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Readers on “Evergreen Leases”

Bob Robichaud, CLP

“Congratulations on a great article. I totally agree with Barry Reitman.

Hopefully every "scrupulous" lessor and broker will read it and also agree, and (in a perfect world) will then amend or have their lessee strike those unnecessary sections from their lease documents.”

Bob Robichaud, CLP

Regional Commercial Credit Sales Manager
PFF Bank & Trust
17851 17th. St.,
Tustin, CA 92780-2124
Tel: 714-730-1672
Fax: 714-505-9287
Mobile: 909-238-0392

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Charlie Lester

“I have never written one, never will and I think brokers and funding sources that do so in anticipation of shafting the lessee at the end of the lease term. I would also give you 10-1 odds these brokers and funding sources never give their lessees a warning as the lease term end approaches.

“These sources count on the fact that most lessees do not know the exact date of lease termination and the small print hides the fact that they must make formal notification to the lessor or the lease automatically renews. If the lessee was making an informed decision to renew, the Evergreen renewal would be an ethical business agreement. Unfortunately, the most common use of the Evergreen provision is to screw the lessee for missing the small print.”

Charlie Lester
cel3245@mindspring.com

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John Winchester, CLP

“Our lease document says that you are to notify if you are to exercise your purchase option. We however have never enforced that clause in the last 20 years. I think it is short sited for a leasing company to use that clause to increase profits.

“We seldom book residuals so what ever we get is a bonus and who would loose a customer over a few thousand dollars. I would say we have 65% of our business through repeat and referral business. You can't do that by playing games at your customers' expense.”

Always
jwinchester, CLP
JWinchester@comcolease.com

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Paul R. Knowlton, CLP

“BWC Equipment Leasing does have a 90 day notification period which rolls into a monthly renewal if notification is not received. The realty is that we write mostly $1.00 buyouts and we would never put a bargain purchase into a monthly renewal. We want to do repeat business with our clients and find that contacting them near maturity is well received and appreciated. Most of the time they want to keep the equipment anyway.

“We have found that managing our "back end" in this manner provides us with more future income than the residual gained. We have also been able to sell against these clauses when faced with them in the market.”

Paul R. Knowlton, CLP
President, BWC Equipment Leasing
knowlton@bowc.com

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Gary Saulter

“An Evergreen clause is something we are very passionate about at Chase Industries. I believe we are one of the few finance companies that not only lists our lease documents on our website, but under our ethics tab, explain in detail how interim rent, evergreen, forced insurance, and blanket liens all work. We know of large leasing companies that actually evergreens a put! We hold some of our paper and discount other transactions, all on our paper. If we broker a transaction on other companies' documents we require them to take out interim and evergreen verbiage. We also monitor end of lease terms on all deals just to make sure our banks are playing fair. We have caught a few of them sneaking in both practices.

“Corporate greed is very much alive in the good ol' USA! “
Gary Saulter|President
800.968.5000 | fax 616.459.6822| gsaulter@chaseindustries.com
Chase Industries, Inc. | 109 Ottawa Avenue| Grand Rapids, MI 49503 |
www.chaseindustries.com

"Evergreen Info"
http://leasingnews.org/PDF/Evergreen_Clauses_Info.pdf

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Mohammed Ahsan

“Generally we do not get involved with Evergreen Leases. Our typical transactions are either $1.00 buy out or FMV. Our doc is straight forward and we never had any issue with the lessee on window of notification problem. I do know that few lessors make a big deal on this window period and try to take advantage of the situation. To protect our good reputation, we do not want any hassle with lessee and we would like them to come back as a happy client.”

Thanks,

Mohammed Ahsan/Quail Capital
mahsan@quailcap.com