Leasing News is getting more complaints about interim rent charges as well as Evergreen Clause extra payments. Our role is to verify the information, go over the contracts and correspondents, often discussing with one of the attorneys listed on our "against Evergreen Clause abuse." Often they believe the salesman when he said it was a $1.00, they claim. There is no documentation, the salesman is no longer around (in the times a salesman is found, none have remembered the lease) and more importantly, on the face of the contract it says "Fair Market Value" or there is no purchase option document. What they don’t often know is whether the salesman shares in the “interim rent” and “residual” as additional commission.
Now before you say, “the lessee should have read the contract before signing it,” there are many leasing companies who have a side letter that states "fair market value" is $1.00. They say this is done for "tax reasons" as the purchase option can't appear on the contract. Or sometimes the original proposal says "fair market value" as does the contract, but the lessee says he was told by the salesman it would not be very much at the end. “This is done for tax purposes.” I have heard this from small machine shop owner to a CFO and President of a 50 truck shipping company. And then there is Shopko with 300 stores nationwide.**
Interim rents are always brought up, especially in the larger lease transactions when the CFO discovered they are not “lease payments.”
Recently, there have been complaints from brokers not being paid their commission. They are often difficult to document and lessees don't want to get involved or the broker doesn't want to get the lessee involved. We have one right now involving a bank not wanting to pay for a portfolio purchase, arranged by a broker in business for 18 years.
There are also complaints from discounters about regulations, rules, and filling out annual reports to get a license to conduct leasing and finance business in a state. “Why do I have to do this?” “We don’t need more regulations!”
* Complaints Bulletin Board
** Balboa Capital and Shopko Settle Their Much Litigated