Why was Reg M enacted?
to ensure that consumers would receive meaningful, accurate, disclosures of the terms of leases for consumer goods
Regulation M was enacted as part of the ___________ and enacted the _________.
Truth in Lending Act
Consumer Leasing Act
Reg M requires disclosures to consumers before _________.
consummation of the lease agreement
What are the requirements of a lease to be covered by Reg M?
* have a duration of more than four months
* are for an amount under the annually adjusted threshold
* are made by a natural person
* involve personal property used primarily for personal, family, or household purposes
Are credit sales under Regulation Z covered by Reg M?
What are the 4 form requirements for Reg M disclosures?
* clear, conspicuous, and in a form the customer can keep
* identify the lessor and lessee
* if made in another language, must be provided in English upon request
What are the 2 format options for Reg M disclosures?
* can be on the contract itself or in a separate statement that identifies the transaction (this includes certain required segregated disclosures)
* multiple items of property can be described in separate statements
As one of the required Reg M segregated items, amount due at lease signing or delivery must be _____________.
itemized by type and amount, including
- refundable security deposit
- advance monthly or other periodic payment
- capitalized cost reduction
- an itemization of how the amount due will be paid, by type and amount, using model form (only required in motor vehicle leases)
One of the required Reg M segregated items is: the total amount of other charges payable to the lessor that are not _____________.
included in the periodic payments (itemized by type and amount)
Early termination notices must include:
* a warning to the customer that a substantial charge may result from early termination (required only for motor vehicle leases)
* the amount of any penalty or other charge for early termination (the penalty must be reasonable)
If there is more than one lessee, Reg M requires that disclosures be given _______________.
to the lessee primarily liable on the lease
Reg M allows lessors to use reasonable estimates for ______________________.
amounts unknown or unavailable
With limited exceptions, any lease that is ______________ is considered to be a new lease.
renegotiated or extended by longer than 6 months
What are the trigger terms for Reg M?
* the amount of any payment or
* any capitalized cost reduction or
* other payment
required before or at consummation or by delivery (or that no payment is required)
If a percentage rate is used in a lease ad, it cannot be ____________________, except for _________________.
more prominent than any other disclosure
the warning regarding the limitation of the rate as a measure of cost
What are the Reg M record retention requirements?
all records (evidence of compliance) must be kept for 2 years after the date of the required disclosures or a required action
If the lessee decides to purchase the leased property and is unhappy with the lessor's fair market value assessment at the end of the lease what can they do?
The lessee can hire an independent appraiser and both parties agree to be bound by the appraisal.
Must the option to purchase the property and the purchase price be included in the initial disclosures?
If the lessor allows the lessee to purchase the property.
If a lease is extended to month-to-month, must the lessor provide new disclosures?
not at the time of the extension however, if the month-to-month lease goes past 6 month, new disclosures are required
Must a bank disclose all specific information and amounts at the time of the lease consummation?
if specific amounts are unknown, the bank may estimate the amounts if they note the information is estimated
T or F
A lessor must develop and provide wear and use standards on leased property?
For most leased property, a lessor is not required to set wear and use standards. If it does set such standards, however, they must be disclosed and be reasonable. A statement regarding wear and use standards is required on motor vehicle leases.
T or F
A lessee's option to extend the lease is not required to be included in the initial disclosures?
What are the required insurance disclosures for leased property?
If provided by the lessor, the disclosure must include the types, amounts, and cost to the lessee. If not provided by the lessor, the type and amount must be disclosed.