Legislature(1999 - 2000)
03/30/1999 04:05 PM RLS
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 this. 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 point. 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 Committee.