Companies who notify lessee in advance of lease expiration These companies do not use language to confuse, perhaps to deceive, with the result an automatic continuation for an additional twelve months of payments. They do not invoke the twelve months on a $1.00 purchase option or an Equipment Finance Agreement. In its editorial of June 30, 2011, Leasing News recommends that the equipment lessor send a certified letter with return receipt; however, at this time, the acceptance of the word of the president of the company will be accepted until proven otherwise. http://leasingnews.org/archives/Jun2011/6_30.htm#editorial
A -Accepts Broker Business | B -Requires Broker be Licensed | C -Sub-Broker Program
We do not do Evergreen leases. Although our leases do not have a provision for renewals we do offer a 6 to 12 month fixed term renewal to our lessees when they reach the end of term if they have paid well or if the P.O. is a fairly sizable amount. At the end of the renewal term they own the equipment for $1.00. The actual end of term option is to purchase for 10% plus other taxes and assessments then due or return the equipment. Our lessees have been very receptive to our renewal option and we always notify lessees at least 30 days in advance of lease end.
We do not have an Evergreen Clause in our lease contracts and always inform the lessee in advance about the expiration date of the lease.
We do use an “evergreen clause” in our master lease, but we proactively communicate with our clients prior to the end of the lease term regarding their purchase options. Most of our leases have a fair market value purchase option with a cap and it is important for us to reach agreement with the client on a purchase price prior to the termination of the lease schedule. (All of our clients have multiple schedules under their master lease, so they are familiar with our process.) We have had a few clients choose to extend on a moth-to-month basis and we always credit those payments to the purchase if and when they buy the equipment. We also allow clients with a good payment history to pay their buyout over 6 to 12 months if they prefer to. In our business of leasing technology equipment which is deployed in thousands of locations, the evergreen renewal is an important tool only in the event that a client says they will not buy the equipment and they will not return it in working condition.
"On a $1, EFA, Put, or lease with a fixed purchase option under 10% of original equipment cost, we do not do automatic renewal. On true operating leases we also always notify lessees of a residual due."
----------------------------------------- Banclease Acceptance Corporation "The 10% residuals we write are PUT’s which the lessee has to pay/ contractual payment w/ no payment continuation if they miss the date. They are just required to pay the PUT. The pure FMV’s leases we write are just that: pay the then FMV, return the equipment or re-lease for a reduced amount agreed upon by both parties/ not evergreen/ no automatic payment continuation. Most of the FMV leases we write are $1MM+ w/ negative stream rates to large hospitals for tier one medical equipment, who typically return the equipment @ the end of term. "We are always fair with our lessees & try to notify them on all $1.00 out; however if they miss the day we still honor the $1.00 out. Executing/ enforcing an evergreen clause on a $1.00 out lease in our opinion is just wrong/ unfair."
“I noticed your mention of us with respect to ‘End of Lease Option’ notification. All but 8 of our 2,505 contracts are full payout. When we occasionally write a residual based contract we call the customer 90 days prior to lease expiration for direction on disposition. Scott Hastings
Bankers Capital’s policy and procedure at the end of the Lease term is to bill for the residual assuming there is no continuing default and the Lessee has satisfied its Lease Obligations. We either get paid or we will even work with them to stretch it out over a few months for cash flow reasons. We only do true Leases and do not do 1.00 out Leases. So we do notify all Lessees. We would rather have repeat business with a new Lease than a pissed off customer with renewal payments for who knows how long. Our Lease documents do state that they either return the equipment, purchase the equipment, or if they choose neither, then the Lease will renew automatically month to month. We prefer that they exercise their purchase option and we try and make it easy for them to do that. Side comments to Lessors who insist on Evergreen clauses and deceptively collecting on them: IF you can’t get your yield on the stream plus the intended residual, Don’t Bait and Switch to get it. That is what gives our industry and Lessors a bad reputation. If you keep it up, it won’t be long before we become regulated. When that happens, it will cost you more to stay in business under those regulations and you will make less money in the long run. And guess who will regulate you???
"Bank of the West Indirect Equipment Finance offers both broker and discounter programs. None of our broker products have evergreen renewals. The only broker product that has renewal period is the PRO Lease: after the initial term the customer has the option to purchase the equipment or renew for a pre-defined 12 month term (this is not an evergreen renewal). We do notify all PRO lease customers of their options in writing in advance of the end of the initial term. Our discounter program typically involves purchasing all the remaining payments in the initial term and sometimes purchasing the residual/balloon payment. We service our discounter transactions including billing and collecting, then after all the assigned payments have been received, we re-assign the transaction to the discounter and cease billing and collecting. If the discounter were to seek renewal payments the lessee would need to be notified by the discounter because we will not bill and collect for any renewal payments." "We do not have a requirement in our Discounter Agreement that a discounter notifies the lessee that it is going into automatic renewal. Practically speaking the lessor would need to notify to lessee in order to collect any more payments. I will note that annually we review and re-approve our discounters to do business with us; any complaints of abusive practices or other problems would likely result in termination of the relationship."
First we don't have a discounting program. We do however allow a broker to "own" the residual. But we only allow transactions to be documented using our document which does not contain an evergreen clause. BSB Leasing, Inc. generally does not take a residual position in the leases we write for our own portfolio. We either write $1 purchase options or PUTS. We do not have an evergreen clause in our lease or EFA contracts. In the rare event that we do take a residual position we do notify the client when the agreement is coming to term and a residual is due.
They are in fact notified in that we will not only invoice them if notification is not received and also we call them
“Since the inception of Capital Technology & Leasing, LLC (CT&L) in 1998 we have always sent a 180 day notice to all of our lessee's reminding them that their lease would expire. I believe it is better not only for lessee planning, but lessor planning to operate in this manner. It also gives me time to offer buyouts and extensions.”
Also, I have to say that I'm surprised by your asking about this issue as every one of Cobra's clients have diligently dissected our ELA upfront and immediately object, (BEFORE they sign our lease), to ANY provision of our lease that they deem unacceptable. Therefore, we don't experience the same "surprise" documentation element that apparently your readers have expressed to you.
"We do offer discounting as well as brokered transactions, and we have approved some Lessor documents for discount. But if we aren’t willing to accept a Lessor’s specific Lease or EFA documents we have a complete set of own “generic” documents they can use. However; our documents do not have any Evergreen, Wintergreen or any other form of renewal or extension provision language." "Whoever discounts to us either has it in their document or gives us a written statement that they inform lessee in advance about the end of their contract, and don't abuse Evergreen clause."
"Dakota never has and never will write an evergreen clause into our leases. One of the great things about our program is that our purchase option is actually already calculated into our lease quotes (with the term residual structure) so that customers know from day 1 exactly how much they will pay to own their equipment at the end of the lease." Mae G. Philpott
We do not renew leases and let the customer know they need to elect their end of term option within 30 days. Beer is selling well!
"I wanted to describe FinPac’s policy regarding 'evergreen clauses' and advance notice on true lease structures. On transactions where FinPac holds an FMV residual position, our documents do not include an evergreen clause and thus we do not enter the contract into a renewal period. In these cases we simply bill and collect a onetime residual. Some of our lessor partners utilize our generic document feature which also doesn’t include any sort of evergreen provisions. In the cases when we purchase discounted transactions on another lessor’s documents, FP does not own the residual (if any) and we reassign our interest back to the lessor after we have been completely paid the initial rental stream. "We make sure all discounted documents comply with the laws of the particular jurisdiction. Therefore they must comply with any State laws regarding notice requirements in the event of a true lease. We encourage all documents to contain some reasonable notice provision as the best practice regardless of a particular State requirement. In the very rare instances that an FP lease results in a dispute between the lessee and original lessor over the residual position, we will work very closely with the lessor to make sure the customer is treated fairly and ethically. The circumstances of residual valuation can vary widely and deteriorate into heated negotiations. Our position is that such negotiations should never get to that level in the best interest of good customer relations and the reputation of FP, the lessor and our industry."
“We send written notice of the impending maturity to all true leases in all states. The current FPC contract calls for notice 120 days prior to maturity. In anticipation of this, we send out certified letters to lessees notifying them of the end of the lease 180 days prior to the contract maturity. "We handle 10% the same as a $1 buyout. We do not require notice because we assume the customer will purchase the equipment for the stated purchase option, so we would just invoice them at the end of the lease."
Let me first start out by giving you my opinion on other leasing companies that use them as additional revenue when the Lessee has a $1 buyout or a bargain purchase option. It's none of my concern. I don't tell other companies how to run their business. I would hope that those types of practices will catch up with them with their vendors and the lease brokers that they do business with. At Forum, we do have an "evergreen clause" in our lease documentation. Not sure where the term "evergreen clauses" came from. We simply negotiate with each Lessee and on each different Lease a notification period. It is imperative that we have that negotiated up front so both parties know what to expect at the end of lease. Keep in mind, we write leases almost exclusively for "tough" credits in the $100,000-$1,000,000 range. They are almost all True leases. All of our lease deals are full financial disclosure and we deal with sophisticated Lessees that have Legal review the documentation. We do not hold any "App Only" lease paper and do not lease to small businesses. Most of our leases are for high residual equipment. Because we deal in "tough" credits, most of the time when we come to end of lease they do not have the resources to purchase the equipment so we work out an extension term and rate for them. Most of this equipment has 2-12 month availability. We are kind of unique in that some of our Lessees are worried we will terminate the Lease, and they want plenty of time to plan for any change of equipment. We actually did a lease two years ago (48 month term) where the equipment had an 18 month availability. There are two years left on the Lease, but we are already in negotiations on the extension/refinancing of the lease. We have had some Leases go month to month as the Lessee needs time to figure out what they want to do. Because the equipment has a relatively high value and is depreciating while on month to month, the Lessee is getting fair value. Use of a depreciating asset while they have the flexibility of renting it. As a Lessor, we need time to remarket equipment that comes off lease. Time is money when you have a depreciating asset that can take 60-90 days to negotiate with a wholesaler and have the equipment moved for sale. Having a 60-90 day notification is the minimum we can agree to on high residual equipment. It's very unusual for us to do a $1 buyout lease or a bargain purchase option lease. It does not work for the credits we write leases for. The few that we have done over the years, we notify the Lessee and provide them with the agreed upon buyout. We have been in business for over 20 years and have a very good reputation for keeping commitments and doing what we say we will do. John Caulfield
I can tell you that I do notify the client when the lease is coming to an end, and I do NOT require notice from them. I have never invoked the extra payment rule of Evergreen since I have been in business.
Innovative Lease Services, Inc., Carlsbad, California "ILS notifies our Lessees regarding any residual, and always in advance of any month-month renewal. We don’t evergreen for a longer period but if there is no exercise of purchase option, then the rental reverts to a monthly extension." Lease-$mart, Oro Valley, Arizona
"We have our own portfolio of leases on which we ALWAYS notify our Lessees of their upcoming lease-end and give them options for purchase or renewal at a reduced rate. The renewals are invoiced every month INCLUDING A REMINDER that the minimum term has been satisfied and they can purchase at any time. We do not use any automatic 12-month renewals, nor any similar 'gotcha' clauses. "In addition, we make great effort to monitor our various brokered transactions to make sure that they do not blindly go into a continuing rental, unless the Lessee specifically intends for that result. Our transaction management system alerts us to follow up with our Lessees 3 to 6 months before the scheduled lease termination date so that OUR clients are not subject to this abuse by unethical lenders. "I have personally spent countless hours and fought hundreds of battles on behalf of my Lessee-customers to make sure that they get what they were promised. We always keep every approval, every quote and every signed document in connection with our leases, so that we always have proof in support of our clients claims for $1 purchase options, or other fixed-price residuals. This is key, because our Lessee customers don't always have perfect record-keeping and filing systems. I estimate that simply having complete documentation in our archives has saved our customers in excess of $100,000 in abusive assessments by Lessors who are lacking in moral conscience and basic business ethics. They sometimes attempt to take advantage of the unsuspecting good businessmen and women we work with, but we come prepared - armed with the facts of the transactions - and the 'tickler' system to protect our customers from their schemes. "We strongly support what you and Leasing News are doing to shine a light on this unethical practice which blemishes our entire industry. Keep up the good work! " -- ----------- “I've recently noticed that you are maintaining a list of Lessors who notify clients of lease maturity and residual/renewal amounts due. Please add our name to that list. We have consistently, over forty plus years, "noticed" our clients about residual or renewal options, six months in advance of maturity dates and are proud of our unblemished reputation within and outside of our client portfolio. Thanks for maintaining this important list of credible Lessors.” Daniel W. West
When our leases are up, they are up. No extra billing(s).
We like to keep our customers happy – and coming back to do more business. Consequently, most of the leases which we originate automatically renew on only a month-to-month basis -- typically with 60- or 90-day notice being required in order to cancel the ongoing month-to-month renewal. In the case of leases that have longer automatic renewal terms (generally 6 or 12 months), we typically do notify our lessee of the upcoming renewal -- especially since we are generally pro-active with all of our lessees in discussing their end-of-lease options. In the case of “$1-out” leases, we often waive formal exercise of the $1.00 purchase option by the lessee -- absent extenuating circumstances.
While we have an Evergreen clause, it is not our intention to rollover the lease and we are in
Mesa Leasing does not have an evergreen clause in our contract. We do have a clause that says
We primarily do loans but we use equipment finance agreements on occasion for smaller ticket transactions. I personally do not use evergreen clauses and never have, at least not in the last 20 years.
We/I do not advocate the “Evergreen or Wintergreen Clause.” The majority of our transactions are $1.00 option leases and we DO NOT continue to bill monthly payments after the last term payment has been made. If there is a residual due, we DO notify lessees in advance via invoice for the residual amount.
A -Accepts Broker Business | B -Requires Broker be Licensed | C -Sub-Broker Program We do very few true leases and none have come to term. We will notify our customers, it is required in some states and it is a good business practice.
We send billing statements every month. We have a signed Residual Agreement the day
1. P&L Capital has always had an A+ rating with the Better Business Bureau. We are proud to say we have not had a single complaint since our inception in 1996. 2. I have attached our letter of intent for our Technology Rotation Lease. Our goal is to help our clients with their next technology rotation, but also, we want to know what’s coming back so we can presell our inventory. The letter is sent, along with several phone calls starting with sales, and then admin. If we get notice of intention on day 89, or even day 30, we do not put our clients into renewal even though we could. As long as communication is present, we work with our clients. We do have equity in these deals, so we need resolution to be made whole. Month to month is our only renewal option, we do not automatically renew for a certain period of time unless its requested by the customer. 3. Our broker business is 70% $1.00 out and we are funding mostly small ticket with a variety of equipment types and industries. We doc and we don’t discount so we control the back end. The end of option form is included in all our deals for signature. Once the term is up, the deal is done. Tim Mathison
Pacifica Capital does not have “Evergreen language” included in our lease documentation. We have a very specific procedure when dealing with our customers regarding end-of-term options. We contact every lessee approximately 60 days prior to the expiration of their lease. At that time, we explain the option ($1.00, 10% or FMV) and offer them payment terms on the residual if they need them due to cash flow restrictions. Although our documentation allows for continuation of the lease on a month-to-month basis, the only time we continue billing at term completion is if we are in negotiation with the customer regarding the option and the residual amount has not been set…
We do not discount with anyone so that's not an issue; everything is on our docs.
Southern California Leasing, Inc.,Tustin, California "We also give our customers a letter 90 days in advance that their residual is coming up. We contact each customer even when we broker the deal to alert them to contact the lender. "We just had a client with US Bancorp that was being billed even though his lease was up. The lessee did contact us because he received our letter in the mail and when we called they said it was a mistake and he did not owe any more payments."
“As policy we notify the lessee of their options 90 days in advance of their lease term ending. We give them the last 60 days of their term to respond with their intentions. Should they fail to reach a decision or fail to respond to our request for end of term resolution we continue their contract on a month to month basis. This continues until they arrange a satisfactory termination or the FMV residual is satisfied. “The same applies to our Vehicle Trac Lease program.” Bob Underwood
Stoddard & Associates, Los Angeles, California "Early on, when I was not an independent broker, I worked for a lessor that sometimes offered an extension option on the lease, especially since the majority of what we were doing were fmvs and the client often needed that extra quarter (or even a year) to decide and/or trade in/return equipment. I always told the client to calendar any end of term provisions; however, I carefully calendared all this at my end as well. It was often a challenge to track down the person responsible for taking action, but I made it a point to do so. I never had one problem as a result. "I carried this process over when I started Stoddard & Associates in 2002. And, I've gone to bat for clients with other company's leases who may have had a problem when slipping a deadline on notification. It's not rocket science. Simply make sure your customer is aware of the contract stipulation, as some of them will not pay attention. Then, safeguard your client by keeping a follow-up so nothing falls through the cracks." Sonia von Matt Stoddard, BPB
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