Companies who notify lessee in advance of lease expiration
These companies do not use language to confuse or deceive, resulting in an automatic continuation of the lease 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 recommended that the equipment lessor send a certified letter with return receipt. A program such as DocuSign is added as another new recommendation. A -Accepts Broker Business | B -Requires Broker be Licensed | C -Sub-Broker Program
Balboa sends 9 months notification of impending lease renewal; it is highly instructive and detailed via regular mail and email Balboa also sends out a follow up 90, 60 and 30 days notification, again detailed via email and via bold notice contained on each invoice for payment The end of lease folks were changed 1 12/2 years ago, from customer service to “professional end of lease folks” that report directly to me, they are no longer rewarded or compensated based on getting “More than the booked residual” or “additional renewal rentals”, they are simply salaried staff who are focused on end of lease professionally and measured on “accounts Closed” without incident. - Robert J. Rasmussen, COO ----------------------------------------- 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."
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???
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.
“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.”
"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."
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."
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, Ocala Florida
"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! " Sincerely,
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. (Microfinancial)/TimePayment, Burlington, Massachusetts
"We notify every lessee – regardless of their contract type - FMV, Lease to Own or $1 out of the coming end of their lease term, and do not include an evergreen clause in any of our contractual agreements."
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.
A -Accepts Broker Business | B -Requires Broker be Licensed | C -Sub-Broker Program “NewLane Finance is a values-based organization. With a tagline of “Business Lending Done Right,” we are committed to a fair and honest lending experience. Our fees are fully disclosed through our plain English agreement, we do not include an evergreen clause, and we provide a 7-day payment grace period. We understand that the foundation of our success and relationships are built on a fair and transparent process.”
North Mill Equipment Finance Norwalk, Connecticut Additionally, in the case of a TRAC or FMV lease, we do not ACH or bill the residual to the customer at the termination date. Instead, we take the important step of providing a written notice 90 days in advance of the termination date to let the customer know the options available. Should there be no response to our written notice, we continue to reach out to the customer until we make contact. At that time, we’ll either agree to accept payment for the residual or work out a payment plan if a lump sum is not affordable. If we don’t get a response, we will make every attempt to reach them, skip trace and contact the broker and as a last resort, we may repossess if a customer is unresponsive. Joe Littier
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 don’t notify, but neither have we ever auto billed renewal payments or an unexpected residual. "We do our own billing/collecting. We indicate payment number on invoice so they know when term is approaching end."
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."
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