Subdivision 1. Applicability. As used in sections 325F.84 to
following terms have the meanings given them.
Subd. 2. Advertisement. "Advertisement" means a commercial message in any
medium, including signs, window displays, and price tags, that promotes,
directly or indirectly, a rental-purchase agreement.
Subd. 3. Cash price. "Cash price" means an amount equal to the equivalent
fair market value for goods offered under a consumer credit sale as provided
Subd. 4. Consummation. "Consummation" means the time at which the lessee
enters into a rental-purchase agreement.
Subd. 5. Lessee. "Lessee" means a natural person who rents personal property
under a rental-purchase agreement for personal, family, or household use.
Subd. 6. Lessor. "Lessor" means a person who, in the ordinary course of
business, regularly leases, offers to lease, or arranges for the leasing of
property under a rental-purchase agreement.
Subd. 7. Personal property. "Personal property" means property that is not
real property under the laws of this state when it is made available for a
Subd. 8. Rental-purchase agreement. "Rental-purchase agreement" means an
agreement for the use of personal property in which all of the following apply:
(1) the lessor is regularly engaged in the rental-purchase business;
(2) the agreement is for an initial period of four months or less, whether
or not there is any obligation beyond the initial period, that is
automatically renewable with each payment and that permits the lessee to
become the owner of the property;
(3) the lessee is a person other than an organization; and
(4) the lessee takes under the rental-purchase agreement primarily for a
personal, family, or household purpose.
HIST: 1990 c 527 s 1; 1997 c 7 art 2 s 71
325F.85 Application of other
If the consumer protection provisions of sections
conflict with sections
apply to a rental-purchase agreement and supersede sections
HIST: 1990 c 527 s 2
In a rental-purchase agreement, the lessor shall disclose the following items,
(a) The total of payments necessary to acquire ownership of the property
accompanied by an explanation that this term means the "total dollar amount of
payments you will have to make to acquire ownership."
(b) The total number, amounts, and timing of all payments and other charges
including taxes or official fees paid to or through the lessor that are
necessary to acquire ownership of the property.
(c) The difference between the amount disclosed under paragraph (a) and the
cash price of the leased property, using the term "cost of lease services" to
mean the difference between these amounts.
(d) Any initial or advance payment such as a delivery charge or trade-in
(e) A statement that the lessee will not own the property until the lessee
has made the total of payments necessary to acquire ownership of the property.
(f) A statement that the total of payments does not include additional
charges such as late payment charges, and a separate listing and explanation
of these charges, as applicable.
(g) A statement that the lessee is liable for loss or damage to the
property and the maximum amount for which the lessee is liable, which in the
case of loss shall in no event be greater than the price the lessee would have
paid to exercise an early purchase option. In the case of damage to the
property other than normal wear and tear, the lessee shall be liable for the
lesser of the price the lessee would have paid to exercise an early purchase
option or the cost of repair as reasonably determined by the lessor.
(h) A statement that the lessee is not required to purchase a liability
damage waiver from the lessor.
(i) A description of the goods or merchandise including model numbers as
applicable and a statement indicating whether the property is new or used. It
is not a violation of this subdivision to indicate that the property is used
if it is actually new.
(j) A statement that the lessee has the option to purchase the leased
property during the terms of the rental-purchase agreement and at what price,
formula, or by what method the price is to be determined.
(k) The cash price of the merchandise.
(l) A statement of the following lessee rights: reinstatement rights under
325F.90, default notice under section
and consumer warranties under sections
The commissioner of commerce may prescribe the disclosure form by rule.
HIST: 1990 c 527 s 3
325F.87 Form requirements.
Subdivision 1. Generally. The disclosure information required by section
be disclosed in a rental-purchase agreement and:
(1) must be made clearly and conspicuously with items appearing in logical
order and segregated as appropriate for readability and clarity;
(2) must be made in writing;
(3) need not be contained in a single writing or made in the order set
forth in section
(4) may be supplemented by additional information or explanations supplied
by the lessor, but none shall be stated, used, or placed so as to mislead or
confuse the lessee or to contradict, obscure, or detract attention from the
information required by section
and so long as the additional information or explanations do not have the
effect of circumventing, evading, or unduly complicating the information
required to be disclosed by section
Subd. 2. Timing. The lessor shall disclose all information required by
before the rental-purchase agreement is executed. These disclosures must be made
on the face of the writing evidencing the rental-purchase agreement.
Subd. 3. Copy to lessee. Before any payment is due, the lessor shall furnish
the lessee with an exact copy of each rental-purchase agreement. The agreement
shall be signed by the lessee and is evidence of the lessee's agreement. If
there is more than one lessee in a rental-purchase agreement, delivery of a copy
of the rental-purchase agreement to one of the lessees constitutes compliance
with this subdivision; however, a lessee not signing the agreement is not liable
Subd. 4. Type size. The terms of the rental-purchase agreement, except as
otherwise provided in this section, must be set forth in not less than
eight-point standard type.
Subd. 5. Blank spaces. All blank spaces on the rental-purchase agreement form
must be filled in before the rental-purchase agreement is executed. Blank spaces
that are provided for items or terms not applicable to the agreement must be
HIST: 1990 c 527 s 4
Subdivision 1. Prohibition. An advertisement for a rental-purchase agreement
shall not state or imply that a specific item is available at specific amounts
or terms unless the lessor usually and customarily offers or will offer that
item at those amounts or terms.
Subd. 2. Disclosures.
(a) If an advertisement for a rental-purchase agreement refers to or states
the amount of any payment or the right to acquire ownership for a specific
item, the advertisement must also clearly and conspicuously state the
following terms, as applicable:
(1) that the transaction advertised is a rental-purchase agreement;
(2) the total of payments necessary to acquire ownership; and
(3) that the lessee will not own the property until the total amount
necessary to acquire ownership is paid in full or by prepayment as provided
for by law.
(b) Every item displayed or offered under a rental-purchase agreement shall
have clearly and conspicuously indicated in Arabic numerals, so as to be
readable and understandable by visual inspection, each of the following
affixed to the item:
(1) the cash price of the item; and
(2) the amount of the lease payment and the total of lease payments
required for ownership.
Subd. 3. Nonapplication. This section does not apply to the owner or
personnel, as such, of any medium in which an advertisement appears or through
which it is disseminated.
HIST: 1990 c 527 s 5
Subdivision 1. Enforceability. An agreement of the parties to a rental-purchase
agreement with respect to default is enforceable only to the extent that one of
the following apply:
(1) the lessee both fails to renew an agreement and also fails to return
the property or make arrangements for its return as provided in the agreement;
(2) the prospect of payment, performance, or return of the property is
materially impaired due to a breach of the rental-purchase agreement, with the
burden of establishing the prospect of material impairment on the lessor.
Subd. 2. Authorization. If a lessee has been in default for three business
days, the lessor may give the lessee a default notice and request surrender of
the property as provided under subdivision 3. Mailing written notice to the last
known address of the lessee meets the requirement of giving written notice under
Subd. 3. Default notice. The first default notice and a subsequent default
notice that is sent more than 12 months after sending the last written notice
must be in writing and conspicuously state the following:
(1) the name, address, and telephone number of the lessor to whom payment
is to be made;
(2) a brief identification of the transaction;
(3) the lessee's right to cure the default;
(4) the amount of payment and date by which payment must be made to cure
(5) a statement of the lessee's reinstatement rights as provided under
(6) a request to voluntarily surrender the property if the payment is not
A subsequent default notice given within the 12 months after a written
default notice may be given orally and constitutes proper notice under this
Subd. 4. Property recovery. A lessor may not bring a court action to recover
the property until seven days after a proper default notice has been given.
Subd. 5. Voluntary surrender of property. This section does not prohibit a
lessee from voluntarily surrendering possession of the property or the lessor
from enforcing a past due obligation which the lessee may have at any time after
Subd. 6. Compliance. If the lessee cures the default by taking the action
required in the default notice, a breach of the agreement is considered as not
HIST: 1990 c 527 s 6
Subdivision 1. Generally. A lessee who fails to make timely lease payments may
reinstate the original rental-purchase agreement without losing any rights or
options previously acquired under the rental-purchase agreement if both of the
(1) after having failed to make a timely payment, the lessee has
surrendered the property to the lessor within seven days of a request to
surrender the property made by the lessor as provided in section
(2) in the case of a lessee that has paid less than 60 percent of the total
of payments necessary to acquire ownership of the property, not more than 60
days have passed since the lessee returned the property. If the lessee has
paid more than 60 percent of the total of payments necessary to acquire
ownership of the property, the lessee's rights to reinstate shall be extended
for a period of not less than 180 days after the lessee has returned the
Subd. 2. Charges. As a condition to reinstating a rental-purchase agreement,
a lessor may charge the outstanding balance of any accrued payments; a
reinstatement fee not to exceed $5 for each reinstatement; and a delivery charge
not to exceed $15 for five items or less or $30 for more than five items, if
redelivery of the item is necessary.
Subd. 3. Substitute items. If reinstatement occurs as provided in this
section, the lessor shall provide the lessee with the same item, if available,
leased by the lessee before reinstatement. If the same item is not available, a
substitute item of comparable worth, quality, and condition may be used. If a
substitute item is provided, the lessor shall provide the lessee with all the
information required by section
HIST: 1990 c 527 s 7
325F.91 Prohibited practices.
Subdivision 1. Prohibited rental agreement provisions. A rental-purchase
agreement may not contain a provision:
(1) requiring a confession of judgment;
(2) authorizing a lessor or an agent of the lessor to commit a breach of
the peace in the repossession of property;
(3) waiving a defense, counterclaim, or right the lessee may have against
the lessor or an agent of the lessor;
(4) requiring the payment of a late charge unless a lease payment is
delinquent for more than two business days for a weekly lease or three
business days for a monthly lease, and the charge or fee shall not be in an
amount more than the greater of five percent of the delinquent lease payment
(5) requiring a separate payment in addition to lease payments in order to
acquire ownership of the property, other than by exercising an early purchase
option pursuant to section
(6) authorizing a lessor to charge a penalty for early termination of a
Subd. 2. Repealed, 1995 c 202 art 3 s 22
Subd. 3. Delivery charges; security deposits; collection fees. A lessor may
not charge a delivery charge that is greater than $15 for five items or less or
$30 for more than five items. A lessor may not charge a security deposit. A
lessor may contract for and receive a charge for picking up payments from the
lessee if the lessor is required or requested to visit the lessee's dwelling to
pick up a payment. In a consumer rental-purchase agreement with payment or
renewal dates which are more frequent than monthly, this charge shall not be
assessed more than three times in any three-month period. In consumer
rental-purchase agreements with payments or renewal options which are at least
monthly, this charge shall not be assessed more than three times in any
six-month period. A charge assessed pursuant to this subdivision shall not
exceed $7. This charge is in lieu of a late charge assessed for the applicable
HIST: 1990 c 527 s 8
Lessor's communications concerning lessee.
Subdivision 1. Location information. A lessor in communication with any person
other than the lessee for the purpose of acquiring information as to the
location of a lessee shall:
(1) identify the lessor and state that the lessor is confirming or
correcting location information concerning the lessee;
(2) not communicate with any person more than once unless requested to do
so by the person or unless the lessor reasonably believes that the earlier
response is erroneous or incomplete and that the person now had correct or
complete location information;
(3) not communicate by postcard;
(4) not use any language or symbol on any envelope or in the contents of
any communication that indicates that the communication relates to the
recovery or repossession of property; and
(5) not communicate with any person other than the lessee's attorney, after
the lessor knows the lessee is represented by an attorney with regard to the
rental-purchase agreement and has knowledge of, or can readily ascertain, the
attorney's name and address, unless the attorney fails to respond within a
reasonable period of time to communication from the lessor or unless the
attorney consents to direct communication with the lessee.
Subd. 2. Time and place. Without the prior consent of the lessee given
directly to the lessor or the express permission of a court of competent
jurisdiction, a lessor may not communicate with a lessee in connection with the
recovery or repossession of property:
(1) at the lessee's place of employment; or
(2) at any unusual time or place or a time or place known or which should
be known to be inconvenient to the lessee. In the absence of knowledge of
circumstances to the contrary, a lessor shall assume that the convenient time
for communicating with a lessee is after 8:00 a.m. and before 9:00 p.m., local
time, at the lessee's location.
Subd. 3. Authorized communications. A lessor may not communicate, in
connection with the rental-purchase agreement, with any person other than the
lessee, the lessee's attorney, or the lessor's attorney, except as reasonably
necessary to acquire location information concerning the lessee as provided
under subdivision 1, or upon prior consent of the lessee given directly to the
lessor, or upon express permission of a court of competent jurisdiction, or as
reasonably necessary to effectuate a postjudgment judicial remedy.
Subd. 4. Ceasing communication. If a lessee notifies the lessor in writing
that the lessee wishes the lessor to cease further communication with the
lessee, the lessor shall not communicate further with the lessee with respect to
the rental-purchase agreement, except:
(1) to advise the lessee that the lessor's further efforts are being
(2) to notify the lessee that the lessor may invoke specified remedies
allowable by law which are ordinarily invoked by the lessor; or
(3) where necessary to effectuate any postjudgment remedy.
Subd. 5. Harassment or abuse. A lessor may not harass, oppress, or abuse any
person in connection with a rental-purchase agreement. The following conduct is
a violation of this subdivision:
(1) the use or threat of use of violence or the criminal means to harm the
physical person, reputation, or property of any person;
(2) the use of obscene, profane, or abusive language;
(3) causing a telephone to ring, or engaging any person in telephone
conversation repeatedly or continuously with intent to annoy, abuse, or harass
any person; and
(4) the placement of telephone calls without disclosure of the caller's
HIST: 1990 c 527 s 9
325F.93 Early purchase option.
At any time after the first periodic payment is made, the lessee may acquire
ownership of the property by tendering 55 percent of the difference between the
total of scheduled payments and the total amount paid on the account.
HIST: 1990 c 527 s 10
325F.94 Claims and defenses.
An assignee of the contract or obligation relating to the rental-purchase lease
transaction is subject to all claims and defenses of the lessee against the
lessor arising from the rental-purchase lease transaction, notwithstanding any
agreement to the contrary.
HIST: 1990 c 527 s 11
liability damage waiver.
Subdivision 1. Liability of lessee. The lessee is liable for loss, destruction,
or damage of the rental property during the term of the rental agreement. The
amount for which the lessee may be held liable in the case of loss or
destruction of the property may not exceed the price that the lessee would have
paid to exercise an early purchase option. In the case of damage to the property
other than normal wear and tear, the lessee is liable for the price that the
lessee would have paid to exercise an early purchase option or the cost of
repair as reasonably determined by the lessor, whichever is less.
Subd. 2. Liability damage waiver.
(a) The lessor must offer a liability damage waiver to the lessee to cover
the lessee's liability for any loss, destruction, or damage of the rental
property. The cost of the liability damage waiver may not exceed ten percent
of the lessee's lease payment.
(b) The lessor must inform the lessee of the following options available to
the lessee regarding the property subject to a rental-purchase agreement:
(1) furnish insurance coverage on the property through an existing
insurance policy that is owned by the lessee;
(2) purchase insurance coverage on the property through any insurer
authorized to transact business in this state;
(3) purchase liability damage waiver coverage from the lessor; or
(4) decline to furnish or purchase insurance coverage or liability damage
HIST: 1990 c 527 s 12
325F.96 Exempted transaction.
do not apply to agreements for the rental of property in which the person who
rents the property has no legal right to become the owner of the rented property
at the end of the rental period.
HIST: 1990 c 527 s 13
325F.97 Penalties and remedies.
Subdivision 1. Disclosure penalties and remedies. A lessor who is found to have
subject to the penalties and remedies provided in section
Subd. 2. Application of other law. A violation of section
shall be treated as a violation of section
remedies provided by section
cumulative and shall not be construed as restricting any remedy that is
Subd. 3. Offsets limited. A lessee may not take any action to offset any
amount for which a lessor is potentially liable under this section against any
amount owed by the lessee, unless the amount of the liability of the lessor has
been determined by a judgment of a court of competent jurisdiction in an action
in which the lessor was a party. This section does not bar a lessee in default
on an obligation arising from the rental-purchase agreement from asserting a
violation of this chapter in an original action, or as defense or counterclaim
to an action brought by the lessor to collect amounts owed by the lessee
pursuant to the rental-purchase agreement.
Subd. 4. Lessor's right to correct error. A lessor is not liable under this
section for a violation of sections
within 60 days after discovering an error and before an action for damages is
filed against the lessor pursuant to this section or written notice of the error
is received from the lessee, the lessor notifies the lessee of the error and
makes adjustments to the account of the lessee that are necessary to assure that
the lessee is not required to pay an amount in excess of the amounts actually
disclosed. This subdivision applies whether the error was discovered through the
lessor's own procedures or by any other means.
Subd. 5. Limitation of liability. A lessor is not liable under this section
for damages in excess of the actual damage sustained by the lessee if the lessor
shows by a preponderance of the evidence that the violation of sections
resulted from a bona fide error notwithstanding the maintenance by the lessor of
procedures reasonably adopted to avoid the error. As used in this subdivision,
"bona fide error" includes, but is not limited to: clerical, calculation,
computer malfunction and programming, and printing errors.
HIST: 1990 c 527 s 14