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Lesson 3:
Vehicle Repairs, Sales, & Leases


§3.16 Vehicle Leasing—Actions for Relief

Remedies:  A lessor who fails to comply with any requirement imposed under CC §2985.8 (lease contract contents) or §2988 (reasonable, good faith approximation of vehicle’s residual value) is liable to the lessee for [CC §2988.5(a)]:

  • Actual damages;
  • Twenty-five percent of the total amount of monthly lease payments, but not less than $100 or more than $1000; and
  • Costs and reasonable attorney fees.

The lessee is entitled to only a single recovery even for a lessor’s multiple failure to disclose required information, but if the lessor continues to fail to disclose after a recovery has been granted, the lessee is entitled to additional recoveries. [CC §2988.5(h).]

Once the lessee obtains a judgment against the lessor, the lessee may offset the amount recovered under CC §2988.5(a)(2) (25 percent of total payments, between $100 and $1000) against any amount still owing to the lessor. [CC §2988.5(f).] If the lessor fails to comply with CC §2985.8 (lease contract contents), the lessee may also elect to rescind the contract if the violation was willful, or if the correction will increase the contract amount, unless the lessor waives collection of the increased amount. [CC §2988.7.]

If a lessor breaches the contract and the lessee has left the vehicle with the lessor as a trade-in downpayment and the lessor fails to return the vehicle, the lessee may recover from the lessor either the fair market value of the vehicle or its value as stated in the lease contract, whichever is greater. [CC §2986.13(b).] This remedy does not prevent the lessee from pursuing any other remedy to which he or she may be entitled. [CC §2986.13(c).]

You must award reasonable attorney fees and costs to the prevailing party in any action based on a vehicle lease. [CC §2988.9.]

Defenses:  The lessor is not liable under CC §2988.5 if the lessor:

  • Notifies the lessee of the error and makes adjustments necessary to correct the account within 15 days after discovering the error and before the lessee institutes an action or sends the lessor written notice of the error [CC §2988.5(c)];
  • Shows by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error despite the maintenance of procedures reasonably adopted to avoid such errors [CC §2988.5(d)]; or
  • Shows that the violation was committed in good faith conformity with a rule, regulation, or interpretation of federal law, even if the rule, regulation, or interpretation was later amended, rescinded, or determined to be invalid [CC §2988.5(g)].

A lessee alleging failure to comply with the statutory requirements must bring the action within one year of the lease contract’s termination. [CC §2988.5(i).]

Venue:  Venue is proper in the county where [CC §2986.3(d)]:

  • The lessee signed the lease contract,
  • The lessee resides at the commencement of the action,
  • The lessee resided when the contract was entered into, or
  • The vehicle is permanently garaged.
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