S T A T E O F N E W Y O R K
________________________________________________________________________
8219
I N S E N A T E
June 16, 2010
___________
Introduced by Sen. BRESLIN -- read twice and ordered printed, and when
printed to be committed to the Committee on Rules
AN ACT to amend the personal property law, in relation to motor vehicle
leasing and installment sales
THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM-
BLY, DO ENACT AS FOLLOWS:
Section 1. Subdivision 6 of section 301 of the personal property law,
as amended by chapter 1 of the laws of 1994, is amended to read as
follows:
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 A GUARANTEED ASSET PROTECTION WAIVER, 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 instal-
ment contract or the unpaid portion of the early termination obligation
under an outstanding motor vehicle retail lease agreement.
S 2. Section 302A of the personal property law, as amended by chapter
111 of the laws of 1995, is amended to read as follows:
S [302A] 302-A. Total loss notice and waiver of the gap amount. 1. If
the retail instalment contract provides that the buyer shall be respon-
sible upon a total loss of the vehicle occasioned by its theft, confis-
cation or physical damage for the gap amount as defined in paragraph
fifty-two of subsection (a) of section one hundred seven of the insur-
ance 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
EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD17155-01-0
S. 8219 2
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 super-
intendent of insurance 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 vehi-
cle 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 insurance 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 UNLESS SUCH WAIVER IS A GUARAN-
TEED ASSET PROTECTION WAIVER AS ESTABLISHED IN SECTION THREE HUNDRED
TWO-B OF THIS ARTICLE. 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 vehi-
cle creditor gap insurance declination notices or other evidence of
unavailability from every insurance company whose name appears on the
insurance department 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
S. 8219 3
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 insurance shall compile and make available a period-
ically 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.
S 3. The personal property law is amended by adding a new section
302-B to read as follows:
S 302-B. GUARANTEED ASSET PROTECTION WAIVERS. 1. "GUARANTEED ASSET
PROTECTION WAIVER" OR "GAP WAIVER" MEANS A CONTRACTUAL AGREEMENT WHEREIN
A CREDITOR AGREES FOR A SEPARATE CHARGE TO CANCEL OR WAIVE ALL OR PART
OF AMOUNTS DUE TO BORROWER'S FINANCE AGREEMENT IN THE EVENT OF A TOTAL
PHYSICAL DAMAGE LOSS OR UNRECOVERED THEFT OF THE MOTOR VEHICLE, WHICH
AGREEMENT MUST BE PART OF, OR A SEPARATE ADDENDUM TO, THE FINANCE
AGREEMENT. FOR PURPOSES OF THIS SECTION, THE TERM MOTOR VEHICLE SHALL
INCLUDE SELF PROPELLED OR TOWED VEHICLES DESIGNED FOR PERSONAL OR
COMMERCIAL USE, INCLUDING, BUT NOT LIMITED TO, MOTOR VEHICLES AS DEFINED
IN SECTION THREE HUNDRED ONE OF THIS ARTICLE, TRUCKS, MOTORCYCLES,
RECREATIONAL VEHICLES, ALL TERRAIN VEHICLES, SNOWMOBILES, CAMPERS,
BOATS, PERSONAL WATERCRAFT, AND MOTORCYCLE, BOAT, CAMPER, AND PERSONAL
WATERCRAFT TRAILERS.
2. GAP WAIVERS SHALL BE OFFERED ACCORDING TO THE FOLLOWING:
(A) NEITHER THE EXTENSION OF CREDIT, THE TERM OF CREDIT, NOR THE TERM
OF THE RELATED MOTOR VEHICLE SALE MAY BE CONDITIONED UPON THE PURCHASE
OF A GAP WAIVER.
(B) THE GAP WAIVER REMAINS A PART OF THE FINANCE AGREEMENT UPON THE
ASSIGNMENT, SALE OR TRANSFER OF SUCH FINANCE AGREEMENT BY THE CREDITOR.
(C) NOTWITHSTANDING ANY OTHER PROVISION OF LAW, ANY COST TO THE
BORROWER FOR A GAP WAIVER ENTERED INTO IN COMPLIANCE WITH THE TRUTH IN
LENDING ACT (15 U.S.C. 1601 ET. SEQ.) AND ITS IMPLEMENTING REGULATIONS,
AS THEY MAY BE AMENDED FROM TIME TO TIME, MUST BE SEPARATELY STATED AND
IS NOT TO BE CONSIDERED A FINANCE CHARGE OR INTEREST.
(D) A BUYER MAY CANCEL THE GAP WAIVER WITHIN A FREE LOOK PERIOD AS
SPECIFIED IN THE WAIVER, AND WILL BE ENTITLED TO A FULL REFUND OF THE
PURCHASE PRICE, SO LONG AS NO BENEFITS HAVE BEEN PROVIDED; OR IN THE
EVENT BENEFITS HAVE BEEN PROVIDED, THE BORROWER MAY RECEIVE A FULL OR
PARTIAL REFUND PURSUANT TO THE TERMS OF THE WAIVER. A GAP WAIVER MAY BE
CANCELLABLE OR NON-CANCELLABLE AFTER THE FREE LOOK PERIOD. IF A GAP
WAIVER IS CANCELLED AFTER THE FREE LOOK PERIOD AND NO BENEFITS HAVE BEEN
PAID, A BORROWER MAY BE ENTITLED TO A REFUND PURSUANT TO THE TERMS OF
THE WAIVER. IN THE EVENT THE GAP WAIVER IS CANCELLED OR UPON EARLY
TERMINATION OF THE FINANCE AGREEMENT, THE GAP WAIVER SHALL DISCLOSE THE
METHODOLOGY FOR CALCULATING ANY REFUND OF THE UNEARNED PURCHASE PRICE OF
THE GAP WAIVER DUE. IN ORDER TO RECEIVE A REFUND, THE BORROWER, IN
ACCORDANCE WITH ANY APPLICABLE TERMS OF THE GAP WAIVER, MUST PROVIDE A
WRITTEN REQUEST TO THE CREDITOR, ADMINISTRATOR OR OTHER PARTY, WITHIN
NINETY DAYS OF THE EVENT TERMINATING THE GAP WAIVER OR FINANCE AGREE-
MENT.
(E) THE GAP WAIVER MUST DISCLOSE IN CLEAR AND UNDERSTANDABLE LANGUAGE
THE TERMS OF THE GAP WAIVER INCLUDING, BUT NOT LIMITED TO, THE REQUIRE-
MENTS FOR PROTECTION, CONDITIONS, OR EXCLUSIONS ASSOCIATED WITH THE GAP
S. 8219 4
WAIVER. THE GAP WAIVER MUST ALSO DISCLOSE THE PROCEDURES THE BORROWER
MUST FOLLOW, IF ANY, TO OBTAIN GAP WAIVER BENEFITS.
(F) NOTWITHSTANDING PARAGRAPH THREE OF SUBSECTION B OF SECTION ONE
THOUSAND ONE HUNDRED ONE OF THE INSURANCE LAW, GAP WAIVERS GOVERNED
UNDER THIS SECTION ARE NOT INSURANCE AND ARE EXEMPT FROM THE INSURANCE
LAWS OF THIS STATE. PERSONS MARKETING, SELLING OR OFFERING TO SELL GAP
WAIVERS TO BORROWERS THAT COMPLY WITH THIS SECTION ARE EXEMPT FROM THIS
STATE'S INSURANCE LICENSING REQUIREMENTS.
S 4. Subdivision 2 of section 335 of the personal property law, as
amended by chapter 111 of the laws of 1995, is amended to read as
follows:
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 vehi-
cle 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 insurance 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 UNLESS SUCH WAIVER IS A
GUARANTEED ASSET PROTECTION WAIVER AS ESTABLISHED IN SECTION THREE
HUNDRED THIRTY-FIVE-A OF THIS ARTICLE. Nothing contained in this section
shall be construed to authorize a waiver, in connection with a trans-
action 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.
S 5. The personal property law is amended by adding a new section
335-A to read as follows:
S 335-A. GUARANTEED ASSET PROTECTION WAIVERS. 1. "GUARANTEED ASSET
PROTECTION WAIVER" OR "GAP WAIVER" MEANS A CONTRACTUAL AGREEMENT WHEREIN
A CREDITOR AGREES FOR A SEPARATE CHARGE TO CANCEL OR WAIVE ALL OR PART
OF AMOUNTS DUE TO BORROWER'S FINANCE AGREEMENT IN THE EVENT OF A TOTAL
PHYSICAL DAMAGE LOSS OR UNRECOVERED THEFT OF THE MOTOR VEHICLE, WHICH
AGREEMENT MUST BE PART OF, OR A SEPARATE ADDENDUM TO, THE FINANCE AGREE-
MENT. FOR PURPOSES OF THIS SECTION, THE TERM MOTOR VEHICLE SHALL INCLUDE
SELF PROPELLED OR TOWED VEHICLES DESIGNED FOR PERSONAL OR COMMERCIAL OR
BUSINESS USE, INCLUDING, BUT NOT LIMITED TO, MOTOR VEHICLES AS DEFINED
IN SECTION THREE HUNDRED ONE OF THIS CHAPTER, TRUCKS, MOTORCYCLES,
RECREATIONAL VEHICLES, ALL TERRAIN VEHICLES, SNOWMOBILES, CAMPERS,
BOATS, PERSONAL WATERCRAFT, AND MOTORCYCLE, BOAT, CAMPER, AND PERSONAL
WATERCRAFT TRAILERS.
2. GAP WAIVERS SHALL BE OFFERED ACCORDING TO THE FOLLOWING:
(A) NEITHER THE EXTENSION OF CREDIT, THE TERM OF CREDIT, NOR THE TERM
OF THE RELATED MOTOR VEHICLE LEASE MAY BE CONDITIONED UPON THE PURCHASE
OF A GAP WAIVER.
(B) THE GAP WAIVER REMAINS A PART OF THE RETAIL LEASE AGREEMENT UPON
THE ASSIGNMENT, SALE OR TRANSFER OF SUCH RETAIL LEASE AGREEMENT BY THE
CREDITOR.
(C) NOTWITHSTANDING ANY OTHER PROVISION OF LAW, ANY COST TO THE
BORROWER FOR A GAP WAIVER ENTERED INTO IN COMPLIANCE WITH THE TRUTH IN
S. 8219 5
LENDING ACT (15 U.S.C. 1601 ET. SEQ.) AND ITS IMPLEMENTING REGULATIONS,
AS THEY MAY BE AMENDED FROM TIME TO TIME, MUST BE SEPARATELY STATED AND
IS NOT TO BE CONSIDERED A FINANCE CHARGE OR INTEREST.
(D) A BUYER MAY CANCEL THE GAP WAIVER WITHIN A FREE LOOK PERIOD AS
SPECIFIED IN THE WAIVER, AND WILL BE ENTITLED TO A FULL REFUND OF THE
PURCHASE PRICE, SO LONG AS NO BENEFITS HAVE BEEN PROVIDED; OR IN THE
EVENT BENEFITS HAVE BEEN PROVIDED, THE BORROWER MAY RECEIVE A FULL OR
PARTIAL REFUND PURSUANT TO THE TERMS OF THE WAIVER. A GAP WAIVER MAY BE
CANCELLABLE OR NON-CANCELLABLE AFTER THE FREE LOOK PERIOD. IF A GAP
WAIVER IS CANCELLED AFTER THE FREE LOOK PERIOD AND NO BENEFITS HAVE BEEN
PAID, A BORROWER MAY BE ENTITLED TO A REFUND PURSUANT TO THE TERMS OF
THE WAIVER. IN THE EVENT THE GAP WAIVER IS CANCELLED OR UPON EARLY
TERMINATION OF THE FINANCE AGREEMENT, THE GAP WAIVER SHALL DISCLOSE THE
METHODOLOGY FOR CALCULATING ANY REFUND OF THE UNEARNED PURCHASE PRICE OF
THE GAP WAIVER DUE. IN ORDER TO RECEIVE A REFUND, THE BORROWER, IN
ACCORDANCE WITH ANY APPLICABLE TERMS OF THE GAP WAIVER, MUST PROVIDE A
WRITTEN REQUEST TO THE CREDITOR, ADMINISTRATOR OR OTHER PARTY, WITHIN
NINETY DAYS OF THE EVENT TERMINATING THE GAP WAIVER OR FINANCE AGREE-
MENT.
(E) THE GAP WAIVER MUST DISCLOSE IN CLEAR AND UNDERSTANDABLE LANGUAGE
THE TERMS OF THE GAP WAIVER INCLUDING, BUT NOT LIMITED TO, THE REQUIRE-
MENTS FOR PROTECTION, CONDITIONS, OR EXCLUSIONS ASSOCIATED WITH THE GAP
WAIVER. THE GAP WAIVER MUST ALSO DISCLOSE THE PROCEDURES THE BORROWER
MUST FOLLOW, IF ANY, TO OBTAIN GAP WAIVER BENEFITS.
(F) NOTWITHSTANDING PARAGRAPH THREE OF SUBSECTION B OF SECTION ONE
THOUSAND ONE HUNDRED ONE OF THE INSURANCE LAW, GAP WAIVERS UNDER THIS
SECTION ARE NOT INSURANCE AND ARE EXEMPT FROM THE INSURANCE LAWS OF THIS
STATE. PERSONS MARKETING, SELLING OR OFFERING TO SELL GAP WAIVERS TO
BORROWERS THAT COMPLY WITH THIS SECTION ARE EXEMPT FROM THIS STATE'S
INSURANCE LICENSING REQUIREMENTS.
S 6. This act shall take effect immediately.