The Vermont Statutes Online

Title 9: Commerce and Trade

Chapter 060: Agricultural Finance Leases

• § 2381. Definitions

  As used in this chapter:

  (1) “Agricultural finance lease” or “lease” means a lease of property to a farmer under which:

  (A) the lease transfers ownership of the leased property to the lessee by the end of the lease term;

  (B) the lease contains an option for the lessee to purchase the leased property at the end of the lease term;

  (C) the lease term is equal to or greater than 75 percent of the estimated economic life of the leased property; or

  (D) when the lease is executed, the present value of the rental and other minimum lease payments equals or exceeds 90 percent of the fair market value of the leased property less any investment tax credit retained by the lessor.

  (2) “Commissioner” means the Commissioner of Financial Regulation.

  (3) “Fair market value” means the price the leased property would be sold for in a transaction between willing and informed parties in an arms-length transaction.

  (4) “Farmer” means any person engaged in farming.

  (5) “Farming” means those activities described in 10 V.S.A. § 6001(22).

  (6) “Leased property” or “property” means personal property leased by a lessor to a farmer lessee for use in farming, including goods, livestock, equipment and machinery, bulk milk tanks, silos, manure storage systems, tools, fixtures that were personal property at the time the lease was entered into, and accessories. The term also includes the cost of installation, if any.

  (7) “Lessee” means a person who acquires the right to possession and use of leased property under an agricultural finance lease.

  (8) “Lessor” means a person who transfers the right to possession and use of leased property under an agricultural finance lease, and agents, successors, and assigns of the lessor. The term also includes a person who is the manufacturer, seller, supplier, or dealer of the leased property if the lessor is wholly owned as a subsidiary corporation by, or wholly owns as a subsidiary corporation, such a person, or if there is common ownership or management in any other form between the lessor and that person. (Added 1989, No. 284 (Adj. Sess.), § 1; amended 1995, No. 180 (Adj. Sess.), § 38; 2011, No. 136 (Adj. Sess.), § 1.)

• § 2382. Agricultural finance leases

  (a) An agricultural finance lease, including any lease amendments, shall be in writing, dated, and signed by the lessee and the lessor. The lease shall be completed before being signed by the lessee. The lease need not be contained in a single document. A copy of the lease shall be provided to the lessee at the time of execution.

  (b) The printed portion of an agricultural finance lease, and the accompanying disclosure sheet if not incorporated into the lease, other than instructions for completion, shall be in a size equal to at least eight-point type. The contract shall be designated in a size equal to at least 10-point bold type as an “agricultural finance lease ” and shall contain the following notice in a size equal to at least 10-point bold type.

  “NOTICE TO THE LESSEE—DO NOT SIGN THIS LEASE IN BLANK. YOU ARE ENTITLED TO A COPY OF THE LEASE AT THE TIME YOU SIGN. KEEP IT TO PROTECT YOUR LEGAL RIGHTS.”

  (c) The provisions of section 2454 of this title, requiring a lessor to disclose a lessee’s right to cancel a lease, shall apply to an agricultural finance lease that is a “home solicitation sale,” as that term is defined by section 2451a of this title. (Added 1989, No. 284 (Adj. Sess.), § 1; amended 2011, No. 136 (Adj. Sess.), § 1, eff. May 18, 2012.)

• § 2383. Disclosure sheet

  The agricultural finance lease shall contain, or be accompanied by, a disclosure sheet that contains the following information in easily readable form:

  (1) The names and addresses of the lessor and lessee. If the seller of the leased property is an entity different than the lessor, the name and address of the seller shall also be included.

  (2) A brief description of each item of the leased property.

  (3) The purchase price of leased property purchased by the lessor contemporaneously with the execution of the agricultural finance lease, evidenced by a copy of the sales invoice or, for other leased property, identification of the leased property’s fair market value at the time of execution of the lease.

  (4) The total amount of any advance payment, down payment, security deposit, together with the rate of interest, if any, or trade-in allowance.

  (5) The number, amount, and due dates or periods of payments scheduled under the lease, and the total amount of the periodic payments.

  (6) The total amount paid or payable by the lessee during the lease term for official fees, registration, certificate of title, license fees, and taxes. If these amounts are not known, a good faith estimate shall be included.

  (7) The total amount of all other charges payable by the lessee to the lessor, individually itemized, that are not included in the periodic payments, except for costs of collection upon default.

  (8) A brief identification of any insurance required by the lease, including:

  (A) if provided or paid for by the lessor, the types and amounts of coverages and the cost to the lessee; or

  (B) if not provided or paid for by the lessor, the types and amounts of coverages required of the lessee.

  (9) A statement identifying any express warranties or guarantees available to the lessee made by the lessor or manufacturer with respect to the leased property.

  (10) Identification of any person responsible for maintaining or servicing the leased property, a brief description of any maintenance responsibility, and a statement of reasonable standards for wear and use, if the lessor sets such standards.

  (11) A description of the terms and conditions of any security interest held or to be retained by the lessor, including any mortgage connected with the lease, and a clear identification of the property to which the security interest applies.

  (12) The amount or method of determining the amount of any penalty or other charge for delinquency, default, or late payments.

  (13) A statement of the conditions under which the lessee or lessor may terminate the lease before the end of the lease term, and the amount, or method of determining the amount, of any penalty or other charge for early termination.

  (14) Identification of the amount, and the method of calculating the amount, of any penalty or other charge for which the lessee is liable at the end of the lease term, if a liability exists.

  (15) A statement of whether the lessee may purchase the leased property before or at the end of the lease term, and identification of the exact time when the option may be exercised. The statement shall also disclose the purchase price or declare that the price will be based on the property’s fair market value at the time the property may be purchased by the lessee. If the price will be based on fair market value, the historical experience, if any, of the lessor in calculating the purchase price of similar equipment under similar leases shall also be disclosed.

  (16) If the lessee has an option to purchase the leased property before or at the end of the lease term based on the property’s fair market value, a statement that the lessee may obtain a professional appraisal of the fair market value by an independent third party agreed to by the lessee and lessor. The appraised price shall be final and binding upon the lessor and lessee. The cost of the appraisal shall be shared equally by the lessor and lessee. The lessee shall not be obliged to exercise the option to purchase the property even though an appraisal has been obtained.

  (17) A declaration that comparison of the total amount of payments that would be due under an agricultural finance lease with the total amount of payment that would be due under a loan to purchase the property does not account for the relative tax advantages to the lessee of lease and loan transactions. (Added 1989, No. 284 (Adj. Sess.), § 1; amended 2011, No. 136 (Adj. Sess.), § 1, eff. May 18, 2012.)

• § 2384. Warranties

  (a) A lessee may enforce all express or implied warranties available to the lessor directly against the manufacturer, seller, supplier, or dealer of the leased property, during the term of the lease.

  (b) A lessor shall impliedly warrant that the leased property is fit for a particular purpose if the lessor, when the lease is executed, has reason to know of any particular purpose for which the goods are required and that the lessee is relying on the lessor’s skill or judgment to select or furnish suitable goods.

  (c) A lessor shall impliedly warrant that the leased property is merchantable, if the lessor is a merchant with respect to goods of that kind.

  (d) A lessor shall impliedly warrant that no person holds a claim to or interest in the leased property arising from an act or omission of the lessor, for the lease term, that will interfere with the lessee’s enjoyment of the leasehold interest. (Added 1989, No. 284 (Adj. Sess.), § 1; amended 2011, No. 136 (Adj. Sess.), § 1, eff. May 18, 2012.)

• § 2385. Unconscionability

  (a) If a court finds an agricultural finance lease, or any clause of a lease, to have been unconscionable at the time it was made, the court may refuse to enforce the entire lease or enforce the remainder of the agricultural finance lease without the unconscionable clause, or it may limit the application of any unconscionable clause to avoid an unconscionable result.

  (b) If a court finds that an agricultural finance lease or any clause of a lease has been induced by unconscionable conduct, or that unconscionable conduct has occurred in the collection of a claim arising from a lease contract, the court may grant appropriate relief.

  (c) Before making a finding on unconscionability under subsection (a) or (b) of this section, the court, on its own motion or that of a party, shall afford the parties a reasonable opportunity to present evidence as to the setting, purpose, and effect of the lease contract or clause, or of the conduct. (Added 1989, No. 284 (Adj. Sess.), § 1; amended 2011, No. 136 (Adj. Sess.), § 1, eff. May 18, 2012.)

• § 2386. Option to accelerate at will

  Any term of an agricultural finance lease providing that a party or a successor in interest may accelerate payment or performance, or require collateral or additional collateral “at will” or “when he or she deems himself or herself insecure,” or in words of similar import, shall be construed to mean that the party may do so only if he or she in good faith believes that the prospect of payment or performance is impaired. The burden of establishing good faith shall be on the party who exercised the power. (Added 1989, No. 284 (Adj. Sess.), § 1; amended 2011, No. 136 (Adj. Sess.), § 1, eff. May 18, 2012.)

• § 2387. Waiver

  No act or agreement of the lessee shall be deemed a waiver of any of the provisions of this chapter, except for a waiver made in settlement of a claim asserted under this chapter. (Added 1989, No. 284 (Adj. Sess.), § 1; amended 2011, No. 136 (Adj. Sess.), § 1, eff. May 18, 2012.)

• § 2388. Prohibition on discrimination based on sex, sexual orientation, gender identity, marital status, race, color, religion, national origin, age, or disability

  No person shall discriminate against any lessee or prospective lessee who has entered into an agricultural finance lease, or who desires to enter into an agricultural finance lease, because of the sex, sexual orientation, gender identity, marital status, race, color, religion, national origin, age, or disability of the lessee. (Added 1989, No. 284 (Adj. Sess.), § 1; amended 1991, No. 135 (Adj. Sess.), § 10; 2007, No. 41, § 13; 2011, No. 136 (Adj. Sess.), § 1, eff. May 18, 2012; 2013, No. 96 (Adj. Sess.), § 28.)

• § 2389. Limitation on power to choose applicable law and judicial forum

  (a) If the parties to an agricultural finance lease choose the law of a jurisdiction other than that in which the goods are to be used, or that in which the lessee resides or has his or her principal place of business, when the lease agreement becomes enforceable or within 30 days thereafter, the choice is not enforceable.

  (b) If the parties to an agricultural finance lease choose a judicial forum that would not otherwise have jurisdiction over the lessee, the choice is not enforceable. (Added 1989, No. 284 (Adj. Sess.), § 1; amended 2011, No. 136 (Adj. Sess.), § 1, eff. May 18, 2012.)

• § 2390. Remedies and penalties

  All remedies and penalties available to a consumer and the Attorney General under chapter 63 of this title shall apply to violations of this chapter. (Added 1989, No. 284 (Adj. Sess.), § 1; amended 1991, No. 79, § 6; 2011, No. 136 (Adj. Sess.), § 1, eff. May 18, 2012.)

• § 2391. Construction

  In the event of a conflict between this chapter and Title 9A, the Uniform Commercial Code, the provisions of this chapter shall control. (Added 1989, No. 284 (Adj. Sess.), § 1; amended 2011, No. 136 (Adj. Sess.), § 1, eff. May 18, 2012.)

• § 2392. Rules

  The Commissioner may adopt rules, including incorporation of the applicable provisions of 12 C.F.R. Part 213, deemed necessary to promote the purposes of this chapter. (Added 1989, No. 284 (Adj. Sess.), § 1; amended 2011, No. 136 (Adj. Sess.), § 1, eff. May 18, 2012.)