Legislature(1999 - 2000)

03/30/1999 04:05 PM RLS

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 128 - LEASE-PURCHASE OF PERSONAL PROPERTY                                                                                    
Number 0006                                                                                                                     
CHAIRMAN COWDERY announced that the committee would hear HOUSE BILL                                                             
NO. 128, "An Act relating to lease-purchases of personal property."                                                             
REPRESENTATIVE LISA MURKOWSKI, sponsor, explained that HB 128 was                                                               
heard in the House Labor and Commerce Standing Committee, the only                                                              
committee of referral.  It was brought to Representative                                                                        
Murkowski's attention that there would be amendments to HB 128,                                                                 
quite possibly on the floor.  Therefore, she had incorporated the                                                               
possible amendments into the proposed committee substitute (CS).                                                                
REPRESENTATIVE MURKOWSKI explained that basically there has been a                                                              
tightening up of warranty provisions.  This bill, HB 128, is a                                                                  
consumer-oriented piece of legislation.  Representative Murkowski                                                               
pointed out that there is no reference to a lease-purchase                                                                      
arrangement in which personal property is leased for a short period                                                             
of time, less than four months.  She emphasized that HB 128                                                                     
attempts to prevent possible problems in the rent-to-own industry.                                                              
Number 0281                                                                                                                     
REPRESENTATIVE KOTT moved to adopt the proposed CS for HB 128,                                                                  
Version 1-LS0337\H, Bannister, 3/27/99, as the working document                                                                 
before the committee.  There being no objection, it was so ordered.                                                             
REPRESENTATIVE MURKOWSKI informed the committee of the changes                                                                  
encompassed in the proposed CS.  Under the disclosure, personal                                                                 
property must be identified as new or used.  With this market, the                                                              
turnover is approximately two and one-half times.  Therefore, a                                                                 
person could rent a piece of property that is technically used, in                                                              
the sense that the property has been rented out to another                                                                      
individual.  By deleting the excess verbiage in Section 2, the                                                                  
language has been cleaned up.                                                                                                   
REPRESENTATIVE MURKOWSKI noted that the language regarding who is                                                               
responsible for maintenance of the property is clarified in the                                                                 
proposed CS in Section 45.35.020.  The lessor is basically                                                                      
responsible for any repairs to the merchandise while under lease,                                                               
unless there have been unauthorized repairs or damage from improper                                                             
use of the property.                                                                                                            
REPRESENTATIVE MURKOWSKI pointed out that another change in the                                                                 
proposed CS is the addition of the section on late fees.  Within                                                                
the rental industry, late fees are not typically charged.  This                                                                 
language would allow late fees not in excess of $5.  It also                                                                    
clarifies that in the event that the property has been either                                                                   
voluntarily surrendered or repossessed, the lessee is not                                                                       
responsible for any late fees or late payments during that time                                                                 
period.  The last suggested change is to include, in those                                                                      
provisions that the lessor and lessee cannot contract to do, any                                                                
agreement that would allow for attorneys' fees or costs, unless                                                                 
they are allowed pursuant to court rules.                                                                                       
Number 0543                                                                                                                     
REPRESENTATIVE GREEN referred to page 3, lines 21 and 22, where it                                                              
states, "A lessor may not charge a consumer more than $5 for each                                                               
payment".  He proposed that if he were buying a refrigerator, and                                                               
might be renting or paying a fair amount, it might behoove him to                                                               
not make payments on time because he can make more on his money                                                                 
than the $5 fine.  He asked whether that was considered, expressing                                                             
concern that a less-than scrupulous renter might take advantage of                                                              
REPRESENTATIVE MURKOWSKI responded that in talking to those in the                                                              
industry in Alaska, they do not assess late fees now.  As she                                                                   
understands it, however, there has been language that allows for a                                                              
late fee.  She noted that if they leave it as allowing for a late                                                               
fee, but without parameters, one could potentially be looking at a                                                              
$50 late fee, which is not reasonable.  Representative Murkowski                                                                
pointed out that with these lease-purchase agreements, the payments                                                             
are minimal in the total scheme; for example, one might pay $20 per                                                             
month for 18 months.  She suggested that the $5 late fee wouldn't                                                               
attract too much attention.                                                                                                     
REPRESENTATIVE GREEN said he could see that for a toaster, for                                                                  
example.  However, if he were buying or renting enough to furnish                                                               
an apartment, there could be some money involved.  He believes                                                                  
there could be situations where, by specifying a number rather than                                                             
a percentage, it might actually encourage somebody to be late.                                                                  
Number 0720                                                                                                                     
REPRESENTATIVE BERKOWITZ suggested, however, that if one were                                                                   
furnishing an apartment, the fee might be assessed on each item.                                                                
He said the fees include a profit, as it were.                                                                                  
REPRESENTATIVE GREEN said he doesn't read it that way.                                                                          
REPRESENTATIVE MURKOWSKI stated, "It's $5 for each payment that is                                                              
late under a lease-purchase agreement, so you could have a lease                                                                
purchase agreement that gives you your couch and your coffee table                                                              
and your lamps, and it would be one agreement.  You would not be                                                                
paying a $5 fee per article; it would be per agreement, ...                                                                     
according to the way this is drafted."                                                                                          
REPRESENTATIVE GREEN said he doesn't think it is all that unusual                                                               
to include more than one article, although it is probably not done                                                              
for the preponderance of agreements.                                                                                            
Number 0794                                                                                                                     
REPRESENTATIVE PHILLIPS asked what the repossession time frame is,                                                              
if the payment is late one month.                                                                                               
REPRESENTATIVE MURKOWSKI responded, "This lease-purchase agreement                                                              
allows for a reinstatement period.  Suppose that you have gotten                                                                
behind in your payments.  You've got a right to voluntarily                                                                     
surrender the property, basically tell me, 'I can't pay for it                                                                  
anymore; I'm here to surrender it,' or you can basically say, 'Come                                                             
and take it.'"  She specified that one is allowed, under the terms                                                              
of the language, to a reinstatement period.  For example, if a                                                                  
person has paid less than two-thirds of the total payment for a                                                                 
couch, that person has a right, if he or she has delivered up                                                                   
possession voluntarily, to reinstate under the same terms, without                                                              
losing anything in terms of the payments already made towards                                                                   
purchase.  It must be done within the grace period allowed,                                                                     
however.  If one has gone beyond the grace period, which is either                                                              
two days or five days prior to the reinstatement, and that person                                                               
has not reinstated, the property could be repossessed at that                                                                   
Number 0927                                                                                                                     
CHAIRMAN COWDERY asked whether there were further comments or                                                                   
questions.  He expressed appreciation that the sponsor had worked                                                               
this out with other members.                                                                                                    
Number 0946                                                                                                                     
REPRESENTATIVE BERKOWITZ made a motion to move CSHB 128, version                                                                
1-LS0337\H, Bannister, 3/27/99, from committee with individual                                                                  
recommendations and attached fiscal note(s).  There being no                                                                    
objection, CSHB 128(RLS) moved from the House Rules Standing                                                                    

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