Vehicle Leasing Legislation Reaches Floor Of Assembly
Gov. Andrew Cuomo has signed legislation that would make it easier to end a vehicle lease when a customer dies.
A.2078A/S.4019 was approved by the state Assembly, 136-10, on its final day of the legislative session and by the state Senate, 62-0, on June 17.
Assemblyman Joe Giglio, R-Gowanda, voted in favor of the legislation when it appeared before the Rules Committee on June 17 and voted in favor on the floor. Assemblyman Andrew Goodell, R-Jamestown, voted against the legislation on the Assembly floor.
The legislation requires that a retail lessee cannot be liable for charges for the early termination of a retail lease agreement of a motor vehicle if he or she has deceased before the end of such lease.
“The reason I put this bill in is after my mother passed away, we tried to terminate a lease and we had a lot of difficulty,” said Aileen Gunther, D-Forestburgh and sponsor of the legislation in the Assembly. “I thought that at a point in time where you lose a loved one and you have to fight for a termination, that’s where the genesis of this bill is.”
Many companies use early termination fees to ensure a customer continues use of a service through the contract length.
However, there have been instances where these companies have charged early termination fees to accounts cancelled prior to the expiration of the contract due to the customer’s death.
Chapter 331 of the laws of 2016 prohibited telephone, cellular telephone, television, internet, energy, and water service providers from charging early termination fees if the contract was broken due to the death of the customer. Motor vehicle leases were not included in that legislation.
Goodell questioned Gunther on the floor of the Assembly regarding the legislation, asking if it was fair to treat of creditors differently in the laws eyes. Gunther said there is already a legal precedent set with the regulation of early termination fees for telephone, cell phone and other contracts.
Goodell also wondered if there is another way to protect people through the use of insurances that would pay the early termination fee without expecting private companies to forego the money they are owed.
“When an individual signs a lease agreement and they agree that if they terminate the lease early they will reimburse the leasing company through an early termination fee, that’s a mutually negotiated agreement,” Goodell said. “That’s an agreement between a person who drives off the lot in a new car and the company that is financing the car. It’s an agreement with the company that borrowed the money to buy the car in the first place. The termination fee reflects the fact that they have real out-of-pocket expenses if that lease is terminated because they’re not going to get any revenue during that lease term. They’re still obligated to make the payments when they bought the car. So what this bill says is if you sign that agreement voluntarily and agree to pay the early termination fee and unfortunately you pass away … we’re going to stick the leasing company with the cost of cleaning up that car and paying for it while you’re not paying for it. So who benefits and who’s hurt? Who benefits? The estate. So the heirs who never signed any of the agreements can get more money. That’s what it’s about, right? The heirs get more money and the leasing company that did nothing wrong gets less. The leasing company loses money and the heirs make more money. That’s what this is about.”
Assemblyman Michael DenDekker, D-Jackson Heights, voted in favor of the legislation and, in his comments on the bill, disagreed with the 10 Assembly members who voted against the legislation.
“I just think those people have a lot of nerve dying just to hurt those leasing companies,” DenDekker said.
“I’ll be voting in the affirmative.”