I appreciate your inquiry regarding ELFA opposition to Wisconsin Senate Bill 212 and the association position on automatic renewals. ELFA has not taken a position on automatic renewal clauses, except in the context of commenting on proposed legislation such as this bill in Wisconsin .  In this instance, Wisconsin Assembly Bill 432/Senate Bill 212 would apply to commercial equipment leases specified notice requirements adopted from landlord-tenant statutes in the consumer sector.  ELFA members engage in business-to-business transactions financing equipment.  This legislative proposal would intertwine their commercial contracts with inappropriate statutory concepts relating to real property. 

Objecting to a bill often means certain provisions are unacceptable.  ELFA opposes the application of real estate statutes to business personal property leases.  The two transaction types vary widely.  For example, the number of leases and the dollar amount of the lease payment varies significantly from a real estate contract.  A lease for a single computer may have a lease payment of $100, whereas a real estate lease could have a payment of several thousand dollars.  In addition, a leasing company may have upwards of 20,000 leases, whereas a real estate agent would be limited by the number of buildings owned. 

The aforementioned explains why ELFA objected to the provision requiring notice by certified mail.  The cost is over $4 per letter, and requires time-intensive processing.  A lessor can have several hundred extensions per month.  This section of the legislation taken from landlord-tenant statute do not take into account the difficulty of completing the invoicing process within a tight notification period or take account of  a lessee that may make quarterly or annual payments.   Additionally, a customer with automatic withdrawals will not receive an invoice.  This legislation would require notice must be “at least 15 days but not more than 45 days before the deadline”.  Often, the lessee will need to go through a lengthy approval process to determine if the contract should be extended or not.  Additionally, the lessor needs time to review the sale, extension, or return option the lessee chooses. 

ELFA must examine each legislative proposal separately as sponsors insert draft language reflecting their individual objectives.  In this case, ELFA is responding to legislation that would incorporate landlord-tenant doctrine applicable to residential property into commercial contracts based on the Uniform Commercial Code, which is an inappropriate convergence of unrelated concepts. The resulting hybrid could pose difficult questions when seeking to determine specific applications to commercial transactions involving tangible personal property.  This confusion is heightened by lack of a provision that would clarify that this legislation would only be operative to contracts entered into after the effective date of this legislation.

Once again, I appreciate your inquiry relating to ELFA opposition to automatic renewal legislation introduced in Wisconsin .

Dennis Brown

Equipment Leasing & Finance Association