(a) A lessor shall not sell, or offer for sale, a service contract for the rental property if that service contract provides any coverage while the rental-purchase agreement is in effect.

(b) A lessor may sell, or offer for sale, a service contract providing coverage for the rental property after the consumer acquires ownership of that property, if both of the following conditions are satisfied:

Terms Used In California Civil Code 1812.635

  • Consumer: means a natural person or persons who rent or lease personal property from a lessor pursuant to a rental-purchase agreement or to whom a lessor offers personal property for use pursuant to a rental-purchase agreement. See California Civil Code 1812.622
  • Contract: A legal written agreement that becomes binding when signed.
  • Lessor: means any person or entity that provides or offers to provide personal property for use by consumers pursuant to a rental-purchase agreement. See California Civil Code 1812.622
  • property: includes property real and personal. See California Civil Code 14
  • Rental-purchase agreement: except as otherwise provided in this subdivision, means an agreement between a lessor and a consumer pursuant to which the lessor rents or leases, for valuable consideration, personal property for use by a consumer for personal, family, or household purposes for an initial term not exceeding four months that may be renewed or otherwise extended, if under the terms of the agreement the consumer acquires an option or other legally enforceable right to become owner of the property. See California Civil Code 1812.622

(1) The lessor does not sell, or offer to sell, the service contract before (A) the consumer pays at least one-half of the total number of periodic payments necessary to acquire ownership of the property or (B) the consumer acquires ownership of the property, as provided in Section 1812.632, whichever occurs first.

(2) The lessor clearly and conspicuously indicates to the consumer in writing before the consumer’s purchase of the service contract that the purchase is optional.

(c) If the consumer chooses to purchase a service contract before the expiration of the rental-purchase agreement and defaults or otherwise does not make all payments necessary to acquire ownership within the rental period specified in the agreement, the lessor shall refund all consideration paid for the service contract to the consumer within two weeks after the lessor has received the consumer’s last rental payment. This subdivision does not limit or alter any of the consumer’s cancellation or refund rights under the service contract or under other provisions of law.

(d) “Service contract” has the meaning set forth in subdivision (o) of Section 1791.

(Added by Stats. 1994, Ch. 1026, Sec. 1. Effective January 1, 1995.)

  Previous section
Next section  
 Title 2.96 Contents