1.1                          A bill for an act 
  1.2             relating to commerce; regulating rental-purchase 
  1.3             agreements; modifying the definitions of certain 
  1.4             terms; providing evidence of the cash price of 
  1.5             property; limiting charges for cost-of-lease services; 
  1.6             amending Minnesota Statutes 1996, sections 325F.84, 
  1.7             subdivision 3, and by adding a subdivision; 325F.85; 
  1.8             325F.86; and 325F.91, by adding subdivisions. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 1996, section 325F.84, 
  1.11  subdivision 3, is amended to read: 
  1.12     Subd. 3.  [CASH PRICE.] "Cash price" means an amount equal 
  1.13  to the equivalent fair market value for goods offered under a 
  1.14  consumer credit sale as provided under section 325G.15. the fair 
  1.15  market value of the property.  The fair market value of the 
  1.16  property means the price at which retail sellers are selling and 
  1.17  retail buyers are buying the same or substantially similar 
  1.18  property for cash in the same trade area in which the lessor's 
  1.19  place of business is located.  Cash price may be evidenced as 
  1.20  provided in section 325F.91, subdivision 2a. 
  1.21     Sec. 2.  Minnesota Statutes 1996, section 325F.84, is 
  1.22  amended by adding a subdivision to read: 
  1.23     Subd. 4a.  [COST OF LEASE SERVICES.] "Cost-of-lease 
  1.24  services" means the total dollar amount a lessor charges under a 
  1.25  rental-purchase agreement in addition to the cash price of the 
  1.26  goods.  Cost-of-lease services includes, but is not limited to, 
  1.27  charges for delivery, set up, pick up, servicing or warranty of 
  2.1   the goods, early purchase option, right to terminate the 
  2.2   transaction at any time without penalty, the right to reinstate 
  2.3   a terminated rental-purchase agreement without losing rights or 
  2.4   options previously acquired, and the fee a lessor charges under 
  2.5   a rental-purchase agreement for the option to acquire ownership 
  2.6   of the goods over time by renewing the agreement in lieu of 
  2.7   acquiring ownership of the goods by cash price. 
  2.8      Sec. 3.  Minnesota Statutes 1996, section 325F.85, is 
  2.9   amended to read: 
  2.10     325F.85 [APPLICATION OF OTHER LAW.] 
  2.11     If the consumer protection provisions of sections 325F.84 
  2.12  to 325F.97 conflict with sections 325G.15 and 325G.16, sections 
  2.13  325F.84 to 325F.97 apply to a rental-purchase agreement and 
  2.14  supersede sections 325G.15 and 325G.16. 
  2.15     Sections 325G.15 and 325G.16 and chapter 334 do not apply 
  2.16  to rental-purchase agreements. 
  2.17     Sec. 4.  Minnesota Statutes 1996, section 325F.86, is 
  2.18  amended to read: 
  2.19     325F.86 [DISCLOSURES.] 
  2.20     In a rental-purchase agreement, the lessor shall disclose 
  2.21  the following items, as applicable: 
  2.22     (a) The total of payments necessary to acquire ownership of 
  2.23  the property accompanied by an explanation that this term means 
  2.24  the "total dollar amount of payments you will have to make to 
  2.25  acquire ownership." 
  2.26     (b) The total number, amounts, and timing of all payments 
  2.27  and other charges including taxes or official fees paid to or 
  2.28  through the lessor that are necessary to acquire ownership of 
  2.29  the property. 
  2.30     (c) The difference between the amount disclosed under 
  2.31  paragraph (a) and the cash price of the leased property, using 
  2.32  the term "cost of lease services" to mean the difference between 
  2.33  these amounts. 
  2.34     (d) Any initial or advance payment such as a delivery 
  2.35  charge or trade-in allowance. 
  2.36     (e) A statement that the lessee will not own the property 
  3.1   until the lessee has made the total of payments necessary to 
  3.2   acquire ownership of the property. 
  3.3      (f) A statement that the total of payments does not include 
  3.4   additional charges such as late payment charges, and a separate 
  3.5   listing and explanation of these charges, as applicable. 
  3.6      (g) A statement that the lessee is liable for loss or 
  3.7   damage to the property and the maximum amount for which the 
  3.8   lessee is liable, which in the case of loss shall in no event be 
  3.9   greater than the price the lessee would have paid to exercise an 
  3.10  early purchase option.  In the case of damage to the property 
  3.11  other than normal wear and tear, the lessee shall be liable for 
  3.12  the lesser of the price the lessee would have paid to exercise 
  3.13  an early purchase option or the cost of repair as reasonably 
  3.14  determined by the lessor. 
  3.15     (h) A statement that the lessee is not required to purchase 
  3.16  a liability damage waiver from the lessor. 
  3.17     (i) A description of the goods or merchandise including 
  3.18  model numbers as applicable and a statement indicating whether 
  3.19  the property is new or used.  It is not a violation of this 
  3.20  subdivision to indicate that the property is used if it is 
  3.21  actually new. 
  3.22     (j) A statement that the lessee has the option to purchase 
  3.23  the leased property during the terms of the rental-purchase 
  3.24  agreement and at what price, formula, or by what method the 
  3.25  price is to be determined. 
  3.26     (k) The cash price of the merchandise. 
  3.27     (l) A statement of the following lessee rights:  
  3.28  reinstatement rights under section 325F.90, default notice under 
  3.29  section 325F.89, and consumer warranties under sections 325G.17 
  3.30  to 325G.20. 
  3.31     (m) A statement as follows:  "If you wish to purchase this 
  3.32  or similar property now, you may be able to get cash or credit 
  3.33  terms from other sources which will result in a lower total cost 
  3.34  than the total of payments shown below." 
  3.35     The commissioner of commerce may prescribe the disclosure 
  3.36  form by rule. 
  4.1      Sec. 5.  Minnesota Statutes 1996, section 325F.91, is 
  4.2   amended by adding a subdivision to read: 
  4.3      Subd. 2a.  [EVIDENCE OF CASH PRICE.] Evidence of cash price 
  4.4   of the property may include published prices or advertisements 
  4.5   by retailers of substantially similar product selling in the 
  4.6   same trade area in which the lessor's place of business is 
  4.7   located, if the prices were published or disseminated within the 
  4.8   90-day period preceding the date of the rental-purchase 
  4.9   agreement or an amount equal to 2.4 times the documented actual 
  4.10  cost, including freight charges and applicable taxes, of the 
  4.11  rental-purchase property from an unaffiliated wholesaler, 
  4.12  distributor, or manufacturer.  A lessor shall maintain records 
  4.13  that establish that the price disclosed as the cash price in a 
  4.14  rental-purchase agreement is the cash price as defined in 
  4.15  section 325F.84, subdivision 3.  A copy of each rental purchase 
  4.16  agreement and of the records required by this subdivision must 
  4.17  be maintained for two years following the termination of the 
  4.18  agreement. 
  4.19     Sec. 6.  Minnesota Statutes 1996, section 325F.91, is 
  4.20  amended by adding a subdivision to read: 
  4.21     Subd. 4.  [COST-OF-LEASE SERVICES.] The total dollar amount 
  4.22  charged by the lessor for the cost-of-lease services under a 
  4.23  rental-purchase agreement must not exceed an amount equal to the 
  4.24  original cash price of the property. 
  4.25     Sec. 7.  [EFFECTIVE DATE.] 
  4.26     Sections 1 to 6 are effective the day following final 
  4.27  enactment and apply to agreements entered into on and after that 
  4.28  date.