§1667b Lessee’s liability on expiration or termination of lease

Summary

If a consumer lease makes the renter owe money at the end based on an estimated residual value, that estimate must be a fair guess of what the item will be worth when the lease ends. If the estimate is more than three times the lease’s average monthly payment above the actual value, the law treats the estimate as unreasonable and not made in good faith. The leasing company cannot collect that extra amount unless it sues and wins. If there is a lawsuit, the company must pay the renter’s reasonable lawyer fees. The rule does not apply when the difference is caused by damage beyond normal wear, or by excessive use, and the lease may set reasonable wear-and-use rules. A renter and company can still agree to a different final amount after the lease ends. Late fees, default charges, or early-termination penalties can be in the lease, but they must be reasonable based on the harm, proof problems, and whether other fixes are impossible. At lease end, the renter may pay for an independent professional appraisal agreed to by both sides; that appraisal is final and binding.