, to the previous purchase, and an amount equal to the

increase, to the subsequent purchase. However the amount of any initial

or down-payment on the subsequent purchase shall be deemed to be

allocated in its entirety to such purchase. The provisions of

subdivisions two and three of this section shall not apply to cases

involving equipment, parts or other merchandise attached or affixed to

goods previously purchased or repairs or services rendered by the seller

in connection therewith at the buyer's request.

Terms of purchase by financing agency. Notwithstanding any

contrary provision of the personal property law, lien law, banking law

or other law:

1. A financing agency may purchase a retail instalment contract,

obligation or credit agreement, or indebtedness of a buyer to be paid

under a credit agreement, from a seller on such terms and conditions and

for such price as may be mutually agreed upon; and

2. No filing of the assignment, no filing of any financing statement,

no notice to the buyer of the assignment, and no requirement that the

seller be deprived of dominion over payments upon the contract,

obligation or credit agreement or over the goods if repossessed by or

returned to the seller, shall be necessary to the validity of a written

assignment of a contract, obligation or credit agreement, or

indebtedness to be paid under a credit agreement, as against creditors,

subsequent purchasers, pledgees, mortgagees or encumbrancers of the

seller.

Cancellation. After the payment of all sums for which the buyer

is obligated under a contract or obligation, and upon written demand

made by the buyer, the holder shall deliver, or mail to the buyer at his

last known address, such one or more good and sufficient instruments as

may be necessary to acknowledge payment in full and to release all

security in the goods. This section does not repeal section seventy-two

of this chapter or section two hundred thirty-eight of the lien law.

Cancellation of contracts for future consumer services. 1.

Contract for future consumer services. As referred to in this section,

the term "contract for future consumer services" shall mean any contract

entered into for consumer services to be performed in the future on a

lesson-by-lesson or class-by-class basis and offered, sold or provided

by correspondence schools which for the purposes of this section shall

mean any plan or method used by any person or persons, firm, corporation

or other organization for giving instruction in any form or manner by

correspondence under contract.

2. No person, including any business entity, may contract to receive,

or demand, in the event of cancellation of a contract for future

services, more than the total of:

(a) five percent of the cash price, but not to exceed fifty dollars,

and

(b) a pro rata portion of the total price, representing the proportion

of services used or completed.

In addition, the seller may receive or demand the cost of any

ancillary goods which the buyer has consumed or wishes to retain after

cancellation of the contract. In no instance shall the seller collect

more than the full contract price from the buyer.

3. Within ten days after a contract for future consumer services has

been cancelled, the seller shall tender to the buyer any payments made

in excess of the amounts permitted to be retained pursuant to

subdivision two of this section.

4. Cancellation. Cancellation shall occur:

(a) when the buyer mails to the seller notice of his intent to cancel,

or

(b) where the seller has actual notice of the buyer's intention to

cancel, or

(c) where the buyer fails to attend consecutive scheduled classes or

lessons constituting at least twenty-five percent of the total lessons

or time contracted for, without informing the seller in writing that he

intends to remain enrolled.

5. The contract forms used by the seller shall conspicuously disclose

the seller's cancellation provisions in compliance with subdivisions

two, three, and four of this section and shall contain the following

notice in ten point bold face type:

If you cancel this contract (the seller) may keep only five percent of

the cash price, but not to exceed fifty dollars, and a portion of the

contract price based upon the lessons or services you have used. You may

notify the seller of your intent to cancel by mail, addressed to (the

seller) at (seller's address).

6. Nothing in this section shall be construed so as to nullify or

impair any right or rights which a buyer may have against a seller at

common law, by statute, or otherwise.

Retail instalment credit agreements. 1. (a) A retail instalment

credit agreement shall be dated and in writing and the printed portion

thereof shall be in at least eight point type. No retail instalment

credit agreement shall be signed by the buyer when it contains blank

spaces to be filled in after it has been signed by the buyer. The

seller, before he shall be able to avail himself of the rates authorized

by subdivision three of this section, shall deliver to the buyer a copy

of the credit agreement executed by the seller.

(b) Provided that the retail installment credit agreement complies in

all other respects with the provisions of this section, a single credit

agreement may provide for a retail seller to acquire indebtedness of a

retail buyer under a sales slip or memorandum evidencing a purchase.

Where a retail seller enters into a credit agreement with a retail buyer

the credit agreement may consist of an agreement complying in all other

respects with the provisions of this section, but executed only by the

retail seller, together with a credit card issued by it to the retail

buyer. The credit agreement, however, must then provide that it shall

not become effective unless and until the retail buyer or a person

authorized by him signs a sales slip or memorandum evidencing a purchase

or lease of property or services by use of the credit card and that

prior thereto the retail buyer shall not be responsible for any purchase

or lease of property or services by use of the credit card after its

loss or theft.

2. Every retail instalment credit agreement shall contain:

(a) The entire agreement of the buyer with respect to the subject

matter of the credit agreement;

(b) The names of the seller and of the buyer, the place of business of

the seller and the residence or place of business of the buyer as

specified by the buyer;

(c) Both at the top thereof and directly above the space reserved for

the signature of the buyer, the words RETAIL INSTALMENT CREDIT AGREEMENT

in at least ten point bold type;

(d) A provision in at least eight point bold type to the effect that

the buyer may at any time pay his total indebtedness; and

(e) A notice in at least eight point bold type reading as follows:

NOTICE TO THE BUYER: 1. Do not sign this credit agreement before you

read it or if it contains any blank space. 2. You are entitled to a

completely filled in copy of this credit agreement.

3. (a) A seller may, in a retail instalment credit agreement, contract

for and, if so contracted for, the seller or holder thereof may charge,

receive and collect the service charge authorized by this article, which

service charge shall not exceed the rate or rates agreed upon by the

seller and the buyer, including, in accordance with the provisions of

the credit agreement, rates that may vary, from time to time computed,

for the purposes of this section, on the outstanding indebtedness from

month to month, or if the service charge so computed is less than

seventy cents for any month, seventy cents. If the credit agreement

provides for a variable rate of service charge, such rate shall be

determined at regular intervals as set forth in the credit agreement and

in accordance with such regulations as the superintendent of financial

services shall prescribe but said rate shall not vary more often than

once in any three month period and shall be based on a published index

that is (a) readily available, (b) independently verifiable, (c) beyond

the control of the seller and (d) approved by the superintendent, (e)

such charges in credit agreements shall be based on the index values, or

the index numbers plus or minus additional percentage points provided,

however, that variations in the charge must correspond directly to the

movements of the index values plus or minus additional percentage points

only. Once such charge is established no lending institution may add any

factors to increase the charge other than variations in the established

index without the prior approval of the superintendent of financial

services.

The superintendent of financial services shall adopt regulations with

respect to credit agreements that provide for a variable rate of service

charge, including but not limited to: (a) providing for disclosure to

the buyer by the seller of the circumstances under which the rate may

increase, any limitations on the increase, the effect of an increase and

an example of the payment terms that would result from an increase; (b)

providing for disclosure to the buyer by the seller of a history of the

fluctuations of the index over a reasonable period of time; and (c)

providing for notice to the buyer by the seller prior to any rate

increase or change in the terms of payment. The regulations shall allow

a seller, holder or financing agency after choosing an approved index to

choose a spread and a minimum and maximum rate of service charge at its

discretion. A retail instalment credit agreement, whether it provides

for a fixed or variable service charge, may provide for an introductory

rate of service charge at either a fixed or variable rate, provided that

the terms of such introductory rate, including, if applicable, the date

on which the introductory rate shall terminate, are disclosed to the

buyer. Such disclosure shall be contained on an application form or

pre-approved written solicitation as specified pursuant to subdivisions

one and one-a of section five hundred twenty of the general business

law. A change in the service charge rate upon expiration of an

introductory rate shall not be considered a variable rate or a change in

terms. The service charge rate in effect after expiration of an

introductory rate may apply to all amounts due under the credit

agreement regardless of when incurred, and disclosure of the same shall

be provided to the buyer in the written agreement.

(b) If the credit agreement so provides, the service charge may be

computed on a schedule of fixed amounts if as so computed it is applied

to all amounts of outstanding balances equal to the fixed amount minus a

differential of not more than five dollars, provided that it is also

applied to all amounts of outstanding balances equal to the fixed amount

plus at least the same differential.

(c) (i) For the purposes of this subdivision the term "outstanding

indebtedness from month to month" shall mean, at the election of the

seller, holder or financing agency either:

(a) the amount unpaid at the beginning of the monthly billing period,

including unpaid service charges, less all payments received and credits

issued during the billing period, except for credits attributable to

amounts not included in the previous balance; or

(b) an amount not to exceed the amount calculated by adding the

amounts unpaid for each day of the monthly billing period, including

unpaid service charges, after reflecting that day's purchases made,

payments received, credits issued and other adjustments, and dividing

such sum by the number of days in the billing period.

(ii) A credit agreement may not provide for the imposition of a

service charge for any monthly billing period in which there is no

previous balance or during which the sum of the payments received and

other credits issued which are attributable to amounts included in the

previous balance is equal to or exceeds the amount of such previous

balance unless the same seller also offers a credit agreement which

provides that no service charge will be imposed for any monthly billing

period in which there is no previous balance or during which the sum of

the payments received and other credits issued which are attributable to

amounts included in the previous balance is equal to or exceeds the

amount of such previous balance.

(iii) The term "billing period" as used in this subdivision shall mean

the time interval between periodic statement dates, pursuant to

subdivision four of this section. A billing period shall be considered

to be a "month" or "monthly" if the last day of each billing period is

on the same day of each month or does not vary by more than four days

therefrom.

(d) Where a retail instalment credit agreement provides that the buyer

has the option of avoiding the imposition of an additional service

charge by paying the outstanding indebtedness or any portion thereof

within a specified period of time, the additional service charge may not

be imposed unless the monthly statement showing such outstanding

indebtedness or portion thereof is mailed at least fifteen days prior to

the date by which payment must be received to avoid that service charge.

A seller or holder shall not be prohibited from imposing a service

charge, or required to refund a service charge, if failure to comply

with the provisions of this paragraph resulted from circumstances beyond

the control of the seller or holder, notwithstanding reasonable

procedures to insure compliance with this paragraph.

(e) No change in the terms of a retail instalment credit agreement

shall take effect unless at least 30 days prior to the effective date of

such change, a written notice has been mailed or delivered to the buyer

that clearly and conspicuously describes such change and the

indebtedness to which it applies, and if the change has the effect of

increasing the rate of service charge, either (a) the notice states that

the incurrence by the buyer or another person authorized by him of any

further indebtedness under the plan to which the agreement relates on or

after the effective date of such change specified in the notice shall

constitute acceptance of such change, and either the buyer agrees in

writing to such change or the buyer or another person authorized by him

incurs such further indebtedness on or after the effective date of the

change stated in the notice, or (b) the notice advises the buyer that he

has thirty days from the earlier of the mailing or delivery of the

notice to advise the seller under or holder of a retail installment

credit agreement in writing that he does not accept such change,

provided that such notice contains an address to which the buyer may

send notice of his election not to accept the change and also provided

that the notice specifies that the change will take effect absent

receipt of the buyer's written objection to the change. Any buyer who

has received a notice pursuant to clause (a) who does not agree in

writing to the change and no further indebtedness is incurred under the

plan to which the agreement relates, and any buyer who gives a timely

notice, pursuant to clause (b), electing not to accept the change shall

be permitted to pay his outstanding indebtedness in accordance with the

terms of the retail installment credit agreement but the seller or

holder may terminate the amount of credit available to the buyer and may

require the buyer to return all credit cards issued in connection with a

retail installment credit agreement. If such a buyer subsequently uses a

credit card to obtain credit under a retail installment credit

agreement, such use shall constitute acceptance of the change of terms

and shall be deemed to have been accepted and shall become effective as

to the buyer as of the date such change would have become effective but

for the giving of notice by the buyer. If notice is given pursuant to

clause (b) and the buyer does not timely object in writing to the

change, such change shall become effective without action on the part of

the buyer; provided that in no event shall any such change take effect

with respect to (i) that portion of the outstanding indebtedness from

month to month which represents indebtedness outstanding prior to

January 1, 1981, and (ii) that portion of the outstanding indebtedness

from month to month which represents indebtedness incurred, under or

pursuant to an agreement in effect on December 1, 1980, between January

1, 1981, and the effective date of such change specified in the first

notice mailed or delivered pursuant to clause (a). Indebtedness

outstanding prior to January 1, 1981 for purpose of clause (i) above and

indebtedness outstanding prior to the effective date of a change for

purposes of clause (ii) above shall be determined on the basis of

crediting payments and other credits first to that portion of any such

indebtedness representing any service charges and then to that portion

of such indebtedness representing purchases and other debits in the

order in which made. An amendment to a credit agreement deleting a

provision that the rate of service charge may vary from time to time may

not become effective within one year from the later of the effective

date of the credit agreement or the effective date of an amendment to

the credit agreement adding a variable rate provision. For purposes of

this paragraph, an adjustment in the rate of the service charge as a

consequence of the movement in the selected index shall not constitute a

change in the terms of that agreement. A reduction in the grace period

for the assessment of a fee on any installment not paid when due, shall

be considered an amendment to an agreement as set forth in this

paragraph. The provisions of this paragraph shall not apply in the case

of an agreement which expressly prohibits changing of terms or which

provides limitations on changing of terms which are more restrictive

than the requirements of this paragraph.

Any service charge, whether assessed by a fixed or variable rate, may

be reduced on such terms as the seller may determine, provided that the

terms of such reduction, including, if applicable, the date on which the

reduction will terminate, are disclosed to the buyer on the written

notice announcing the reduction, prior to the effective date of the

reduction. A new method of determining a service charge is a reduction

in the service charge if the charge determined under the new method

never exceeds the charge under the original method. The original service

charge or original method of determining the service charge may be

applied after the reduction ends to the entire outstanding indebtedness,

including any indebtedness incurred when the reduced service charge

applied, and disclosure of the same shall be provided to the buyer in

the written notice announcing the reduction. A reduction to a service

charge, including the resumption of the original service charge or the

original method of determining the service charge, shall not be

considered a change in terms for purposes of this paragraph.

3-a. No retail instalment credit agreement or guarantee of a retail

instalment credit agreement shall provide for a security interest in any

investment property, as defined in paragraph forty-nine of subsection

(a) of section 9--102 of the uniform commercial code, that is pledged as

collateral, unless (a) the contract either specifically identifies the

investment property as collateral or (b) the secured party is a

securities intermediary, as defined in paragraph fourteen of subsection

(a) of section 8-102 of the uniform commercial code, or commodity

intermediary, as defined in paragraph seventeen of subsection (a) of

section 9--102 of the uniform commercial code, with respect to the

investment property. The identification of an account shall include the

name of the holder, account number, and name of the entity holding the

investment property. In the event that a retail instalment credit

agreement or guarantee does not comply with this section, the security

interest in the investment property is void.

4. The seller or holder under a retail instalment credit agreement

shall promptly provide the buyer under the agreement with a statement as

of the end of each monthly period (which need not be a calendar month)

containing

(a) The items required to be set forth pursuant to the act of congress

entitled "Truth in Lending Act" and the regulations thereunder, as such

act and regulations may from time to time be amended; and

(b) A legend to the effect that the buyer may at any time pay his

total indebtedness.

5. (a) The fees and charges authorized by this subdivision and

subdivision three of this section shall be inclusive of all charges

incident to investigating and making the retail instalment credit

agreement and for the extension of credit thereunder. No fee, expense,

delinquency, collection or other charge whatsoever shall be taken,

received, reserved or contracted for by the seller under or holder of a

retail instalment credit agreement except as provided in this section. A

retail instalment credit agreement may provide for the payment of

attorney's fees not exceeding twenty per centum of the amount due and

payable under the credit agreement if it is referred to an attorney not

a salaried employee of the seller or holder for collection.

(b) In addition to the service charge on outstanding indebtedness

permitted under subdivision three of this section, the seller or holder

may charge, receive and collect any one or more of the fees and charges

described in this paragraph, provided that any such fee or charge is

provided for in the retail instalment credit agreement. When credit

cards are issued in connection with a retail instalment credit

agreement, the retail instalment credit agreement may provide for an

annual fee for membership in the credit card plan. If a buyer has

requested the issuance of a credit card, the fee for the first year may

be charged by the seller or holder at any time. The seller or holder

shall in each subsequent year in which an annual fee is payable, send

the buyer in or with the statement for the monthly billing period before

that in which the fee is to be billed, a notice that the annual fee will

be billed in the next monthly statement. A buyer who is not delinquent

or otherwise in breach of any term of the agreement with the seller or

holder shall have the right during the first six months after the annual

fee is billed to notify the seller or holder in writing, at its address

on the credit agreement, to terminate the buyer's account and request a

refund of the unused portion of the annual fee previously paid. Upon

receipt of the termination notice and refund request from such buyer,

the seller or holder shall refund to the buyer the unused pro-rata share

of any annual fee previously paid as of the first billing statement date

after receipt of the termination notice. The retail installment credit

agreement may provide for the assessment of a fee for any installment

which is not paid on or before the date on which it is due. A seller or

holder that imposes a fee for late payments without allowing a grace

period of at least ten days must credit any cash payment made by a buyer

to an authorized representative of the seller or holder at all stores,

or to a teller at a branch where deposits are accepted, as of the date

of the receipt of the payment. The retail installment credit agreement

may, in addition, provide for an overlimit charge. The overlimit charge

may be imposed whenever the specified credit limit is exceeded but not

more than once in a monthly billing cycle. If the overlimit charge is

imposed, the credit limit must be disclosed on the monthly billing

statement. The retail installment credit agreement also may provide for:

(i) a returned payment charge, in the amount set forth in section 5-328

of the general obligations law, for any check or other method of payment

that is returned unpaid, excluding payment made by automated teller

machine or other electronic media; (ii) a charge for replacement of lost

or stolen credit cards, which charge shall be applied only where a buyer

has suffered a lost or stolen credit card after two replacements

thereof; (iii) a charge for additional credit cards for the buyer's

account; and (iv) a charge for copies of sales slips, monthly statements

and other documents when such copies are not required by federal or

state law governing billing error disputes.

Sections 190.40 and 190.42 of the penal law shall not apply to fees

and charges set forth in this subdivision. For purposes of 12 U.S.C. §§

85, 1831 d, 1463(g) and 1785 (g), the fees and charges permitted under

this subdivision are interest under New York law, and all terms,

conditions, and other provisions of a retail instalment credit

agreement, including without limitation, fees and charges, provisions

relating to the method of determining the outstanding indebtedness on

which a service charge is imposed and circumstances in which a service

charge may be avoided, are material to the determination of the interest

rate under New York law.

6. If the cost of any insurance is to be separately charged to the

buyer, the retail instalment credit agreement shall state whether the

insurance is to be procured by the buyer or the seller or holder. If the

insurance is to be procured by the seller or holder, the seller or

holder shall comply with the provisions of subdivision five of section

four hundred two.

7. No retail instalment credit agreement shall require or entail the

execution of any note or series of notes by the buyer which when

separately negotiated will cut off as to third parties any right of

action or defense which the buyer may have against the seller.

8. The provisions of subdivisions four and five of section four

hundred two A and of sections four hundred six and four hundred twelve

hereof shall be applicable to retail instalment credit agreements. The

words "credit service charge" in subdivisions four and five of section

four hundred two A shall read "service charge" for the purposes of this

section.

9. The service charge allowed in subdivision three of this section

shall be allowed to a seller or holder under this section only:

(a) If the seller enters into an agreement subject to the provisions

of this article with any buyer on or after October first, nineteen

hundred fifty-seven; or

(b) In the case of any buyer who had entered into an agreement with a

seller prior to October first, nineteen hundred fifty-seven, if the

seller or holder delivers or mails to the buyer a copy of a retail

instalment credit agreement in conformity with this section duly

executed on behalf of the seller and the seller or holder thereafter

complies with all the other provisions of this section.

Nothing in this subdivision contained shall be construed to affect the

validity or invalidity of any agreement or alleged agreement made prior

to October first, nineteen hundred fifty-seven.

10. No retail instalment credit agreement shall contain any provision

by which:

(a) In the absence of the buyer's default, the holder may, arbitrarily

and without reasonable cause, accelerate the maturity of any part or all

of the amount owing thereunder;

(b) A power-of-attorney is given to confess judgment in this state, or

an assignment of wages is given;

(c) The buyer waives any right of action against the seller or holder

of the agreement, or other person acting on his behalf, for any illegal

act committed in the collection of payments under the agreement;

(d) The buyer executes a power-of-attorney appointing the seller or

holder of the agreement, or other person acting on his behalf, as the

buyer's agent in collecting payments under the agreement;

(e) The buyer relieves the seller from liability for any legal remedy

which the buyer may have against the seller under the agreement or

otherwise;

(f) The buyer waives any right to a trial by jury in any action or

proceeding arising out of the agreement.

(g) The buyer consents to receive any goods or services on a regular

or irregular basis. Any such consent to receive goods or services must

be separately agreed to by the buyer in a writing other than the retail

instalment credit agreement.

Any such prohibited provision shall be void but shall not otherwise

affect the validity of the contract.

11. (a) Provided that the retail instalment credit agreement complies

in all other respects with the provisions of this section, a financing

agency may enter into a credit agreement with a retail buyer for its own

account or on behalf of one or more retail sellers or municipal

corporations, or the New York city water board, which need not be named

in the agreement, pursuant to which the financing agency may, with the

buyer's consent, purchase or acquire from one or more retail sellers or

municipal corporations, or the New York city water board, which need not

be named in the credit agreement, indebtedness of the buyer under a

sales slip or memorandum evidencing a purchase or fine, civil penalty,

rent, rate, tax, fee, charge, revenue, financial obligation, or other

amount, including a penalty, special assessment or interest, to be paid

in accordance with the agreement. Such a credit agreement shall contain

the name and place of business of the financing agency in lieu of those

of a retail seller, municipal corporation or the New York city water

board, and may not contain any provision for a security interest in real

or personal property or fixtures of the buyer to secure payment or

performance of the buyer's obligation under the credit agreement other

than a security interest in a specifically identified interest-bearing

deposit account of the buyer with such financing agency. A financing

agency may in such a credit agreement contract for, and if it has so

contracted and delivered to the buyer a copy of the credit agreement

executed by it, may charge, receive and collect the service charge

authorized by this section. Each sales slip or memorandum evidencing a

purchase or fine, civil penalty, rent, rate, tax, fee, charge, revenue,

financial obligation, or other amount, including a penalty, special

assessment or interest due to a municipal corporation or the New York

city water board from the buyer to be paid in accordance with such a

credit agreement shall refer to the credit agreement between the buyer

and the financing agency by account number or otherwise and contain the

names of the retail buyer and the retail seller, municipal corporation

or the New York city water board.

A financing agency which purchases from more than one seller or

municipal corporation or which purchases from the New York city water

board indebtedness of a retail buyer to be paid in accordance with such

a retail instalment credit agreement entered into by the financing

agency with the buyer as provided in this subdivision may charge,

receive and collect the service charge authorized by subdivision three

of this section only if the service charge so authorized is computed on

the buyer's total outstanding indebtedness to the financing agency from

month to month to be paid in accordance with such a retail instalment

credit agreement.

(b) A financing agency may enter into a credit agreement with a retail

buyer for its own account or on behalf of one or more authorized

insurers or insurance agents or insurance brokers, who need not be named

in the agreement, pursuant to which the financing agency may, with the

buyer's consent, purchase or acquire from one or more authorized

insurers or insurance agents or brokers, who need not be named in the

agreement, the buyer's indebtedness under a sales slip or memorandum

evidencing a purchase of insurance under an insurance contract or

contracts, provided that (i) such credit agreement complies with the

requirements of paragraph (a) of this subdivision, and (ii) such credit

agreement does not permit cancellation of the insurance contract or

contracts as a result of default under the credit agreement by the

buyer. For purposes of this paragraph, the terms "authorized insurer",

"insurance contract", "insurance agent", and "insurance broker" shall be

as defined in or have the meanings assigned to them by section one

hundred seven of the insurance law.

(c) A single credit agreement entered into pursuant to either

paragraph (a) or paragraph (b) of this subdivision may provide for the

financing agency to acquire indebtedness of a retail buyer under a sales

slip or memorandum evidencing a purchase or, if applicable, a fine,

civil penalty, rate, rent, tax, fee, charge, revenue, financial

obligation or other amount, including a penalty, special assessment, or

interest, pursuant to the other of said paragraphs. Where a financing

agency enters into a credit agreement with a retail buyer for its own

account, the credit agreement may consist of an agreement complying in

all other respects with the provisions of this section, but executed

only by the financing agency, together with a credit card issued by it

to the retail buyer. The credit agreement, however, must then provide

that it shall not become effective unless and until the retail buyer or

a person authorized by him signs a sales slip or memorandum evidencing

purchase or lease of property or services or the payment of a fine,

civil penalty, rent, rate, tax, fee, charge, revenue, financial

obligation or other amount, including a penalty, special assessment or

interest, to a municipal corporation or the New York city water board by

use of the credit card and that prior thereto the retail buyer shall not

be responsible for any purchase or lease of property or services or the

payment of a fine, civil penalty, rate, rent, tax, fee, charge,

financial obligation, or other amount, including a penalty, special

assessment or interest, by use of the credit card after its loss or

theft.

(d) A credit agreement entered into pursuant to paragraph (a) or (b)

of this subdivision shall contain or be accompanied by a statement

making the disclosures required by the act of congress entitled "Truth

in Lending Act" and the regulations thereunder, as such act and

regulations may from time to time be amended.

(e) A financing agency enters into a credit agreement provided for in

this subdivision in this state, for purposes of this article, if the

financing agency delivers or mails in this state to the buyer a copy of

the agreement executed by the financing agency, provided, however, that

in order to reduce the potential for theft or fraud, a financing agency

may mail the credit agreement from outside the state if the credit

agreement is prepared and sealed in the state before mailing and prior

to being transported to a location outside of the state for actual

mailing.

(f) For the purpose of this subdivision, the term "municipal

corporation", as defined in subdivision twenty-two of section four

hundred one of this chapter, shall include the White Plains parking

authority, and the term "purchase" shall include any fee, rate, rent or

other charge of such authority.

12. (a) Except as provided in paragraphs (b) and (c) of this

subdivision, no retail instalment credit agreement, or any agreement

executed in connection therewith, may provide for the creation of a

security interest in any personal or real property (including any goods

sold under such agreement) to secure payment of the buyer's outstanding

indebtedness under such retail instalment credit agreement. Any such

prohibited provision shall be void but shall not otherwise affect the

validity of such retail instalment credit agreement.

(b) A financing agency may require a pledge to such financing agency

of a specifically identified interest-bearing deposit account of the

buyer maintained at such financing agency as collateral security for a

loan made by such financing agency under the authority of this

subdivision and provided further that any such financing agency which

requires such a pledge shall be subject to the provisions of section

five hundred twenty-b of the general business law.

(c) Except for motor vehicles as defined in article nine of this

chapter, or goods which the seller knows or reasonably should know are

or are likely to be so affixed to a motor vehicle or to realty as to

become a part thereof, a retail seller, or financing agency which enters

into a retail installment credit agreement with a retail buyer on behalf

of a retail seller named in the agreement, may take or retain a purchase

money security interest, as that term is defined in section 9--103 of

the uniform commercial code, in any item of merchandise purchased at a

price of not less than two hundred dollars pursuant to a retail

installment credit agreement until the purchase price of such

merchandise is fully paid, but in no event shall any purchase money

security interest created hereunder be valid or enforceable for a period

greater than five years from the date a purchase is posted to any

account which may be used to purchase an item of merchandise at a price

less than two hundred dollars. In the event such a purchase money

security interest is taken or retained by a retail seller or financing

agency, payments shall be applied to the purchase in the order such

purchases are posted to the account after such payments are first

applied to any finance, late, or other charges imposed by the retail

seller or financing agency. Notwithstanding the provisions of section

9--609 of the uniform commercial code, repossession of merchandise

subject to a purchase money security interest permitted under this

subdivision shall be prohibited unless and until payment on the account

shall be in default for a period of at least thirty days and thereafter

a notice of default be mailed to the buyer providing an additional

thirty days time in which to cure the default on the account. In the

event of repossession without judicial process, a substantially

contemporaneous writing signed by the buyer indicating the buyer's

agreement to such repossession shall be required.

13. (a) Subject to the limitation contained in paragraph (b) of this

subdivision, the holder of a retail instalment credit agreement

(including for purposes of this subdivision a financing agency which

enters into a credit agreement with a retail buyer as provided in

subdivision eleven of this section) shall be subject to all claims

(other than tort claims) and defenses arising out of the buyer's

purchase of goods and services to be paid in accordance with the credit

agreement if (1) the buyer has made a good faith attempt to obtain

satisfactory resolution of a disagreement or problem relative to the

sale from the seller; (2) the amount of the initial transaction exceeds

fifty dollars; and (3) the place where the initial transaction occurred

was in the same state as the mailing address previously provided by the

buyer or was within one hundred miles from such address, except that the

limitations set forth in subparagraphs (2) and (3) of this paragraph

with respect to a buyer's right to assert claims and defenses against

the holder shall not be applicable to any transaction in which the

seller (A) is the same person as the holder; (B) is controlled by the

holder; (C) is under direct or indirect common control with the holder;

(D) is a franchised dealer of the holder's products or services; or (E)

has obtained the order for such sale through a mail solicitation made by

or participated in by the holder in which the buyer is solicited to

enter into such transactions by using the credit agreement with the

holder.

(b) The amount of claims or defenses asserted by the buyer may not

exceed the amount of indebtedness owing to the holder with respect to

such transaction at the time the buyer first notifies the holder or

seller of such claim or defense. For the purpose of determining the

amount of indebtedness owing to the holder in the preceding sentence,

payments and credits to the buyer's account are deemed to have been

applied, in the order indicated, to the payment of (1) service charges

in order of their entry to the account; and (2) debits to the account

other than those set forth above, in the order in which each debit entry

to the account was made.

14. (a) A seller of goods pursuant to the terms of this article shall

adopt and apply procedures to reasonably avoid debiting the buyer's

account with respect to any transaction, or to reasonably avoid selling

or assigning to a financing agency a sales slip or memorandum evidencing

a purchase of goods, prior to the date the goods subject to the

transaction are delivered to the buyer or the buyer's designee. A seller

of goods may debit the buyer's account, or sell or assign to a financing

agency a sales slip or memorandum evidencing a purchase of goods, on or

after the date of sale where:

(i) the goods subject to the transaction are shipped within ten days

of the date of sale and the seller has reason to believe that delivery

will be effected not later than fourteen days from the date of sale; or

(ii) the goods subject to the transaction are one of a kind or are to

be specifically manufactured for the buyer and are not suitable for sale

to others in the ordinary course of the seller's business; or

(iii) the buyer requested delayed delivery of goods that will be

available for delivery not later than fourteen days from the date of

sale; or

(iv) the buyer and seller have agreed that delivery of the goods will

occur at regular intervals or in instalments.

(b) For the purposes of this subdivision, a seller may debit the

buyer's account, or sell or assign to a financing agency a sales slip or

memorandum evidencing a purchase of goods, on or after the date of

shipment where, in the ordinary course of business, delivery is to be

effected no later than ten days after the date of shipment.

(c) It shall not be a violation of this subdivision if the seller

ships or makes the goods available for delivery as agreed and delivery

is delayed due to failure of the buyer to accept said delivery.

(d) The provisions of this subdivision shall not apply to mail order

merchandise as regulated by section three hundred ninety-six-m of the

general business law.

Penalties. 1. Any person who shall wilfully violate any

provision of this article shall be guilty of a misdemeanor and upon

conviction shall be punished by a fine not exceeding five hundred

dollars.

2. In case of failure by any person to comply with the provisions of

this article, the buyer shall have the right to recover from such person

an amount equal to the credit service charge or service charge imposed

and the amount of any delinquency, collection, extension, deferral or

refinance charge imposed.

3. Notwithstanding the provisions of this section, any failure to

comply with any provision of this article may be corrected within ten

days after the holder is notified thereof in writing by the buyer and,

if so corrected, neither the seller nor the holder shall be subject to

any penalty under this section.

4. Subdivision three of this section shall not apply to any person who

wilfully violates any provision of this article in connection with the

imposition, computation or disclosures of or relating to a credit

service charge on a consolidated total of two or more contracts or

obligations under the provisions of section four hundred ten, and the

buyer may recover from such person an amount equal to the credit service

charges and any delinquency, collection, extension, deferral or

refinance charges imposed, contracted for or received on all contracts

and obligations included in the consolidated total and the seller shall

be barred from the recovery of any such charges.

5. Subdivisions one and three of this section shall not apply to any

person who violates subdivision two-a of section four hundred three of

this article.

Exceptions. 1. The provisions of sections four hundred nine and

four hundred eleven of this article shall apply to an instalment sale of

goods or services for any use.

2. The provisions of section four hundred eight of this article shall

apply to an installment sale of equipment used for production of a farm

product, as defined in section two of the agriculture and markets law.

Waiver. Any waiver by the buyer of the provisions of this

article shall be unenforceable and void.

Severability. If any provision of this article or the

application thereof to any person or circumstances is held

unconstitutional, the remainder of the article and the application of

such provision to other persons or circumstances shall not be affected

thereby.

Short title. This article may be cited as the "Retail

Instalment Sales Act."

Refund credit on cancellation of credit related insurance or

prepayment of contract. The provisions of this article requiring refunds

and refund credits with respect to group credit life insurance in cases

of cancellation of group credit life insurance or of prepayment of a

retail instalment contract or obligation shall also require refunds and

refund credits with respect to credit unemployment insurance, group

credit accident, group credit health or group credit accident and health

insurance in cases of cancellation of such insurance or of prepayment of

a retail instalment contract or obligation which included such

insurance.

Guaranties to sellers of liabilities of buyers under retail

instalment contracts. (a) No guaranty given to the seller or to the

seller and the seller's assignee of the liabilities of a buyer under a

retail instalment contract shall be valid unless the guaranty is

incorporated in or endorsed on the contract or identifies the contract

and specifies the time balance thereof. A copy of the guaranty and the

contract to which it relates shall be given or mailed to the guarantor

upon or immediately after the execution and delivery of the guaranty by

the guarantor. As used in this section, "retail instalment contract" and

"contract" include a retail instalment obligation and a retail

instalment contract as defined in the motor vehicle retail instalment

sales act, constituting article nine of this chapter. This section does

not apply to a guaranty made by a seller or a holder of a retail

instalment contract.

(b) No guaranty given to the seller or to the seller and the seller's

assignee of the liabilities of a buyer under a retail instalment

contract shall relate to any future retail instalment contracts.

Security interest in other property. Except as provided in

section four hundred ten of this chapter, no retail instalment contract

or obligation, or any other agreement executed in connection therewith,

may provide for the creation of a security interest in any real or

personal property, other than the goods which are the subject matter of

the retail instalment sale, to secure the payment of the time sale price

under such contract or obligation or any part thereof; provided,

however, that the prohibition of this section shall not be applicable to

the taking of a mortgage upon real property to secure the payment of the

time sale price of a retail instalment obligation, if the transaction

which gave rise to such obligation was the furnishing of goods or

services for repairs, alterations or improvements upon, or in connection

with buildings upon, such real property. Any such prohibited provision

shall be void but shall not otherwise affect the validity of the

contract or obligation.

Claim for deficiency after default and repossession. If a buyer

defaults on any instalment of the time sale price under a retail

instalment contract, and the holder obtains possession of the goods

which are the subject matter of such contract and disposes of such goods

as provided by section 9--610 of the uniform commercial code, the buyer

shall be liable to the holder for any deficiency to the extent provided

in that section; provided, however, that in calculating such deficiency

there shall be deducted from the amount thereof as prescribed by such

section 9--610, an amount equal to that portion of the refund credit to

which the buyer would have been entitled under section four hundred

eight of this chapter if, at the time the holder disposed of such goods,

the buyer had not been in default and had prepaid in full the balance of

the time sale price as the amount realized upon the disposition of the

goods bears to the balance of the time sale price.

Short title; purpose. This act may be cited as the door-to-door

sales protection act. The purpose of this act is to afford consumers a

"cooling-off" period to cancel contracts which are entered into as a

result of high pressure door-to-door sales tactics.

Definitions. In this article:

1. "Door-to-door sale" shall mean a sale, lease or rental of consumer

goods or services in which the seller or his representative personally

solicits the sale, including those in response to or following an

invitation by the buyer, and the buyer's agreement or offer to purchase

is made at a place other than the place of business of the seller. The

term "door-to-door sale" does not include a transaction:

(a) made pursuant to prior negotiations in the course of a visit by

the buyer to a retail business establishment having a fixed permanent

location where the goods are exhibited or the services are offered for

sale on a continuing basis; or

(b) in which the buyer has initiated the contact and the goods or

services are needed to meet a bona fide immediate personal emergency of

the buyer, and the buyer furnishes the seller with a separate dated and

signed personal statement in the buyer's handwriting describing the

situation requiring immediate remedy and expressly acknowledging and

waiving the right to cancel the sale within three business days; or

(c) conducted and consummated entirely by mail or telephone; and

without any other contact between the buyer and the seller or its

representative, other than at the place of business of the seller, prior

to delivery of the goods or performance of the services; or

(d) in which the buyer has initiated the contact and specifically

requested the seller to visit his home for the purpose of repairing or

performing maintenance upon the buyer's personal property. If in the

course of such a visit, the seller sells the buyer the right to receive

additional services or goods other than replacement parts necessarily

used in performing the maintenance or in making the repairs, the sale of

those additional goods or services would not fall within this exclusion;

or

(e) pertaining to the sale or rental of real property, to the sale of

insurance or to the sale of securities or commodities by a broker-dealer

registered with the securities and exchange commission; or

(f) where the purchase price whether under single or multiple

contracts, does not exceed twenty-five dollars and the products, goods,

or merchandise purchased is capable of delivery at one time.

2. "Consumer goods or services" shall mean goods or services

purchased, leased, or rented primarily for personal, family or household

purposes, including courses of instruction or training regardless of the

purpose for which they are taken.

3. "Seller" shall mean any person, partnership, corporation or

association engaged in the the door-to-door sale of consumer goods or

services.

4. "Place of business" shall mean the main or permanent branch office

or local address of the seller.

5. "Purchase price" shall mean the total price paid or to be paid for

the consumer goods or services, including all interest and service

charges.

6. "Business day" shall mean any calendar day except Sunday, or the

following business holidays: New Year's Day, Washington's Birthday,

Memorial Day, Independence Day, Labor Day, Columbus Day, Veterans' Day,

Thanksgiving Day, and Christmas Day.

7. (a) "Personal emergency response service" shall mean (i) the

provision and maintenance of electronic communication equipment in the

home of an individual which signals a monitoring agency for help when

activated by the individual, or after a period of time if a timer

mechanism has not been reset; (ii) the continuous monitoring of such

signals by a trained operator and, in case of receipt of such signal,

the immediate notification of such emergency response organizations or

persons, if necessary, as the individual has previously specified.

(b) With respect to a "personal emergency response service" as defined

in paragraph (a) of this subdivision, the provisions of this article

shall apply to the purchase by a consumer of provision for such service,

whether or not such purchase is made in a "door-to-door sale" as defined

in subdivision one of this section, except where applying any of the

provisions of this article conflicts with any provision of section three

hundred ninety-one-l of the general business law, in which case the

provisions of section three hundred ninety-one-l of the general business

law shall prevail. For this purpose, the transactional exclusions from

the definition of "door-to-door sale" contained in paragraphs (a)

through (f) of subdivision one of this section shall not apply to the

sale or purchase of a personal emergency response service as defined

herein, and the term "door-to-door sale" wherever used in this article

shall be deemed to also mean any sale, lease or rental of a personal

emergency response service to or by a consumer.

Buyer's or other obligor's right to cancel. 1. In addition to

any right otherwise to revoke an offer, the buyer or other person

obligated for any part of the purchase price may cancel a door-to-door

sale until midnight of the third business day, or until midnight of the

seventh business day in the case of a door-to-door sale of a personal

emergency response service, after the day on which the buyer has signed

an agreement or offer to purchase relating to such sale.

2. Cancellation occurs when written notice of cancellation is given to

the seller.

3. Notice of cancellation, if given by mail, shall be deemed given

when deposited in a mailbox properly addressed and postage prepaid.

4. Notice of cancellation need not take the form prescribed and shall

be sufficient if it indicates the intention of the buyer not to be

bound.

Form of notice; statement of buyer's rights. 1. In a

door-to-door sale, the seller shall furnish to the buyer

(a) a fully completed receipt or copy of any contract pertaining to

such sale at the time of its execution, which is in the same language,

e.g. Spanish, as that principally used in the oral sales presentation

and which shows the date of the transaction and contains the name and

address of the seller, and in immediate proximity to the space reserved

in the contract for the signature of the buyer or on the front page of

the receipt if a contract is not used and in not less than ten-point

bold face type, a statement in substantially the following form:

"YOU, THE BUYER, MAY CANCEL THIS TRANSACTION AT ANY TIME PRIOR TO

MIDNIGHT OF THE THIRD BUSINESS DAY AFTER THE DATE OF THIS TRANSACTION.

SEE THE ATTACHED NOTICE OF CANCELLATION FORM FOR AN EXPLANATION OF THIS

RIGHT."

(b) at the time the buyer signs the door-to-door sales contract or

otherwise agrees to buy consumer goods or services from the seller, a

completed form in duplicate, captioned "NOTICE OF CANCELLATION", which

shall be attached to the contract or receipt and easily detachable, and

which shall contain in not less than ten-point bold face type the

following information and statements in the same language, e.g. Spanish,

as that used in the contract:

NOTICE OF CANCELLATION

(enter date of transaction)

_________________________________________

(Date)

YOU MAY CANCEL THIS TRANSACTION, WITHOUT ANY PENALTY OR OBLIGATION,

WITHIN THREE BUSINESS DAYS FROM THE ABOVE DATE.

IF YOU CANCEL, ANY PROPERTY TRADED IN, ANY PAYMENTS MADE BY YOU UNDER

THE CONTRACT OR SALE, AND ANY NEGOTIABLE INSTRUMENT EXECUTED BY YOU WILL

BE RETURNED WITHIN 10 BUSINESS DAYS FOLLOWING RECEIPT BY THE SELLER OF

YOUR CANCELLATION NOTICE, AND ANY SECURITY INTEREST ARISING OUT OF THE

TRANSACTION WILL BE CANCELLED.

IF YOU CANCEL, YOU MUST MAKE AVAILABLE TO THE SELLER AT YOUR RESIDENCE,

IN SUBSTANTIALLY AS GOOD CONDITION AS WHEN RECEIVED, ANY GOODS DELIVERED

TO YOU UNDER THIS CONTRACT OR SALE; OR YOU MAY IF YOU WISH, COMPLY WITH

THE INSTRUCTIONS OF THE SELLER REGARDING THE RETURN SHIPMENT OF THE

GOODS AT THE SELLER'S EXPENSE AND RISK.

IF YOU DO MAKE THE GOODS AVAILABLE TO THE SELLER AND THE SELLER DOES NOT

PICK THEM UP WITHIN TWENTY DAYS OF THE DATE OF YOUR NOTICE OF

CANCELLATION, YOU MAY RETAIN OR DISPOSE OF THE GOODS WITHOUT ANY FURTHER

OBLIGATION. IF YOU FAIL TO MAKE THE GOODS AVAILABLE TO THE SELLER, OR IF

YOU AGREE TO RETURN THE GOODS TO THE SELLER AND FAIL TO DO SO, THEN YOU

REMAIN LIABLE FOR PERFORMANCE OF ALL OBLIGATIONS UNDER THE CONTRACT.

TO CANCEL THIS TRANSACTION, MAIL OR DELIVER A SIGNED AND DATED COPY OF

THIS CANCELLATION NOTICE OR ANY OTHER WRITTEN NOTICE, OR SEND A

TELEGRAM, TO

(Name of Seller), AT Address of Seller

__________________ _________________________________

(Place of Business) NOT LATER THAN MIDNIGHT OF

__________________

__________________

(Date)

I HEREBY CANCEL THIS TRANSACTION.

_________________

(Date)

______________________________

(Buyer's Signature)

and the seller shall complete both copies by entering the name of the

seller, the address of the seller's place of business, the date of the

transaction, and the date, not earlier than the third business day

following the date of the transaction, by which the buyer may give

notice of cancellation.

2. In a door-to-door sale, the seller shall inform each buyer orally,

at the time he signs the contract or purchases the goods or services, of

his right to cancel. Until the seller has complied with this section,

the buyer or any other person obligated for any part of the purchase

price may cancel the door-to-door sale by notifying the seller in any

manner and by any means of his intention to cancel. The period

prescribed by subdivision one of section four hundred twenty-seven shall

begin to run from the time the seller complies with this section.

3. A door-to-door sales contract or receipt shall not include any

confession of judgment or any waiver of any of the rights to which the

buyer is entitled under this article including specifically his right to

cancel the sale in accordance with the provisions of this article.

4. A door-to-door sales contract or receipt shall disclose

conspicuously the seller's refund policy as to all goods, wares or

merchandise subject to the door-to-door sales agreement. If the seller

fails to disclose conspicuously the applicable refund policy, then the

seller shall be liable to the buyer for a cash refund of the total price

or a credit of the total price, at the buyer's option, provided that

within twenty days from the date of delivery of the purchased item or

items, the buyer makes a demand therefor and provided that the

merchandise is in substantially as good condition as when received by

the buyer. In no event shall this subdivision be deemed to supercede a

refund policy of a seller which allows return of merchandise more than

twenty days after the date of delivery of the purchased item or items.

The amount paid by the buyer to the seller shall be refunded or

credited, as the case may be, within ten business days from the date of

return of the seller's merchandise in substantially as good condition as

when received by the buyer.

5. This section does not relieve any person, firm, corporation or

association subject to the provisions of this section from complying

with any other applicable law, ordinance, rule or regulation relating to

refund policies which affords the buyer greater protection than do the

provisions of this section.

Restoration of down payment. 1. Within ten days after a

door-to-door sale has been cancelled or an offer to purchase revoked,

the seller shall tender to the buyer all payments made by the buyer and

any note or other evidence of indebtedness.

2. If the down payment includes goods traded in, the goods shall be

tendered in substantially as good condition as when received by the

seller. If the seller fails to tender the goods as provided by this

section, the buyer may elect to recover an amount equal to the trade-in

allowance stated in the agreement.

3. If the seller refuses within the period prescribed by subdivision

one to return all payments made by the buyer, he shall be liable to the

buyer for the said payments and if the buyer is successful in his action

therefor or appeal thereon, the court shall award him one hundred

dollars plus reasonable attorney's fees and costs, in addition to such

payments.

4. Until the seller has complied with this section, the buyer may

retain possession of goods delivered to him by the seller and shall have

a lien on the goods in his possession or control for any recovery to

which he may be entitled.

Duty of buyer. 1. Except as provided by subdivision four of

section four hundred twenty-nine, within a reasonable time after a

door-to-door sale has been cancelled or an offer to purchase revoked,

the buyer upon demand shall tender to the seller any goods delivered by

the seller pursuant to the sale but need not tender at any place other

than his residence. If the seller fails to demand possession of such

goods within a reasonable time after cancellation or revocation, the

goods shall become the property of the buyer without obligation to pay

for them. For the purpose of this section, twenty days shall be presumed

to be a reasonable time.

2. The buyer shall take reasonable care of the goods in his possession

both before cancellation or revocation and for a reasonable time

thereafter, during which time the goods are otherwise at the seller's

risk.

3. If the seller has performed any services pursuant to a door-to-door

sale prior to its cancellation, the seller shall not be entitled to

compensation therefor.

Restriction on assignment of obligation. 1. A seller shall not

negotiate, transfer, sell or assign any note or other evidence of

indebtedness to a finance company or other third party prior to midnight

of the fifth business day, or in the case of a contract for door-to-door

sale of a personal emergency response service, prior to midnight of the

ninth business day, following the day the contract was signed or the

goods or services were purchased.

2. The assignee of any note or evidence of indebtedness shall be

subject to all claims and defenses of the buyer against the seller

arising from the sale notwithstanding any agreement to the contrary, but

the assignee's liability under this subdivision shall not exceed the

amount owing to the assignee at the time the claim or defense is

asserted against the assignee. Rights of the buyer under this section

can be asserted affirmatively against or as a matter of defense to or

set-off against a claim by the assignee.

Short title; purpose. This article may be cited as the

"telephone sales protection act". The purpose of this article is to

afford consumers a "cooling-off" period to cancel a sale which is made

as a result of high pressure telephone sales tactics.

Definitions. 1. (a) "Telephone sales business" shall mean a

business which is primarily engaged in the solicitation of orders by

telephone for:

(1) merchandise or services connected with merchandise to be shipped

to the customer through the mail or by other carrier, upon receipt of an

order in a communication initiated by the seller with charge account

authorization remitted by telephone and the merchandise by its nature is

ready for use or consumption when advertised or offered for sale and can

be held in stock;

(2) vacation club membership, vacation packages or other travel

services.

(b) The term "telephone sales business" does not include a

transaction:

(1) where the purchase price whether under single or multiple

contracts, does not exceed twenty-five dollars and the products, goods

or merchandise purchased are capable of delivery at one time; or

(2) pertaining to the sale or rental of real property, to the sale of

insurance or to the sale of securities or commodities by a broker-dealer

registered with the securities and exchange commission or with the

department of law; or

(3) pertaining to the solicitation of sales by a catalog seller who

periodically issues and delivers catalogs to potential purchasers by

mail or by other means; provided, however, that this exception shall

only apply if the catalog includes a written description or illustration

and the sales price of each item of merchandise offered for sale,

includes at least twenty-four full pages of written material or

illustrations, is distributed in more than one state, and has an annual

circulation of not less than two hundred fifty thousand customers; or

(4) pertaining to a renewal or continuation of an existing or prior

contractual relationship or prior purchasing relationship between a

buyer and a seller; or

(5) pertaining to the sale of a vacation or travel service which is

offered by a:

(i) person, firm, corporation, partnership or association that is an

officially appointed agent of a common carrier and meets applicable

standards no less than those required for authorized agents of the

airline reporting corporation; or

(ii) person, firm, corporation, partnership or association that is a

registered member in good standing of the cruise lines international

association and who solely solicits and/or sells travel services and

products as an officially appointed agent of one or more ocean carriers

in the sale of the ocean carrier's travel services pursuant to the

agency appointment.

(6) Pertaining to a sale in which the seller at a minimum has a policy

of:

(i) accepting returns or canceling services, for a period of not less

than seven days after the date of delivery to the customer and providing

a cash refund for a cash purchase or issuing a credit for a credit

purchase, which credit is applied to the account on which the purchase

was debited, in connection with the return of its unused and undamaged

merchandise or canceled services;

(ii) disclosing such seller's return and refund policy to the buyer,

orally by telephone or in writing with advertising, promotional

material, or with delivery of the products or service; and

(iii) restoring such payment or issuing such credit, as required under

clause (i) of this subparagraph, within thirty days after the date on

which the seller receives returned merchandise or notice of cancellation

of services. A seller who discloses, in writing, that a sale is made or

provided "satisfaction guaranteed", with "free inspection", "no risk

guarantee", or similar words or phrases shall be deemed to meet the

requirements of the review and return for refund policy set forth in

this subparagraph.

2. "Telephone sale" shall mean any of the transactions referred to in

subdivision one of this section and shall include transactions initiated

by a consumer as a result of a mail solicitation inviting such telephone

call.

3. "Merchandise" shall mean tangible chattels bought for personal,

family or household purposes.

4. "Shipment" shall mean the act whereby the seller physically places

the merchandise into the possession of the United States postal service

or other carrier.

5. "Accepts orders" shall mean receipt of an order with charge account

authorization and debiting the buyer's account.

6. "Purchase price" shall mean the total price paid or to be paid for

the merchandise, including all interest and service charges.

7. "Business day" shall mean any calendar day except Sunday, or the

following business holidays: New Year's Day, Martin Luther King Day,

Washington's Birthday, Memorial Day, Independence Day, Labor Day,

Columbus Day, Veterans Day, Thanksgiving Day, and Christmas Day.

Buyer's or other obligor's right to cancel. 1. In addition to

any other right otherwise to revoke an offer, the buyer or other person

obligated for any part of the purchase price may cancel the telephone

sale until midnight of the third business day after the day on which the

buyer has received written notice from the seller notifying the buyer of

his right to cancel the telephone sale.

2. Cancellation occurs when written notice of cancellation is given to

the seller.

3. Notice of cancellation shall be deemed given when deposited in a

mailbox properly addressed and postage prepaid.

4. Notice of cancellation shall be deemed received on midnight of the

fifth day after it is deemed given.

5. Notice of cancellation need not take the form prescribed and shall

be sufficient if it indicates the intention of the buyer not to be

bound.

Form of notice; statement of buyer's rights. 1. In a telephone

sale, the seller shall furnish to the buyer, in the same language as

that principally used in the sales presentation, a written notice, which

shall contain in not less than ten-point boldface type, a statement in

substantially the following form:

"You, the buyer, may cancel this transaction without any penalty or

obligation at any time prior to midnight of the third business day after

receipt of this notice. If you cancel, any payments made by you under

the sale will be credited to your charge account within ten business

days following receipt by the seller of your written notice of

cancellation and any security interest arising out of the transaction

will be cancelled.

If you cancel, you must make available to the seller at your

residence, in substantially as good condition as when received, any

goods delivered to you under this contract of sale; or you may, if you

wish, comply with the instruction of the seller regarding the return

shipment of the goods at the seller's expense and risk.

If you do make the goods available to the seller and the seller does

not pick them up within twenty days of the date of your notice of

cancellation, you may retain or dispose of the goods without any further

obligation. If you fail to make the goods available to the seller, or if

you agree to return the goods to the seller and fail to do so, then you

remain liable for performance of all obligations under the contract.

To cancel this transaction, mail or deliver a written notice of

cancellation, or send a telegram to (name of seller) at the following

address (address of seller)".

2. Until the seller has informed the buyer of his right to cancel and

has complied with the provisions of this article, the buyer or any other

person obligated for any part of the purchase price may cancel the

telephone sale by notifying the seller in any manner and by any means of

his intention to cancel. The period prescribed by subdivision one of

this section shall begin to run from the time the seller complies with

the provisions of this article.

3. Pursuant to subdivision one of this section, the seller is required

to furnish the buyer with the seller's name, and the name of the person

to whom any notice of cancellation is to be given if different from the

seller's name, the legal name of the company for whom the seller is

soliciting, the seller's street address and the seller's phone number.

The seller is additionally required to furnish the buyer with the date

of the telephone sale and a description of the telephone sale.

Restoration of down payment. 1. Within thirty days after a

telephone sale has been cancelled, the seller shall recredit the buyer's

charge account.

2. If the down payment includes goods traded in, the goods shall be

tendered in substantially as good condition as when received by the

seller. If the seller fails to tender the goods as provided by this

section, the buyer may elect to recover an amount equal to the trade-in

allowance stated in the agreement.

3. If the seller refuses within the period prescribed by subdivision

one of this section to return all payments made by the buyer, he shall

be liable to the buyer for the said payments and if the buyer is

successful in his action therefor or appeal thereon, the court shall

award him one hundred dollars and may award reasonable attorney's fees

and costs, in addition to such payments. In addition to such an action,

such payments and the one hundred dollar amount may be recovered from

any telemarketer maintaining a bond pursuant to subdivision four of

section three hundred ninety-nine-pp of the general business law, or the

surety or bank, trust company, savings bank or savings and loan

association in an action on the bond. Nothing in the preceding sentence

shall authorize the awarding of attorney's fees and costs against the

surety, bank, trust company or savings and loan association.

4. Until the seller has complied with this section, the buyer may

retain possession of goods delivered to him by the seller and shall have

a lien on the goods in his possession or control for any recovery to

which he may be entitled.

Duty of buyer. 1. Except as provided in subdivision four of

section four hundred forty-four of this article, within a reasonable

time after a telephone sale has been cancelled and the buyer has

received written notice from the seller that the buyer's charge account

has been recredited, the buyer upon demand shall tender to the seller

any goods delivered by the seller pursuant to the sale but need not

tender at any place other than his residence. If the seller fails to

demand possession of such goods within a reasonable time after

cancellation or revocation, the goods shall become the property of the

buyer without obligation to pay for them. For the purpose of this

section, twenty days shall be presumed to be a reasonable time.

2. The buyer shall take reasonable care of the goods in his possession

both before cancellation and for a reasonable time thereafter, during

which time the goods are otherwise at the seller's risk.

3. If the seller has performed any services pursuant to a telephone

sale prior to its cancellation, the seller shall not be entitled to

compensation therefor.

Restriction on assignment of obligation. 1. A seller shall not

negotiate, transfer, sell or assign any note or other evidence of

indebtedness to a finance company or other third party prior to midnight

of the fifth business day following the day the seller sent written

notice to the buyer informing the buyer of his right to cancel.

2. The assignee of any note or evidence of indebtedness shall be

subject to all claims and defenses of the buyer against the seller

arising from the sale notwithstanding any agreement to the contrary, but

the assignee's liability under this subdivision shall not exceed the

amount owing to the assignee at the time the claim or defense is

asserted against the assignee. Rights of the buyer under this section

can be asserted affirmatively against a claim by the assignee.

Enforcement; penalties. Whenever there shall be a violation of

this article, 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 article, an injunction may be issued by such court

or justice, enjoining and restraining any further violation, 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 that a

violation of this article 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.

Separability. If any provision of this article or the

application of such provision in certain circumstances shall be held

invalid, the validity of the remainder of this article and its

applicability to other circumstances shall not be affected.

Definitions. For the purposes of this article:

1. "Advertisement" means a commercial message in any medium that

directly or indirectly promotes or assists a rental-purchase agreement.

2. "Cash price" means the price of the merchandise described in the

rental-purchase agreement that the consumer may pay in cash to the

merchant at the inception of the rental-purchase agreement to acquire

ownership of such merchandise.

3. "Consumer" means an individual who leases personal property under a

rental-purchase agreement.

4. "Merchandise" means the personal property that is the subject of a

rental-purchase agreement.

5. "Merchant" means a person who, in the ordinary course of business,

regularly leases, offers to lease, or acts as an agent for the leasing

of merchandise under a rental-purchase agreement.

6. "Rental-purchase agreement" means an agreement for the use of

merchandise by a consumer for primarily personal, family, or household

purposes, for an initial period of four months or less, that is

renewable with each payment after the initial period and that permits

the consumer to become the owner of the property. An agreement that

complies with this article is not a retail installment sales contract,

agreement, or obligation as defined in this chapter nor a security

interest as defined in paragraph thirty-five of subsection (b) of

section 1--201 of the uniform commercial code.

7. "Cost of rental" means the difference between the total of payments

necessary to acquire ownership under the rental-purchase agreement and

the cash price of the rental merchandise that is subject to the

rental-purchase agreement.

8. "Fee" means any payment, charge, fee, cost, or expense, however

denominated, other than a rental payment.

9. "Appliance" means and includes any refrigerator, freezer, range

including any cook top or oven, microwave oven, washer, dryer,

dishwasher, or room air conditioner or air purifier or other machine for

routine household tasks.

10. "Electronic set" means and includes any television, radio, camera,

video game, computer system or any type of device for the recording,

storage, copying, printing, transmission, display, or playback of any

sound or image.

11. "Merchant's cost" means the documented actual cost, including

actual freight charges, of the rental merchandise to the merchant from a

wholesaler, distributor, supplier, or manufacturer and net of any

discounts, rebates, and incentives that are vested and calculable as to

a specific item of merchandise at the time the merchant accepts delivery

of the merchandise.

12. "Total of payments" means the total amount of periodic payments

necessary to acquire ownership of the merchandise that is the subject of

the rental-purchase agreement if the consumer makes all regularly

scheduled payments.

13. "Periodic payment" means a payment to be made by a consumer for

the right of the possession and use of merchandise for a specific rental

period, but does not include taxes imposed on such payment.

Form. 1. A rental-purchase agreement must be written in plain

English and in any other language used by the merchant in an

advertisement related to the rental-purchase agreement. Numerical

amounts must be stated in figures.

2. Disclosures required by this section must be printed or typed in

each rental-purchase agreement in a size equal to at least ten-point

bold-faced type.

3. A rental-purchase agreement may not contain a provision:

(a) requiring a confession of judgment;

(b) authorizing a merchant or an agent of the merchant to commit a

breach of the peace in the repossession of merchandise;

(c) waiving a defense, counterclaim, or right the consumer may have

against the merchant or an agent of the merchant;

(d) requiring the purchase of insurance from the merchant to cover the

merchandise;

(e) requiring the payment of a late charge or reinstatement fee unless

a periodic payment is delinquent for more than three days for agreements

that are renewed on week by week terms and seven days for agreements

that are renewed on month by month terms, and the charge or fee is in an

amount not more than the greater of ten percent of the delinquent amount

or three dollars for agreements that are renewed on week by week terms

and not more than the greater of ten percent of the delinquent amount or

five dollars for agreements that are renewed on month by month terms. In

the event that multiple items are leased to a consumer pursuant to more

than one rental-purchase agreement, any late fee imposed pursuant to

this section shall not exceed ten percent of the total of the periodic

payments that are delinquent.

(f) requiring a payment in addition to regular periodic payments in

order to acquire ownership of the merchandise or requiring periodic

payments totalling more than the cost to acquire ownership, as provided

in section five hundred three of this article.

4. Only one late charge or reinstatement fee may be assessed for a

delinquent periodic payment regardless of the period during which it

remains in default. No merchant shall assess a late charge for a

periodic payment made in full on its due date or within three days for

agreements that are renewed on week by week terms or seven days for

agreements that are renewed on month by month terms when the only

delinquency is attributable to late fees assessed on earlier periodic

payments. With respect to payments accepted by mail or by store deposit

box, no merchant shall assess a late fee for payments which are

post-marked or received before the expiration of the applicable

delinquency periods.

5. A rental-purchase agreement must provide that:

(a) a charge in addition to periodic payments, if any, must be

reasonably related to the cost of a service performed;

(b) a consumer who fails to make a timely payment may reinstate an

agreement without losing rights or options previously acquired and

without incurring any charges, other than rental charges for the time he

possessed the property, except for those charges provided for in

paragraph (e) of subdivision three of this section by making the

required payment before the later of seven days or half the number of

days in a regular payment period after the due date of the payment;

(c) if the merchandise is returned or voluntarily surrendered by the

consumer, other than through judicial process, during the applicable

reinstatement period set forth in paragraph (b) of this subdivision, the

consumer's right to reinstate the agreement as set forth in paragraph

(b) of this subdivision shall be extended for a period of not less than

one year after the date of the return of the merchandise.

6. This section does not prevent a merchant from attempting to

repossess merchandise during the reinstatement period provided in

paragraph (b) of subdivision five of this section. The consumer's right

to reinstate an agreement does not expire because of such a

repossession. If the consumer is entitled to reinstatement after

repossession, then, within fifteen days of the repossession, the

merchant shall provide written notice to the consumer of the consumer's

right to reinstate the agreement pursuant to paragraph (c) of

subdivision five of this section. On reinstatement, the merchant shall

provide the consumer with the same merchandise or substitute merchandise

of comparable quality and condition. If substitute merchandise is

provided, the merchant shall provide the consumer with the disclosures

required in subdivision seven of this section.

7. (a) Every rental-purchase agreement shall be contained in a single

document which shall set forth all of the agreements of the merchant and

the consumer with respect to the rights and obligations of each party.

Every rental-purchase agreement shall clearly and conspicuously disclose

all of the following:

(1) the names of the merchant and the consumer, the merchant's

business address and telephone number, the consumer's address, the date

on which the agreement is executed, and a description of the merchandise

sufficient to identify it;

(2) whether the merchandise subject to the rental-purchase agreement

is new or used, provided, however that it shall not be a violation of

this section to indicate that the merchandise is used if it is actually

new;

(3) the minimum period for which the consumer is obligated under the

rental-purchase agreement; the duration of the rental-purchase agreement

if all regularly scheduled periodic payments are made, designated as the

"rental period"; and the amount of each periodic payment;

(4) the total of payments and the total number of periodic payments

necessary to acquire ownership of the merchandise if the renter makes

all regularly scheduled periodic payments;

(5) the cash price of the merchandise subject to the rental purchase

agreement;

(6) the cost of rental;

(7) the amount and purpose of any other payment or fee in addition to

those specified pursuant to subparagraphs three and four of this

paragraph, including any late payment fee;

(8) a statement that the total number and dollar amount of payments

necessary to acquire ownership of the rental merchandise disclosed under

subparagraph four of this paragraph does not include other fees, such as

late payment fees, and that the consumer should read the rental-purchase

agreement for an explanation of any applicable additional fees;

(9) whether the consumer is liable for loss or damage to the

merchandise and, if so, the maximum amount for which the consumer may be

liable, which in the case of loss shall in no event be greater than the

price the consumer would have paid to exercise an early purchase option

pursuant to this article. In the case of damage to the merchandise,

other than normal wear and tear the consumer shall be liable for the

lesser of the price the consumer would have paid to exercise an early

purchase option pursuant to this article or the cost of the repair as

determined by the merchant;

(10) that the consumer does not acquire ownership rights unless the

consumer has complied with the ownership terms of the agreement;

(11) the following notice:

NOTICE

You are renting this merchandise. You will not own it until you make

all of the regularly scheduled payments or you use the early purchase

option.

You do not have the right to keep the merchandise if you do not make

required payments or do not use the early purchase option. If you miss a

payment, the merchant can repossess the merchandise, but, you may have

the right to the return of the same or similar merchandise.

See the contract for an explanation of your rights.

(12) a statement of the consumer's right to acquire ownership as

provided in section five hundred four of this article, including

substantially the following statement: "The attached chart shows the

amount required to exercise your early purchase option after each

renewal payment, assuming you make each periodic payment on time." The

rental-purchase agreement shall be accompanied by a chart showing the

amount required to exercise the consumer's early purchase option after

each periodic payment if payments are made as scheduled;

(13) a description of the consumer's reinstatement rights as provided

in subdivision five of this section;

(14) a description of the consumer's right to lower periodic payment

amounts as provided in section five hundred four-a of this article.

(15) if warranty coverage is transferable to a consumer who acquires

ownership of the merchandise, a statement that the unexpired portion of

all warranties provided by the manufacturer, distributor, or seller of

the merchandise that is the subject of the rental-purchase agreement

will be transferred by the merchant to the consumer at the time the

consumer acquires ownership of the merchandise from the merchant; and

(16) a description of the merchant's obligation to maintain the rental

merchandise and to repair or replace rental merchandise that is not

operating properly, as provided in section five hundred four-b of this

article.

(b) (1) The disclosures required by subparagraphs three, four, five,

and six of paragraph (a) of this subdivision shall be printed in at

least ten-point boldfaced type or capital letters if typed and shall be

grouped together in a box formed by a heavy line in the following form:

________________________________________________________________________

TOTAL OF COST OF RENTAL CASH PRICE

PAYMENTS

$ $ $

You must pay Amount over Merchandise available

this amount to cash at this

own the price you will price for cash from

merchandise if pay if the merchant. See

you make all you make all about your

the regular regular early purchase

payments. payments. option rights.

You can buy

the merchandise

for less

under the

early

purchase

option.

________________________________________________________________________

AMOUNT OF NUMBER RENTAL

EACH PAYMENT OF PERIOD

PAYMENTS

$

per

_______________

(insert period)

________________________________________________________________________

(2) The box described in subparagraph one of this paragraph shall

appear immediately above the space reserved for the consumer's

signature.

(c) The disclosures required by subparagraphs three, four, five, and

six of paragraph (a) of this subdivision shall be grouped together in a

box formed by a heavy line in the form prescribed in paragraph (b) of

this subdivision and shall be clearly and conspicuously placed on a tag

or sticker affixed to the merchandise available for rental-purchase. If

the merchandise available for rental-purchase is not displayed at the

merchant's place of business but appears in a photograph or catalog

shown to consumers, a tag or sticker shall be affixed to the photograph

of the merchandise or catalog shown to consumers or shall be given to

consumers. The disclosure required by subparagraph two of paragraph (a)

of this subdivision also shall be clearly and conspicuously placed on

the tag or sticker. The provisions of this paragraph shall not apply to

photographic depictions of merchandise that comply with the provisions

of section five hundred five of this article.

(d) All disclosures required by this subdivision shall be printed or

typed in a color or shade that clearly contrasts with the background.

8. (a) (1) Subject to federal law and regulation, no rental-purchase

agreement shall contain a mandatory arbitration clause. Nothing

contained herein shall be construed to prohibit a merchant from

incorporating a provision within such contract that such merchant agrees

that the decision of the arbitrator or panel of arbitrators shall be

final in its application to such merchant and not subject to court

review.

(2) The provisions of a mandatory arbitration clause shall be null and

void but shall not constitute a violation of this article. The inclusion

of such clause in a rental-purchase agreement shall not serve to impair

the enforceability of any other provision of such contract.

(b) For the purposes of this subdivision the following terms shall

have the following meaning:

(1) "mandatory arbitration clause" shall mean a term or provision

contained in a rental-purchase agreement which requires the consumer to

submit any controversy thereafter arising under such agreement to

arbitration prior to the commencement of any legal action to enforce the

provisions of such agreement and which also further provides language to

the effect that the decision of the arbitrator or panel of arbitrators

in its application to the consumer shall be final and not subject to

court review.

(2) The term "arbitration" shall mean the use of a decision making

forum conducted by an arbitrator or panel of arbitrators within the

meaning and subject to the provisions of article seventy-five of the

civil practice law and rules.

Availability. Every rental purchase agreement shall indicate

that a consumer at his or her request shall be permitted to review a

completed rental-purchase agreement for up to forty-eight hours prior to

signing. A copy of the fully completed rental-purchase agreement and all

other documents which the merchant requests the consumer to sign shall

be given to the consumer at the time they are signed. The

rental-purchase agreement shall not be enforceable against the consumer

until the consumer has received a signed copy. In addition to any other

right of cancellation, a consumer has the right to cancel a

rental-purchase agreement, without penalty or obligation if the consumer

has not taken possession of the property.

Total cost. 1. A merchant shall maintain records that establish

the merchant's cost for each item of merchandise that is the subject of

the rental-purchase agreement. A copy of each rental-purchase agreement

and of the records required by this subdivision shall be maintained for

at least two years following the termination of the agreement.

2. The maximum cash price for the merchant's first rental of the

merchandise that is the subject of the rental-purchase agreement may not

exceed 1.75 times the merchant's cost for appliances, 1.75 times the

merchant's cost for electronic sets having merchant cost less than one

hundred fifty dollars, 2.0 times the merchant's costs for electronic

sets having merchant cost greater than or equal to one hundred fifty

dollars, 2.15 times the merchant's cost for furniture, 2.0 times the

merchant's cost for automotive accessories, jewelry, and musical

instruments, and 1.75 times the merchant's cost for all other items.

3. The maximum total of payments may not exceed 2.25 times the maximum

cash price that could have been charged for the first rental of the

merchandise under subdivision two of this section.

4. The maximum total of payments for the merchant's second and

subsequent rental of the merchandise that is the subject of the

rental-purchase agreement may not exceed the maximum total of payments

permitted under the terming matrix contained in subdivision five of this

section.

5. (a) The terming matrix provided for in paragraph (b) of this

subdivision shall be used to lower the number of periodic payments,

which shall result in a lower total of payments and a lower maximum cash

price for the used merchandise based on its age and condition, or, in

the event that the merchant chooses to maintain the number of periodic

payments of the original term when new, the merchant shall lower the

total of payments and maximum cash price on a pro-rata basis. The

merchant shall keep in electronic or hard copy form, the matrix used,

together with a record of the number of periodic payments provided in

the first agreement for the item when it was offered as new, as well as

a record of the item's condition as determined by the merchant pursuant

to such matrix each time it is priced as used. This requirement shall

be satisfied by a record of the number of periodic payments and cash

price from each rental-purchase agreement under which merchandise was

rented. These records shall be maintained as long as the item is owned

by the merchant. No merchant shall price used goods in excess of the

prices dictated by the matrix.

(b) The attorney general shall make available in printed form to

merchants and publish on the website of the department of law a terming

matrix in chart form to be used by merchants as required pursuant to

paragraph (a) of this subdivision. The chart shall have as its title

"Terming Matrix for Used Merchandise". The matrix chart shall conform to

the example set forth in this paragraph and shall consist of five rows

and five columns and shall be printed in at least ten point type.

TERMING MATRIX FOR USED MERCHANDISE

Original Term 91 weeks

in Weeks 34 weeks 35 - 38 weeks 39 - 90 weeks or more

when New or less

EXCELLENT subtract a subtract a subtract a subtract a

CONDITION minimum of 1 minimum of 2 minimum of 3 minimum of

week from weeks from weeks from 4 weeks

original original original from ori-

term term term ginal term

GOOD subtract a subtract a subtract a subtract a

CONDITION minimum of 3 minimum of 5 minimum of 7 minimum of

weeks from weeks from weeks from 9 weeks

original original original from ori-

term term term ginal term

FAIR subtract a subtract a subtract a subtract a

CONDITION minimum of 4 minimum of 7 minimum of 10 minimum of

weeks from weeks from weeks from 13 weeks

original original original from ori-

term term term ginal term

POOR subtract a subtract a subtract a subtract a

CONDITION minimum of 6 minimum of 10 minimum of 15 minimum of

weeks from weeks from weeks from 20 weeks

original original original from ori-

term or cash term or cash term or cash ginal term

sale sale sale or cash

sale

(c) Immediately below the terming matrix, the following language shall

be printed in ten point type.

New = Full Term

Excellent = In great shape. Refurbished to look like new.

Good = In good working order. Refurbished, but imperfections still

exist.

Fair = Completely operational, but refurbishment has not concealed

obvious wear and tear.

Poor = Ripped, faded, cracked or broken and refurbishment did not change

it.

6. The maximum cash price for merchandise on its second or subsequent

rental may not exceed the maximum total of payments for that merchandise

as permitted under subdivision five of this section divided by 2.25.

7. Upon the written request of the attorney general a merchant shall

provide copies of the records described in this section.

8. If a merchant intentionally discloses a cash price or a total of

payments that exceeds the amount permitted by this section, the

rental-purchase agreement is void, the consumer shall retain the

merchandise without any obligation, and the merchant shall refund to the

consumer all amounts paid.

Early purchase option. 1. The consumer has the right to acquire

ownership of the merchandise at any time by tendering to the merchant

all past due payments and fees and an amount equal to the cash price

stated in the rental-purchase agreement multiplied by a fraction that

has as its numerator the number of periodic payments remaining under the

agreement and that has as its denominator the total number of periodic

payments. A consumer must affirmatively elect to exercise an early

purchase option. In no event shall the consumer's early purchase option

be less than the amount of one periodic payment.

2. In a clear and conspicuous manner on the consumer's receipt for

every periodic payment, the merchant shall, in connection with a

consumer's rights under this section, provide the consumer with a

written statement of:

(a) the total amount the consumer would have to pay to acquire

ownership of the rental merchandise if the consumer makes all regularly

scheduled payments remaining under the rental-purchase agreement; and

(b) the total amount the consumer would have to pay to acquire

ownership of that merchandise pursuant to subdivision one of this

section.

Interruption or reduction of income in certain instances. 1.

If any consumer who has signed a rental-purchase agreement experiences

an interruption or reduction of twenty-five percent or more of income

due to involuntary job loss, involuntary reduced employment, illness,

pregnancy or disability after one-half or more of the total amount of

the rental payments necessary to acquire ownership under the agreement

has been paid, and such consumer provides to the merchant some evidence

of the amount and cause of the interruption or reduction of income, the

merchant shall reduce the amount of each rental payment by (a) the

percentage of the reduction in the consumer's income or (b) fifty

percent, whichever is less, for the period during which the consumer's

income is interrupted or reduced.

2. If payments are reduced, the total dollar amount of payments

necessary to acquire ownership shall not be increased, provided,

however, that the number of payments necessary to acquire ownership may

be increased accordingly and the rights and duties of the merchant and

the consumer shall not otherwise be affected.

3. When the consumer's income is restored, the merchant may increase

the amount of rental payments, but in no event shall rental payments

exceed the originally disclosed amount of rental payments.

Maintenance of merchandise. 1. The merchant shall maintain

the property subject to the rental-purchase agreement in good working

order while the agreement is in effect without charging any fee to the

consumer in addition to the regularly scheduled rental payments set

forth in the rental-purchase agreement.

2. By the end of the second business day following the day on which

the merchant received notice from the consumer that the property is not

operating properly, the merchant shall repair or replace the property

without any fee to the consumer in addition to the regularly scheduled

rental payments set forth in the rental-purchase agreement.

3. If a repair or replacement cannot be immediately effected, the

merchant shall temporarily substitute property of comparable quality and

condition while repairs are being effected. If repairs cannot be

completed to the reasonable satisfaction of the consumer within thirty

days after the merchant receives notice from the consumer or within a

longer period voluntarily agreed to by the consumer, the merchant shall

permanently replace the property.

4. All replacement property shall be the same brand, if available, and

comparable in quality, age, condition, and warranty coverage to the

replaced property. If the same brand is not available, the brand of the

replacement property shall be agreeable to the consumer, provided,

however that any request by the consumer shall not be unreasonable.

5. All of the consumer's and merchant's rights and obligations under

the rental-purchase agreement and this title that applied to the

property originally subject to the rental-purchase agreement shall apply

to any replacement property.

6. The consumer shall not be charged, or held liable for, any pro rata

portion of a periodic payment for any period of time greater than one

full day and each full day thereafter during which the property that is

the subject of the rental-purchase agreement or any property substituted

for it pursuant to this section is not in good working order.

7. This section shall not apply to repairs or damage for which the

consumer is liable under the rental-purchase agreement as permitted by

this article.

8. A merchant shall not deliver to a consumer any property which the

merchant knows or has reason to know is defective.

Advertisement. 1. An advertisement for a rental-purchase

agreement that refers to or states the amount of a payment or the right

to acquire ownership of any one particular item under the agreement

shall clearly and conspicuously state:

(a) that the transaction advertised is a rental-purchase agreement;

(b) the total number of payments and the total amount to be paid to

acquire ownership, which amount shall be explicitly labeled "total

cost";

(c) the circumstances under which the consumer can acquire ownership

rights; and

(d) whether the advertised terms are for new or used merchandise.

2. An advertisement for personal property available through

rental-purchase agreements that refers to more than one appliance or

particular item and includes information on periodic payment amounts

shall include a representative item available at that amount and shall

conspicuously state:

(a) that the merchandise offered may be new or used;

(b) that transaction advertised is a rental-purchase agreement; and

(c) that the consumer does not acquire ownership rights unless the

consumer complies with the ownership terms of the agreement.

3. Every item displayed or offered under a rental-purchase agreement

shall have clearly and conspicuously indicated in arabic numerals, so as

to be readable and understandable by visual inspection, each of the

following affixed to the item:

(a) the cash price of the merchandise;

(b) the amount of the periodic payment and the total number of

periodic payments required for ownership; and

(c) the total amount that must be paid to acquire ownership of

merchandise, which amount shall be explicitly labeled total cost.

Exempted transactions. This article does not apply to:

1. Agreements for the rental of merchandise in which the person who

rents the merchandise has no legal right to become the owner of the

property at the end of the rental period;

2. A lease of a safe deposit box; and

3. Retail installment sales agreements, contracts, or obligations.

Enforcement. 1. A consumer who has suffered a loss due to a

violation of this article by a merchant is entitled to recover from the

merchant actual damages, reasonable attorney's fees and court costs.

2. Whenever a court finds that a consumer has been injured because a

merchant acted in bad faith in its performance under this article, the

merchant shall be subject to a penalty of not less than one hundred

dollars nor more than one thousand dollars as determined by the court.

3. A violation of this article is a deceptive trade practice under

section three hundred forty-nine of the general business law.

4. Whenever there shall be a violation of this article 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 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 such court or justice enjoining and restraining any further

violation, 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 that a violation of this article 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.

5. Nothing in this article shall be construed so as to nullify or

impair any right or rights which a consumer may have against a merchant

at common law, by statute, or otherwise.

6. A merchant or assignee may not be held liable in an action brought

under this article for a violation of this article that was

unintentional and resulted from a bona fide or clerical error

notwithstanding the maintenance of procedures reasonably adopted to

avoid any such error.

7. An action shall not be brought under this article more than four

years after the occurrence of the act, method or practice which is the

subject of the action or more than one year after the last payment in a

transaction involving the method, act or practice which is the subject

of the action, whichever is later.

Administration by the attorney general. The attorney general

may make rules and regulations necessary for the administration of this

article; provided, however, that such rules and regulations shall not

attempt to regulate or characterize rental-purchase agreements as a

security interest, credit sale, retail installment sale, conditional

sale or any other form of consumer credit that imputes to a

rental-purchase agreement the creation of a debt or extension of credit,

nor shall such rules and regulations require the disclosure of a

percentage rate calculation, including a time-price differential, an

annual percentage rate, or an effective annual percentage rate.

Laws repealed. Of the laws enumerated in the schedule hereto

annexed, that portion specified in the last column is hereby repealed.

When to take effect. This chapter shall take effect

immediately.