Full text of Consumer Leasing Act of 1976

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PUBLIC LAW 94-240—MAR. 23, 1976

90 STAT. 257

Public Law 94-240
94th Congress
An Act
To amend the Truth in Lending Act to protect consumers against inadequate and
misleading leasing information, assure meaningful disclosure of lease terms,
and limit ultimate liability in connection with leasing of personal property
primarily for personal, family, or household purposes, and for other purposes.

Mar. 23, 1976
[H.R. 8835]

Be it enacted hy the Senate and House of Rep^'esentatives of the
United States of America in Congress assembled, T h a t this Act may Consumer
be cited as the "Consumer Leasing Act of 1976".
1976°^ ^^^ °^
riNDINGS AND PURPOSE

note.
SEC. 2. Section 102 of the T r u t h in Lending Act (15 U.S.C. 1601)
is amended by inserting " ( a ) " before the first sentence, and adding
the following subsection:
" ( b ) T h e Congress also finds that there has been a recent trend
toward leasing automobiles and other durable goods for consumer use
as an alternative to installment credit sales and that these leases have
been offered without adequate cost disclosures. I t is the purpose of this
title to assure a meaningful disclosure of the terms of leases of personal property for personal, family, or household purposes so as to
enable the lessee to compare more readily the various lease terms available to him, limit balloon payments in consumer leasing, enable comparison of lease terms with credit terms where appropriate, and to
assure meaningful and accurate disclosures of lease terms in
advertisements.".
DISCLOSURE o r LEASE TERMS

SEC. 3. The T r u t h in Lending Act (15 U.S.C. 1601-1665)
amended by adding at the end thereof a new chapter as follows:

is

"Chapter 5—CONSUMER L E A S E S
"Sec.

"181. Definitions.
"182. Consumer lease disclosures.
"183. Lessee's liability on expiration or termination of lease,
"184. Consumer lease advertising.
"185. Civil liability.
"186. Relation to State laws.
"§181. Definitions
" F o r purposes of this chapter—
15 USC 1667.
" (1) T h e term 'consumer lease' means a contract in the form of
a lease or bailment for the use of personal property by a n a t u r a l
person for.a period of time exceeding four months, and for a total
contractual obligation not exceeding $25,000, primarily for personal, family, or household purposes, whether or not the lessee
has the option to purchase or otherwise become the owner of the
property at the expiration of the lease, except t h a t such term shall
not include any credit sale as defined in section 103(g). Such term 15 USC 1602.
does not include a lease for agricultural, business, or commercial
purposes, or to a government or governmental agency or instrumentality, or to an organization.

90 STAT. 258

15 use 1667a.

PUBLIC LAW 94-240—MAR. 23, 1976
"(2) The term 'lessee' means a natural person who leases or is
offered a consumer lease.
"(3) The term 'lessor' means a person who is regularly engaged
in leasing, offering to lease, or arranging to lease under a consumer lease.
"(4) The term 'personal property' means any property which
is not real property under the laws of the State where situated
at the time offered or otherwise made available for lease.
" (5) The terms 'security' and 'security interest' mean any interest in property which secures payment or performance of an
obligation.
"§ 182. Consumer lease disclosures
"Each lessor shall give a lessee prior to the consummation of the lease
a dated written statement on which the lessor and lessee are identified
setting out accurately and in a clear and conspicuous manner the following information with respect to that lease, as applicable:
" (1) A brief description or identification of the leased property;
"(2) The amount of any payment by the lessee required at the
inception of the lease;
"(3) The amount paid or payable by the lessee for official fees,
registration, certificate of title, or license fees or taxes;
' (4) The amount of other charges payable by the lessee not
included in the periodic payments, a description of the charges
and that the lessee shall be liable for the differential, if any,
between the anticipated fair market value of the leased property
and its appraised actual value at the termination of the lease, if
the lessee has such liability;
"(5) A statement of the amount or method of determining the
amount of any liabilities the lease imposes upon the lessee at the
end of the term and whether or not the lessee has the option to
purchase the leased property and at what price and time;
"(6) A statement identifying all express warranties and guarantees made by the manufacturer or lessor with respect to the
leased property, and identifying the party responsible for maintaining or servicing the leased property together with a description of the responsibility;
"(7) A brief description of insurance provided or paid for by
the lessor or required of the lessee, including the types and
amounts of the coverages and costs;
" (8) A description of any security interest held or to be retained
by the lessor in connection with the lease and a clear identification
of the property to which the security interest relates;
"(9) The number, amount, and due dates or periods of payments under the lease and the total amount of such periodic
payments;
"(10) Where the lease provides that the lessee shall be liable
for the anticipated fair market value of the property on expiration of the lease, the fair market value of the property at the inception of the lease, the aggregate cost of the lease on expiration, and
the differential between them; and
"(11) A statement of the conditions under which the lessee or
lessor may terminate the lease prior to the end of the term and
the amount or method of determining any penalty or other charge
for delinquency, default, late payments, or early termination.
The disclosures required under this section may be made in the lease
contract to be signed by the lessee. The Board may provide by regulation that any portion of the information required to be disclosed under

PUBLIC LAW 94-240—MAR. 23, 1976

90 STAT. 259

this section may be given in the form of estimates where the lessor is
not in a position to know exact information.
**§ 183. Lessee's liability on expiration or termination of lease
"(a) Where the lessee's liability on expiration of a consumer lease 15 USC 1667b.
is based on the estimated residual value of the propert}' such estimated
residual value shall be a reasonable approximation of the anticipated
actual fair market value of the property on lease expiration. There
shall be a rebuttable presumption that the estimated residual value is
unreasonable to the extent that the estimated residual value exceeds
the actual residual value by more than three times the average payment
allocable to a monthly period under the lease. In addition, where the
lessee has such liability on expiration of a consumer lease there shall
be a rebuttable presumption that the lessor's estimated residual value
is not in good faith to the extent that the estimated residual value
exceeds the actual residual value by more than three times the average
payment allocable to a monthly period under the lease and such lessor
shall not collect fi'om the lessee the amount of such excess liability on
expiration of a consumer lease unless the lessor brings a successful
action with respect to such excess liability. In all actions, the lessor
shall pay the lessee's reasonable attorney's fees. The presumptions
stated in this section shall not apply to the extent the excess of estimated over actual residual value is due to physical damage to the
property beyond reasonable wear and use, or to excessive use, and
the lease may set standards for such wear and use if such standards
are not unreasonable. Nothing in this subsection shall preclude the
right of a willing lessee to make any mutually agreeable final adjustment with respect to such excess residual liability, provided such an
agreement is reached after teimination of the lease.
"(b) Penalties or other charges for delinquency, default, or early
termination may be specified in the lease but only at an amount which
is reasonable in the 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.
"(c) If a lease has a residual value provision at the termination of
the lease, the lessee may obtain at his expense, a professional appraisal
of the leased property by an independent third party agreed to by
both parties. Such appraisal shall be final and binding on the parties.
"§ 184. Consumer lease advertising
"(a) No advertisement to aid, promote, or assist directly or indi- 15 USC 1667c.
rectly any consumer lease shall state the amount of any payment, the
number of required payments, or that any or no downpayment or
other payment is required at inception of the lease unless the advertisement also states clearly and conspicuously and in accordance with
regulations issued by the Board each of the following items of information which is applicable:
"(1) That the transaction advertised is a lease.
"(2) The amount of any payment required at the inception of
the lease or that no such payment is required if that is the case.
"(3) The number, amounts, due dates or periods of scheduled
payments, and the total of payments under the lease.
"(4) That the lessee shall be liable for the differential, if any,
between the anticipated fair market value of the leased property
and its appraised actual value at the termination of the lease, if
the lessee has such liability.
"(5) A statement of the amount or method of determining the
amount of any liabilities the lease imposes upon the lessee at the

90 STAT. 260

15 use 1667(1.
15 use 1640.

"ereditor."
15 use 1614,
1641.

15 u s e 1667e.

PUBLIC LAW 94-240—MAR. 23, 1976
end of the term and whether or not the lessee has the option to
purchase the leased property and at what price and time.
" (b) There is no liability under this section on the part of any
owner or personnel, as such, of any medium in which an advertisement
appears or through which it is disseminated.
Ǥ 185. Civil liability
"(a) Any lessor who fails to comply with any requirement imposed
under section 182 or 183 of this chapter with respect to any person
is liable to such person as provided in section 130.
"(b) Any lessor who fails to comply with any requirement imposed
under section 184 of this chapter with respect to any person who suffers
actual damage from the violation is liable to such person as provided
in section 130. For the purposes of this section, the term xreditor'
as used in sections 115, 130, and 131 shall include a lessor as defined
in this chapter.
"(c) Notwithstanding section 130(e), any action'under this section
may be brought in any United States district court or in any other
court of competent jurisdiction. Such actions alleging a failure to
disclose or otherwise comply with the requirements of this chapter
shall be brought within one year of the termination of the lease
agreement.
"§ 186. Relation to State laws
"(a) This chapter does not annul, alter, or affect, or exempt any
person subject to the provisions of this chapter from complying with,
the laws of any State with respect to consumer leases, except to the
extent that those laws are inconsistent with any provision of this
chapter, and then only to the extent of the inconsistency. The Board
is authorized to determine whether such inconsistencies exist. The
Board may not determine that any State law is inconsistent with any
provision of this chapter if the Board determines that such law gives
greater protection and benefit to the consumer.
"(b) The Board shall by regulation exempt from the requirements
of this chapter any class of lease transactions within any State if it
determines that under the law of that State that class of transactions
is subject to requirements substantially similar to those imposed under
this chapter or that such law gives greater protection and benefit to
the consumer, and that there is adequate provision for enforcement."
AMENDMENTS TO SECTION

15 use 1640.

Ante, p. 257.

1.^0

SEC. 4. Section 130 of the Truth in landing Act is amended as
follows:
(1) In subsection (a), after "chapter 4" insert "or 5".
(2) In clause (2) (A) of subsection (a), insert " ( i ) " after
" (A)", and insert after "transaction" a comma and the following:
"or (ii) in the case of an individual action relating to a consumer
lease under chapter 5 of this title, 25 per centum of the total
amount of monthly payments under the lease".
(3) In paragraph (2) (B) of subsection (a), strike out "lesser
of $100,000" and insert in lieu thereof "lesser of $500,000".
(4) In subsection (b), insert "or chapter 5" after "this
chapter" and strike out the word "finance".
(5) In subsection (g), after "this chapter", insert "or chapter
4 or 5 of this title", and insert after "consumer loan" a comma
and "consumer lease".

PUBLIC LAW 94-240—MAR. 23, 1976

90 STAT. 261

(CONFORMING AMENDMENT

SEC. 5. The table of chapters of the Truth in Lending Act is
amended by adding at the end thereof the following:
"5. Consumer Leases

181".
EFFECTIVE DATE

SEC. 6. This Act takes effect one year after the date of its enactment. 15 USC 1667
note.

Approved March 23, 1976.

LEGISLATIVE HISTORY:
HOUSE REPORTS: No. 94-544 (Comm. on Banking, Currency and Housing) and No.
94-872 (Comm. of Conference).
SENATE REPORT No. 94-590 (Comm. on Banking, Housing and Urban Affairs).
CONGRESSIONAL RECORD:
VoL 121 (1975): Oct. 28, considered and passed House.
VoL 122 (1976): Feb. 2, considered and passed Senate, amended.
Mar. 9, Senate and House agreed to conference report.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS:
Vol. 12, No. 13 (1976): Mar. 23, Presidential statement.

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