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Commitment Forms
The dollar size of the lease proposal often dictates the details and length of the commitment letter. In small ticket lease, the actual lease payment is often given and calls for the first and last as well as the documentation fee. Often a clause contains a "documentation" fee for $495.00, which is non-refundable if the lease is not approved. The wording is different and seems to be buried and whether written originally by an attorney or taken from the use of another leasing companies form is not known. According to ex-employees as well as complaints that have appeared in Leasing News, many companies get such proposals signed in advance knowing they will be unable to proceed with the lease due to the nature of the equipment or the proposed lessee telling them of their credit difficulties in the presentation or from running a consumer credit report. In larger ticket size leases, often a form such as this is used, which specifically charges a fee to process the application: http://two.leasingnews.org/loose_files/Lease_app_agreement.rtf Loans or “Working Capital” commitment letters are explicit and require the broker to often be licensed. This form is for use in California: http://two.leasingnews.org/loose_files/Authorization_to_find_lender.rtf This form is one of the most widely used in the leasing industry for leases $50,000 and above and covers most of the bases. Note: Last sentences about the signatures makes this more a “proposal,” than commitment. If required, these sentences may be removed. http://two.leasingnews.org/loose_files/Generic%20commit%20Letter.DOC It is a good idea to have the form you use reviewed by an attorney with equipment leasing experience. This does not mean your college friend who became a lawyer. You wouldn't take your children to an Endodontist to get braces on their teeth, although the practitioner is a "dentist." The same with going to an attorney. You don't go to a divorce attorney to go over a lease commitment contract. Some things to consider in your form. #1: ACH---If you are going to require it or may require it, you should have this spelled out in the agreement. If not in the contract and becomes a requirement of the lease, the proposal is invalid. #2 Date---It is a good idea to have a time period involved, and perhaps if not approved, from completion of all the documents and/or lease contracts. A prospect can back out after 30 days and bring this up in small claims court, unless spelled out the time begins after all documentation is complete ( attorneys will have different opinions on this and its wording, but the complaint may make it into Leasing News when it takes months before anything happens.) #3 Personal guarantee--of all officers who own 10% or more of a privately held corporation. (This will protect if the final approval comes in with terms and conditions, but requires other guarantors who are not named on the application or in the proposal.) This form was developed by Ken Greene now at partner at Hamrick & Evans, LLP, Universal City, California, with offices also in Northern California. http://www.leasingnews.org/Conscious-Top%20Stories/Greene_Lease_agreement.htm To Contact Ken Greene:
Kenneth C. Greene, Partner Northern Office:
The form makes it a contract between both parties, and is not one sided as appeared in this Leasing News Bulletin Board Complaint:
from this Leasing News Bulletin Board Complaint:
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