What's happening
This bill amends the personal property law to allow courts to award reasonable costs and attorney's fees against loan assignees.
Why it matters
Empowers consumers in legal disputes. By allowing courts to award reasonable costs and attorney’s fees against loan assignees, the bill makes it less financially risky for consumers to pursue or defend claims, potentially leveling the playing field in disputes over retail installment contracts.
Deters predatory practices by assignees. The threat of having to pay a consumer’s legal fees may discourage loan assignees from aggressive or unfair collection tactics, knowing they could bear additional financial consequences if they lose in court.
Clarifies liability limits. The amendment specifies that the existing cap on an assignee’s liability does not include court-awarded costs and attorney’s fees, ensuring consumers can recover these expenses in addition to any damages or claims, which could influence settlement negotiations and litigation strategy.
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Who cares
Headline styles
Limit Car Loan Assignee Liability
Plain English, a few words. Used as the page title.
Sponsors
1 Co-sponsor
History
- Signed chap.487
- Delivered to governor
- Returned to senate
- Passed assembly
- Ordered to third reading rules cal.418
- Substituted for A8098
- Referred to codes
- Delivered to assembly
- Passed senateVote 46–17
- Ordered to third reading cal.1638
- Reported and committed to rules
- Referred to consumer protection
Companion bill
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Limit Loan Assignee Liability
Assembly Floor Calendar · Sponsor Brian Kavanagh
Full text
1 pageUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
5152
2017-2018 Regular Sessions
IN SENATE
March 9, 2017
Introduced by Sen. SAVINO -- read twice and ordered printed, and when printed to be committed to the Committee on Consumer Protection
AN ACT to amend the personal property law, in relation to loan assignees
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Subdivision 9 of section 302 of the personal property law, as amended by chapter 643 of the laws of 1978, is amended to read as follows:
9. (a) No retail instalment contract shall contain any provision by which the buyer agrees not to assert against an assignee a claim or defense arising out of the sale or require or entail the execution of any note or series of notes, which when separately negotiated will cut off as to third parties any right of action or defense which the buyer may have against the seller. The assignee of a retail installment contract or obligation shall be subject to all claims and defenses of the buyer against the seller arising from the sale notwithstanding any agreement to the contrary, but the assignee's liability under this subdivision shall not exceed the amount owing to the assignee at the time the claim or defense is asserted against the assignee.
(b) Limitations on assignee liability referred to in paragraph (a) of this subdivision shall be exclusive of any reasonable costs and attorney's fees the court may award.
§ 2. This act shall take effect on the first of January next succeeding the date on which it shall have become a law.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD03767-01-7
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the personal property law, in relation to loan assignees
Purpose
This bill slightly increases liability on loan assignees in automobile financing transactions by providing that plaintiffs who prevail in cases against assignees in automobile transactions may be entitled to attorney's fees exclusive of caps on assignee liability, at the court's discretion.
Summary of provisions
Section 1: Amends Subdivision 9 of section 302 of the personal property law to specify that attorney's fees are exclusive of any cap on suits against loan assignees, and authorizes courts to award attorney's fees in these cases to prevailing plaintiffs.
Section 2: This act shall take effect on the first of January next succeeding the date on which it shall have become a law.
Existing law
Under current law, assignees generally have their liability capped to the buyer's amount owing to the assignee.
Justification
In many cases, consumers are defrauded by auto dealerships who create fraudulent loan applications stating false income levels or employment histories. Consumers are then stuck with auto loans they could have never been expected to afford and must then sue auto dealerships to become financially whole. In some cases, dealerships close their doors and default on these obligations, and lenders associated with the dealerships turn a blind eye to this fraud and consumer abuse.
Banks and lenders in automobile transactions have heavy involvement in creating the terms under which these contracts are executed, and enable dealers to transact business by providing routes of financing. Even though they are technically assignees because the dealer executes the financing contract, the dealer very quickly sells the note to the assignee, and the banks and financing companies are de facto lenders in these transactions. Lender liability is limited under the assignee rule in the Motor Vehicle Retail Instalment Sales Act. Thus, consumers are left to recover from dealerships (who sometimes shut their doors or default), even when, in some cases, lenders are complicit with fraud. By making attorney's fees exclusive of the normal cap on assignee liability, consumers will be able to access legal counsel in more cases where auto dealers have engaged in fraud, and banks that purchase auto loans will be more careful about monitoring lending practices and the legitimacy of loan applications. Due to increased liability, lenders who are aware of and complicit with auto loan fraud will now have a strong disincentive to continue working with abusive and predatory dealerships.
Legislative history
2015-16 Session - new bill S.5506 - passed Senate both Sessions
Fiscal implications
None.
Effective date
This act shall take effect on the first of January next succeeding the date on which it shall have become a law.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.