Session of 1999
         
HOUSE BILL No. 2177
         
By Representative Adkins
          
1-28
          
  9             AN  ACT enacting the consumer motor vehicle leasing contracts act;
10             amending K.S.A. 84-2a-104 and K.S.A. 1998 Supp. 50-645 and re-
11             pealing the existing sections.
12      
13       Be it enacted by the Legislature of the State of Kansas:
14             New Section  1. As used in sections 1 through 13:
15             (a) "Adjusted capitalized cost" means the amount which serves as the
16       basis for determining the base lease payment, computed by subtracting
17       from the capitalized cost any capitalized cost reduction. The adjusted
18       capitalized cost is amortized during the lease term to the estimated re-
19       sidual value by the application of a portion of each scheduled lease
20       payment.
21             (b) "Capitalized cost" means: (1) The amount which, when reduced
22       by the amount of the capitalized cost reduction, equals the adjusted cap-
23       italized cost.
24             (2) Capitalized cost shall include all items that are capitalized in the
25       lease and, after the application of the capitalized cost reduction, amor-
26       tized by the scheduled lease payments over the term of the lease.
27             (3) Capitalized cost shall include to the extent capitalized and am-
28       ortized as set forth in paragraph (2):
29             (A) Taxes, registration, license, acquisition, administration, assign-
30       ment and other similar fees;
31             (B) charges for insurance, an extended warranty, mechanical repair
32       contract, service contract, vehicle maintenance agreement and any other
33       similar charge;
34             (C) charges for a waiver of the contractual obligation to pay the gap
35       amount;
36             (D) charges for accessories and installation of accessories;
37             (E) charges for delivering, servicing, repairing or improving the ve-
38       hicle; and
39             (F) charges for other goods, services and benefits incidental to the
40       consumer lease transaction.
41             (4) Capitalized cost shall also include, to the extent capitalized and
42       amortized as set forth in paragraph (2), with respect to a vehicle or other
43       property traded-in in connection with a lease, the unpaid balance of any

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  1       amount financed under an outstanding vehicle loan agreement or vehicle
  2       retail installment contract or the unpaid portion of the early termination
  3       obligation under any lease or other obligation of the lessee.
  4             (c) "Capitalized cost reduction" means any payments made by cash,
  5       check, rebates or similar means that are in the nature of down payments
  6       made by the lessee and any net trade-in allowance granted by the lessor
  7       at the inception of the consumer-lease for the purpose of reducing the
  8       capitalized cost. Capitalized cost reduction does not include any base
  9       lease payments due at the inception of the lease or all of the lease pay-
10       ments if they are all paid at the inception of the lease.
11             (d) "Consumer leasing act" means that act of congress codified at 15
12       U.S.C.§ § 1667 through 1667e, and regulations promulgated pursuant
13       thereto.
14             (e) "Dealer" means a dealer as defined in subsection (dd) of K.S.A.
15       8-2401, and amendments thereto.
16             (f)  (1) "Lease" or "leasing" means a contract in the form of a bail-
17       ment or lease for the use of a motor vehicle by an individual primarily
18       for personal, family or household purposes, for a period of time exceeding
19       four months; including renewal periods, whether or not the lessee has
20       the option to purchase or otherwise become the owner of the motor
21       vehicle at the expiration of the lease.
22             (2) Lease does not include:
23             (A) A lease which meets the definition of a credit sale in federal
24       regulation Z, 12 C.F.R. § 226.2;
25             (B) a lease for agricultural, business or commercial purposes; or
26             (C) a lease made to an organization.
27             (g) "Lessee" means an individual who leases under, or who is offered,
28       a motor vehicle lease.
29             (h) "Lessor" means a person who during any 12-month period leases
30       or offers to lease five or more motor vehicles or who is assigned five or
31       more leases. Lessor does not include the holder of a security interest in
32       leases to secure an obligation or a holder of an interest in a trust that
33       owns leases.
34             (i) "Motor vehicle" means a motor vehicle that is registered in this
35       state as a passenger vehicle or a truck registered for a gross weight of
36       16,000 pounds or less.
37             (j) "Manufacturer" means a first stage manufacturer or second stage
38       manufacturer as defined in K.S.A. 8-2401, and amendments thereto.
39             (k) "Original lessor" means the person identified in the lease as the
40       lessor of the motor vehicle. Original lessor does not include any assignee
41       of the lease.
42             (l) "Warranty" means the written warranty, so labeled, of the man-
43       ufacturer of a new motor vehicle, including any terms or conditions prec-

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  1       edent to the enforcement of obligations under that warranty and shall
  2       include any motor vehicle subject to a lease.
  3             Warranty includes any implied warranties provided for by federal or
  4       state law, including the federal Magnusson Moss warranty act and the
  5       Kansas uniform commercial code.
  6             (m) "Warranty period" means the earlier of:
  7             (1) The period of the motor vehicle's first 15,000 miles of operation;
  8       or
  9             (2) fifteen months following the date of original delivery of the motor
10       vehicle to the lessee.
11             (n) "Distributor," "factory branch" and "distributor branch" shall
12       have the meaning given such terms under K.S.A. 8-2401, and amend-
13       ments thereto.
14             New Sec.  2. (a) A lease shall be in writing and signed by the lessor
15       and the lessee.
16             (b) The printed portion of the lease, other than directions for com-
17       pletion of the lease and the text of any assignment between the original
18       lessor and an assignee, shall be printed in a size equal to at least 8 point
19       type. The lease shall contain the following items printed or written in a
20       conspicuous manner:
21             (1) At the top of the lease, the words "Motor Vehicle Lease
22       Agreement";
23             (2) if physical damage or liability insurance coverage for bodily injury
24       and property damage caused to others is not included in the lease, a notice
25       substantially similar to the following: "No physical damage or liability
26       insurance coverage for bodily injury or property damage caused to others
27       is included in this lease.";
28             (3) directly above the acknowledgment permitted by subsection (c),
29       a written notice substantially similar to the following: "Notice to the les-
30       see: This is a lease. You have no ownership rights in the motor vehicle
31       unless and until you exercise your option to purchase the motor vehicle,
32       if this lease contains a purchase option. Do not sign this lease before you
33       read it or if it contains any blank space. You are entitled to a completely
34       filled in copy of this lease when you sign it.";
35             (4) a statement substantially similar to the following: "Early termi-
36       nation may require you to pay a substantial amount."; and
37             (5) the following provision in at least 10 point boldface type:
38      
"Notice
39             Any holder of this consumer lease is subject to all claims and
40       defenses which the lessee could assert against the lessor of the
41       motor vehicle. Recovery hereunder by the lessee shall not exceed
42       amounts paid by the lessee under this lease."
43             (c) The lessor shall deliver to the lessee, or mail to the lessee at the

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  1       lessee's address shown on the lease, a copy of the lease signed by the
  2       lessor. Any acknowledgment by the lessee of delivery of a copy of the
  3       lease shall be conspicuous and shall appear directly above the space re-
  4       served for the lessee's signature.
  5             (d) The lease shall state the names of the original lessor and lessee,
  6       the place of business of the original lessor, the residence of the lessee as
  7       specified by the lessee and a description of the motor vehicle, including
  8       its make, model year, model and the motor vehicle's identification
  9       number.
10             (e) The lease shall contain:
11             (1) All items required to be disclosed by the consumer leasing act;
12             (2) a disclosure of the capitalized cost;
13             (3) the effective interest rate charged; and
14             (4) a provision briefly describing the lessee's rights upon default.
15             (f) If the lessee is obligated under the lease to maintain liability in-
16       surance or other insurance on the motor vehicle and if subsequent to
17       execution of the lease the lessee fails to maintain the required insurance,
18       if the lease permits, the lessor may procure insurance for either the in-
19       terests of the lessee and the lessor or the interest of either of them in-
20       suring substantially the same risks required to be insured by the lease.
21             The lease may also provide that the amount of the premium paid by
22       the lessor may be the subject of a lease charge as though such amount
23       was part of the capitalized cost and shall be subject to the default provi-
24       sions of the lease.
25             Nothing in this subsection shall prevent the lessor from pursuing any
26       other remedy for default set forth in the lease or provided by law.
27             (g)  (1) If the lease permits, a lessor may impose on the lessee:
28             (A) A late or delinquency charge for payments or portions of pay-
29       ments that are in default under the lease;
30             (B) a collection charge, which may include all court and other collec-
31       tion costs actually incurred by the lessor and, if the lease is referred for
32       collection to an attorney who is not a salaried employee of the lessor, a
33       reasonable attorney fee; and
34             (C) a service charge for an insufficient check as defined and author-
35       ized by paragraph (e) of subsection (1) of K.S.A. 16a-2-501, and amend-
36       ments thereto.
37             (2) No more than one late or delinquency charge may be imposed
38       for any single payment or portion of payment, regardless of the period
39       during which it remains in default.
40             (h)  (1) Except as permitted by paragraph (2), no lease shall be signed
41       by any party if it contains blank spaces to be filled in after it has been
42       signed.
43             (2) If delivery of the motor vehicle is not made at the time of exe-

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  1       cution of the lease, the motor vehicle's identifying numbers, marks or
  2       similar information and the due date of the first payment may be filled
  3       in after execution of the lease.
  4             (3) The lessee's written acknowledgment, conforming to the require-
  5       ments of subsection (c), of delivery of a copy of the lease shall be conclu-
  6       sive proof of delivery of a copy of the consumer lease in any action or
  7       proceeding by or against an assignee of the lease without knowledge to
  8       the contrary at the time of the assignment.
  9             (i) Notwithstanding any contrary provision of this act or other laws of
10       this state:
11             (1) Subject to the rights of the lessee under the lease, a lessor may
12       sell a lease, a leased motor vehicle or an interest in a lease on such terms
13       and conditions and for such price as may be mutually agreed upon be-
14       tween the lessor and the lessor's assignee; and
15             (2) no filing of the assignment, no notice to the lessee of the assign-
16       ment and no requirement that the lessor be deprived of dominion over
17       payments upon the lease or over the motor vehicle if repossessed by or
18       returned to the lessor, shall be necessary to the validity of a written as-
19       signment of a lease as against creditors, subsequent purchasers, pledgees,
20       mortgagees or encumbrancers of the lessor.
21             (j)  (1) Until the lessee has notice of assignment of a lease, payment
22       made by the lessee to the last known holder of the lease shall be binding
23       upon all subsequent assignees.
24             (2) If requested by the lessee, the assignee shall furnish reasonable
25       proof that the assignment has been made and the lessee may pay the
26       original lessor until reasonable proof of the assignment has been
27       furnished.
28             (3) The lessor shall provide the lessee with a written receipt for any
29       payment made in cash.
30             (k)  (1) Upon written request from a lessee, the lessor shall give or
31       forward to the lessee a written statement of the dates and amounts of the
32       payments that have been made under the lease and the amount of the
33       lessee's remaining payments and any other amounts owed to the lessor
34       as reflected on the lessor's books and records at the time of the notice.
35             (2) Upon written request from a lessee, the lessor shall give or for-
36       ward to the lessee a written estimate of the lessee's total early termination
37       liability under the lease.
38             (3) No charge may be imposed on the lessee for preparation of the
39       statements provided for in paragraphs (1) and (2), except a lessor may
40       impose a reasonable fee, not to exceed $5 per statement, if:
41             (i) The lessee requests more than one statement under paragraph (1)
42       or more than one statement under paragraph (2) in any 12-month period;
43       and

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  1             (ii) the charge is disclosed in the lease.
  2             (l) A lease may not contain any provision by which:
  3             (1) In the absence of the lessee's default, the lessor may, arbitrarily
  4       and without reasonable cause, accelerate maturity of any part or all of the
  5       amount owing under the lease;
  6             (2) the lessor may accelerate maturity of any part or all of the amount
  7       owing under the lease solely because the lessor deems itself insecure;
  8             (3) a power of attorney is given to confess judgment or an assignment
  9       of wages is given;
10             (4) the lessor, or other person acting on behalf of the lessor, is given
11       authority to enter upon the lessee's premises unlawfully or to commit any
12       breach of the peace in the repossession of the motor vehicle;
13             (5) the lessee waives any right of action against the lessor, or other
14       person acting on behalf of the lessor, for any illegal act committed in the
15       collection of payments under the lease or in the repossession of the motor
16       vehicle;
17             (6) the lessee executes a power of attorney appointing the lessor, or
18       other person acting on behalf of the lessor, as the lessee's agent in col-
19       lection of payments under the lease or in the repossession of the motor
20       vehicle, except that this paragraph shall not prohibit the inclusion in a
21       lease of a limited power of attorney or other provision authorizing the
22       lessor to execute in the lessee's name any proofs of insurance claims or
23       losses, to execute in the lessee's name any titling and registration docu-
24       ments or to endorse the lessee's name on any insurance settlement or
25       premium rebate draft or check the proceeds of which are applicable to
26       the lessee's obligations under the lease;
27             (7) the lessor is relieved from liability for any legal remedy which the
28       lessee may have against the lessor under the lease or any separate instru-
29       ment executed in connection therewith;
30             (8) the maturity of any part or all of the amount owing under the
31       lease is accelerated where, following a default consisting solely of the
32       failure to make timely payments, a lessee who has the right to redeem
33       the lease makes timely payment of an amount sufficient to redeem the
34       lease under section 8, and amendments thereto; or
35             (9) the lessee waives any right provided to the lessee by this act.
36             (m)  (1) Any clause or provision prohibited by subsection (l) shall be
37       unenforceable but shall not otherwise affect the lease's continuing validity
38       and enforceability.
39             (2) The penalties provided in section 7, and amendments thereto, do
40       not apply to violations of subsection (1) of this section unless a lessor
41       attempts to enforce a provision prohibited by that subsection.
42             New Sec.  3. (a) A person who leases vehicles to lessees shall not:
43             (1) Make any false, falsely disparaging or misleading oral or written

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  1       statement, visual description or other representation of any kind that has
  2       the capacity, tendency or effect of deceiving or misleading a consumer
  3       or lessee;
  4             (2) by any means advertise or offer to the public any motor vehicle
  5       without intent to lease it as advertised or offered; or
  6             (3) misrepresent a lease of a motor vehicle as a sale.
  7             (b)  (1) Except as allowed by paragraph (2), in offering to allow a
  8       lessee to cure a default by entering into a new lease for the same motor
  9       vehicle, a lessor may not include in the new lease any material provision
10       that is less favorable to the lessee than the provisions of the original lease.
11             (2) A lessor may include in a lease under paragraph (1) an increase
12       in one or more of the following:
13             (A) The security deposit;
14             (B) the down payment paid to the lessor; or
15             (C) the lease payments, so long as the total of scheduled lease pay-
16       ments over the term of the new lease does not exceed the total of sched-
17       uled lease payments under the original lease.
18             New Sec.  4. (a) To the extent that K.S.A. 84-2-313 through 84-2-
19       318, and amendments thereto, apply to the purchase of a motor vehicle,
20       the rights and remedies provided for in those sections shall apply to the
21       lease of a motor vehicle and may be exercised by any lessee.
22             (b) If the warranty period is to include those miles of operation when
23       the new motor vehicle is in the possession of any person other than the
24       lessee, the manufacturer shall state that fact in 12 point boldface type in
25       the manufacturer's written warranty.
26             (c)  (1)  (A) If a new motor vehicle does not conform to all applicable
27       warranties during the warranty period, the lessee shall, during the war-
28       ranty period, report the nonconformity, defect or condition by giving
29       written notice to the manufacturer, factory branch or lessor by certified
30       mail, return receipt requested.
31             (B) Notice of this procedure shall be conspicuously disclosed to the
32       lessee in writing at the time of lease of the motor vehicle.
33             (2) The lessee shall provide an opportunity for the manufacturer or
34       factory branch, its agent or authorized dealer or the lessor or the lessor's
35       agent to cure the nonconformity, defect or condition.
36             (3) The manufacturer or factory branch, its agent or its authorized
37       dealer or the lessor or the lessor's agent shall correct the nonconformity,
38       defect or condition at no charge to the lessee, even if repairs are made
39       after the expiration of the warranty period.
40             (d)  (1)  (A) If, during the warranty period, the manufacturer or fac-
41       tory branch, its agent or authorized dealer or the lessor or the lessor's
42       agent is unable to repair or correct any nonconformity, defect or condition
43       that substantially impairs the use and market value of the motor vehicle

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  1       to the lessee after a reasonable number of attempts, the manufacturer or
  2       factory branch, at the option of the lessee shall:
  3             (i) Replace the motor vehicle with a comparable motor vehicle ac-
  4       ceptable to the lessee; or
  5             (ii) accept return of the motor vehicle from the lessee and refund to
  6       the lessee all moneys paid by the lessee to repair the defect, condition or
  7       nonconformity pursuant to a lease, including all excise tax, license fees,
  8       registration fees and any similar governmental charges, less a reasonable
  9       allowance for the lessee's unimpaired use of the vehicle; and
10             (B) in the event a motor vehicle is replaced under paragraph (1)(A)(i)
11       and provided that the lessee meets the lessor's then current credit criteria
12       with respect to the lease, the lessor shall:
13             (i) Transfer the title of the defective motor vehicle to the
14       manufacturer;
15             (ii) accept title to the comparable replacement motor vehicle;
16             (iii) transfer possession of the comparable replacement motor vehicle
17       to the lessee; and
18             (iv) execute a lease agreement with the lessee with the same time
19       period, terms and conditions of the original lease.
20             (2)  (A) In the event a manufacturer accepts return of a motor vehi-
21       cle, under paragraph (1)(A)(ii), the lessee shall be compensated by the
22       manufacturer for any moneys paid during the period in which the motor
23       vehicle was not available due to the defect, condition or nonconformity
24       and the lessor shall be paid by the manufacturer all amounts due to the
25       lessor under the terms of the lease.
26             (B) This subsection shall be construed to provide a mechanism
27       through which the lessee and the lessor shall be made whole for losses
28       incurred as a result of a motor vehicle's nonconformity, defect or condi-
29       tion and actions taken to conform the motor vehicle to applicable
30       warranties.
31             (3) If a manufacturer, factory branch, dealer or lessor accepts return
32       of a motor vehicle as described under paragraph (1)(A), the lessee may
33       not be obligated to pay any penalties, early termination fees or other
34       charges as a consequence of the return of the motor vehicle.
35             (e) It shall be presumed that a reasonable number of attempts have
36       been undertaken to conform a motor vehicle to the applicable warranties
37       if:
38             (1) The same nonconformity, defect or condition has been subject to
39       repair four or more times by the manufacturer or factory branch or its
40       agents or authorized dealers within the warranty period but such non-
41       conformity, defect or condition continues to exist;
42             (2) the motor vehicle is out of service by reason of repair of one or
43       more nonconformities, defects or conditions for a cumulative total of 30

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  1       or more days during the warranty period; or
  2             (3) a nonconformity, defect or condition resulting in failure of the
  3       braking or steering system has been subject to the same repair at least
  4       once within the warranty period and the manufacturer has been notified
  5       and given the opportunity to cure the defect and the repair does not bring
  6       the vehicle into compliance.
  7             (f) The term of any warranty, the warranty period and the 30-day out-
  8       of-service period shall be extended by any time during which repair serv-
  9       ices are not available to the lessee by reason of war, invasion, strike or
10       fire, flood or other natural disaster.
11             (g) If a motor vehicle is returned to a manufacturer or factory branch
12       under subsection (d)(1)(A), the manufacturer or factory branch shall no-
13       tify the division of vehicles of the department of revenue of the fact that
14       the vehicle was returned under this section as defective.
15             (h) If a motor vehicle that is returned under this section is then made
16       available for resale or subsequent lease, the seller or lessor shall disclose
17       prior to sale or lease in writing in a clear and conspicuous manner, on a
18       separate piece of paper in 10 point all capital type to a lessee or buyer
19       the material fact that this motor vehicle was returned to the manufacturer
20       or factory branch, the nature of the defect which resulted in the return
21       and the condition of the motor vehicle at the time of resale or subsequent
22       lease.
23             New Sec.  5. (a) The provisions of article 2A of chapter 84 of the
24       Kansas Statutes Annotated shall not apply to motor vehicle leases gov-
25       erned by this act.
26             (b) Except as provided in subsection (a), this act does not limit the
27       rights or remedies that are otherwise available to a lessee under any other
28       law, including any implied warranties, including the federal Magnusson
29       Moss warranty act and the Kansas uniform commercial code.
30             (c) If a manufacturer or factory branch has established an informal
31       dispute settlement procedure which complies in all respects with the pro-
32       visions of title 16, code of federal regulations, part 703, as amended, a
33       lessee need not resort to that procedure before section 4, and amend-
34       ments thereto. A lessee who has resorted to an informal dispute settle-
35       ment procedure may not be precluded from seeking the rights or reme-
36       dies available by law.
37             (d) Except as otherwise provided by this act, any agreement entered
38       into by a lessee for the lease of a new motor vehicle that waives, limits or
39       disclaims the rights set forth in this act shall be void.
40             (e) If a lessor permits the lessee to assign any interest in the lease or
41       in the motor vehicle, upon such assignment the rights available to a lessee
42       under this act shall inure to an assignee of the lessee's rights under the
43       lease or a subsequent transferee of the motor vehicle.

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  1             (f)  (1) Any action brought under this act may not be brought more
  2       than one year after termination of the lease.
  3             (2) Notwithstanding the limitation in paragraph (1), a lessee at any
  4       time may assert a violation of this act in an action to collect the debt as
  5       a matter of defense, by recoupment or setoff.
  6             (g)  (1) Except as provided in paragraph (2), a lessor may charge fees
  7       for excess wear and use or excess mileage, if:
  8             (A) The right to charge the fees and method for calculating the fees
  9       are disclosed in the lease in at least 8 point bold capital letters;
10             (B) at the time the vehicle is returned, the lessor conducts a visual
11       inspection of the vehicle and provides the lessee with a reasonable op-
12       portunity to be present at the inspection. If the lessee is present, in ad-
13       dition to the notice required by subparagraph (C), the lessor shall provide
14       the lessee at the time of the inspection with a written statement of the
15       mileage and of the excess wear to the motor vehicle identified through
16       the visual inspection. If the lessee is not present at the inspection, the
17       lessor is only required to provide the lessee with the notice required by
18       subparagraph (C);
19             (C) within 30 days after obtaining possession of the motor vehicle,
20       the lessor shall deliver or mail to the lessee at the lessee's last known
21       address:
22             (i) An itemized list of excess wear to the motor vehicle and the esti-
23       mated or actual cost of repairing or replacing each item listed; and
24             (ii) a statement of the number of miles above the amount permitted
25       by the lease and the total charge to the lessee for the excess mileage.
26             (2) A lessor may not charge fees for excess and use or excess mileage
27       if the lessee exercises an option to purchase the leased motor vehicle.
28             New Sec.  6. (a) (1) The provisions of this act apply only to the lease
29       of a motor vehicle where the lessee has signed or been offered the lease
30       in this state.
31             (2) This act does not apply to a fleet lease of five or more motor
32       vehicles.
33             (b) A lessor, manufacturer, factory branch, distributor or dealer may
34       not exclude or limit the operation of this act.
35             New Sec.  7. (a) Except as otherwise provided in this act, a lessor who
36       fails to comply with any requirement imposed by this act with respect to
37       a person shall be liable to the person for:
38             (1) Any actual damage sustained by the person as a result of the fail-
39       ure; and
40             (2) an amount equal to 25% of the total amount of monthly payments
41       under the lease, but not less than $100 nor greater than $1,000.
42             (b)  (1) A court may award reasonable attorney fees to a prevailing
43       party under this act.

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  1             (2) If it appears to the satisfaction of the court that an action is
  2       brought in bad faith or is of a frivolous nature, the court may order the
  3       offending party to pay the other party reasonable attorney fees.
  4             (c) A lessee may not recover damages in an action under this act for
  5       any failure to comply with any provision of this act if, within 60 days after
  6       discovering an error and prior to the institution of an action under this
  7       act or the receipt of written notice of the error from the lessee, the lessor
  8       notifies the lessee of the error and makes whatever adjustments are nec-
  9       essary to correct the error.
10             (d) The penalty provided under subsection (a)(2) does not apply
11       where a lessor:
12             (1) Unintentionally and in good faith fails to comply with this act; and
13             (2) corrects the error or violation and makes the lessee whole for all
14       losses, including reasonable attorney fees and interest, where appropriate,
15       within 10 days after the lessor receives notice of the error or violation.
16             (e) A lessor who knowingly violates any provision of this act shall be
17       liable to the lessee for three times the amount of fees and charges col-
18       lected in excess of that authorized by this act.
19             New Sec.  8. (a) (1) A lessor may repossess a leased motor vehicle if
20       the lessee is in default or a law enforcement agency has seized the motor
21       vehicle and will not unconditionally return the motor vehicle to the lessor.
22             (2) The lessor may repossess the leased motor vehicle from a lessee
23       only by:
24             (A) Legal process; or
25             (B) self-help, without use of force.
26             (b) Nothing in this section authorizes a violation of criminal law.
27             (c)  (1) At least 10 days before a lessor repossesses any leased motor
28       vehicle, the lessor may serve a written notice on the lessee of the intention
29       to repossess the motor vehicle.
30             (2) The notice shall:
31             (A) State the default and any period at the end of which the leased
32       motor vehicle will be repossessed; and
33             (B) briefly state the rights of the lessee in case the leased motor ve-
34       hicle is repossessed.
35             (d) The notice may be delivered to the lessee personally or sent to
36       the lessee at the lessee's last known address by registered or certified
37       mail.
38             (e) Within five days after the lessor repossesses the leased motor ve-
39       hicle, the lessor shall deliver to the lessee personally or send to the lessee
40       at the lessee's last known address by registered or certified mail a written
41       notice which states:
42             (1) The right of the lessee to redeem the leased motor vehicle and
43       the amount payable for it;

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  1             (2) the rights of the lessee as to a sale of the motor vehicle and the
  2       lessee's liability for a deficiency; and
  3             (3) the exact location where the leased motor vehicle is stored and
  4       the address where any payment is to be made.
  5             (f) For 15 days after the lessor gives the notice required by subsection
  6       (e), the lessor shall retain the repossessed motor vehicle.
  7             (g) During the period provided for in subsection (f), the lessee may:
  8             (1) Redeem and retake possession of the motor vehicle; and
  9             (2) resume the performance of the lease.
10             (h) To redeem the leased motor vehicle, the lessee shall:
11             (1) Tender the amount due under the lease at the time of redemp-
12       tion, without giving effect to any provision which allows acceleration of
13       any amounts otherwise payable after that time;
14             (2) tender performance of any other promise for the breach of which
15       the motor vehicle was repossessed; and
16             (3) if the discretionary notice provided for in subsection (c) was given,
17       pay the actual and reasonable expenses of retaking and storing the motor
18       vehicle.
19             (i) This section does not apply, and the lessor shall have the right to
20       enforce the lease according to its terms, including the default and early
21       termination provisions of the lease and any provision that requires the
22       lessee to pay an amount due at early termination, if:
23             (1) The date of the default under the lease that led to the present
24       repossession occurred within 18 months after the last repossession; or
25             (2) the lessee was guilty of fraudulent conduct, intentionally and
26       wrongfully concealed, removed, damaged or destroyed the motor vehicle,
27       or attempted to do so, and the motor vehicle was repossessed because of
28       that conduct.
29             New Sec.  9. (a) This section applies if the lease provides that the
30       motor vehicle is to be sold after repossession and the lessee is to be
31       responsible for any deficiency arising from the sale of the motor vehicle.
32             (b)  (1) The lessor shall sell the motor vehicle that was repossessed
33       at:
34             (A) Subject to subsection (c), a private sale; or
35             (B) a public auction.
36             (2) At least 10 days before the sale, the lessor shall notify the lessee
37       in writing of the time and place of the sale, by certified mail, return
38       receipt requested, sent to the lessee's last known address.
39             (3) Any sale of a repossessed motor vehicle must be accomplished in
40       a commercially reasonable manner.
41             (c) In all cases of a private sale of a repossessed motor vehicle under
42       this section, a full accounting shall be made to the lessee in writing. This
43       accounting shall contain the following information:

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  1             (1) The unpaid balance at the time the motor vehicle was
  2       repossessed;
  3             (2) the refund credit of unearned insurance premiums, if any;
  4             (3) the remaining net balance;
  5             (4) the proceeds of the sale of the motor vehicle;
  6             (5) the remaining deficiency balance, if any, or the amount due to
  7       the lessee; and
  8             (6) all expenses incurred as a result of the sale.
  9             (d)  (1) The proceeds of a sale to which this section applies shall be
10       applied, in the following order, to:
11             (A) The actual and reasonable costs of the sale;
12             (B) the actual and reasonable costs of retaking and storing the prop-
13       erty; and
14             (C) the unpaid balance owing under the lease agreement at the time
15       the property was repossessed.
16             (2) The lessor shall furnish to the lessee a written statement which
17       shows the distribution of the proceeds.
18             (3) If the provisions of this act, including the requirement of furnish-
19       ing a notice following repossession, are not followed, the lessor shall not
20       be entitled to any deficiency judgment to which it would be entitled under
21       the lease agreement.
22             New Sec.  10. Any penalties or charges set forth in the lease or
23       claimed by the lessor in the event of early termination or default must
24       comply with the standards set forth in the consumer leasing act.
25             New Sec.  11. Any violation of this act is an unconscionable act or
26       practice under the provisions of the Kansas consumer protection act and
27       shall be subject to any and all of the enforcement provisions of the Kansas
28       consumer protection act.
29             New Sec.  12. The provisions of sections 1 through 11 shall apply to
30       all consumer motor vehicle leasing contracts entered into on or after the
31       effective date of this act.
32             New Sec.  13. Sections 1 through 13 shall be known and may be cited
33       as the Kansas consumer motor vehicle leasing contracts act.
34             Sec.  14. K.S.A. 1998 Supp. 50-645 is hereby amended to read as
35       follows: 50-645. (a) As used in this act:
36             (1) "Consumer" means the original purchaser or lessee, other than
37       for purposes of resale, of a motor vehicle; and
38             (2) "motor vehicle" means a new motor vehicle which is sold or leased
39       in this state, and which is registered for a gross weight of 12,000 pounds
40       or less, and does not include the customized parts of motor vehicles which
41       have been added or modified by second stage manufacturers, first stage
42       converters or second stage converters as defined in K.S.A. 8-2401, and
43       amendments thereto.

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  1             (b) If a motor vehicle does not conform to all applicable warranties,
  2       and the consumer reports the nonconformity to the manufacturer, its
  3       agent or its authorized dealer during the term of any warranties or during
  4       the period of one year following the date of original delivery of the motor
  5       vehicle to a consumer, whichever is the earlier date, the manufacturer,
  6       its agent or its authorized dealer shall make such repairs as are necessary
  7       to conform the vehicle to such warranties, notwithstanding the fact that
  8       such repairs are made after the expiration of any such term or such one-
  9       year period.
10             (c) If the manufacturer, or its agents or authorized dealers, are unable
11       to conform the motor vehicle to any applicable warranty after a reasonable
12       number of attempts, the manufacturer shall replace the motor vehicle
13       with a comparable motor vehicle under warranty or accept return of the
14       vehicle from the consumer and refund to the consumer the full purchase
15       or lease price including all collateral charges, less a reasonable allowance
16       for the consumer's use of the vehicle as calculated from the most recent
17       edition of Your Driving Costs, published by the American automobile
18       association. Refunds shall be made to the consumer, and lienholder if
19       any, as their interests may appear. A reasonable allowance for use shall
20       be that amount directly attributable to use by the consumer and any
21       previous consumer prior to the first report of the nonconformity to the
22       manufacturer, agent or dealer and during any subsequent period when
23       the vehicle is not out of service by reason of repair. It shall be an affir-
24       mative defense to any claim under this act that:
25             (1) An alleged nonconformity does not substantially impair such use
26       and value; or
27             (2) a nonconformity is the result of abuse, neglect or unauthorized
28       modifications or alterations of a motor vehicle by a consumer.
29             (d) If the manufacturer receives actual notice of the nonconformity,
30       it shall be presumed that a reasonable number of attempts have been
31       undertaken to conform a motor vehicle to the applicable warranties, if:
32             (1) The same nonconformity which substantially impairs the use and
33       value of the motor vehicle to the consumer has been subject to repair
34       four or more times by the manufacturer or its agents or authorized dealers
35       within the term of any warranty or during the period of one year following
36       the date of original delivery of the motor vehicle to a consumer, whichever
37       is the earlier date, but such nonconformity continues to exist;
38             (2) the vehicle is out of service by reason of repair for a cumulative
39       total of 30 or more calendar days during such term or period, whichever
40       is the earlier date; or
41             (3) there have been 10 or more attempts to repair any nonconform-
42       ities which substantially impair the use and value of the motor vehicle to
43       the consumer and such attempts to repair have been attempts by the

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  1       manufacturer or its agents or authorized dealers.
  2             The term of any warranty, such one-year period and such thirty-day
  3       period shall be extended by any period of time during which repair serv-
  4       ices are not available to the consumer because of war, invasion, strike,
  5       fire, flood or other natural disaster.
  6             (e) If a manufacturer has established an informal dispute settlement
  7       procedure which complies in all respects with the provisions of title 16,
  8       code of federal regulations, part 703, as from time to time amended, the
  9       provisions of subsection (c) concerning refunds or replacement shall not
10       apply to any consumer who has not first resorted to such procedure.
11             (f) The attorney general shall have jurisdiction to enforce this section.
12             Sec.  15. K.S.A. 84-2a-104 is hereby amended to read as follows: 84-
13       2a-104. (1) A lease, although subject to this article, is also subject to any
14       applicable:
15             (a) Certificate of title statute of this state: (List any certificate of title
16       statutes covering automobiles, trailers, mobile homes, boats, farm trac-
17       tors, and the like);
18             (b) certificate of title statute of another jurisdiction (K.S.A. 84-2a-
19       105); or
20             (c) consumer protection statute of this state, or final consumer pro-
21       tection decision of a court of this state existing on the effective date of
22       this article.
23             (2) In case of conflict between this article, other than K.S.A. 84-2a-
24       105, 84-2a-304(3) and 84-2a-305(3), and a statute or decision referred to
25       in subsection (1), the statute or decision controls.
26             (3) Failure to comply with an applicable law has only the effect spec-
27       ified therein.
28             (4) The provisions of article 2a of chapter 84 of the Kansas Statutes
29       Annotated shall not apply to consumer motor vehicle leasing contracts
30       subject to the provisions of sections 1 through 13.  
31       Sec.  16. K.S.A. 84-2a-104 and K.S.A. 1998 Supp. 50-645 are hereby
32       repealed.
33        Sec.  17. This act shall take effect and be in force from and after its
34       publication in the statute book.