(a) This division applies to any transaction, regardless of form, that creates a lease and, in the case of a hybrid lease, it applies to the extent provided in subdivision (b).

(b) In a hybrid lease, the following rules apply:

Terms Used In California Commercial Code 10102

  • Finance lease: means a lease with respect to which (A) the lessor does not select, manufacture, or supply the goods, (B) the lessor acquires the goods or the right to possession and use of the goods in connection with the lease, and (C) one of the following occurs:

    California Commercial Code 10103

  • Goods: means all things that are movable at the time of identification to the lease contract, or are fixtures (Section 10309), but the term does not include money, documents, instruments, accounts, chattel paper, general intangibles, or minerals or the like, including oil and gas, before extraction. See California Commercial Code 10103
  • Hybrid lease: means a single transaction involving a lease of goods and any of the following:

    California Commercial Code 10103

  • Lease: means a transfer of the right to possession and use of goods for a term in return for consideration, but a sale, including a sale on approval or a sale or return, or retention or creation of a security interest is not a lease. See California Commercial Code 10103
  • Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
  • Lessee: means a person who acquires the right to possession and use of goods under a lease. See California Commercial Code 10103
  • Right: includes remedy. See California Commercial Code 1201

(1) If the lease-of-goods aspects do not predominate, the following rules apply:

(A) Only the provisions of this division which relate primarily to the lease-of-goods aspects of the transaction apply, and the provisions that relate primarily to the transaction as a whole do not apply.

(B) Section 10209 applies if the lease is a finance lease.

(C) Section 10407 applies to the promises of the lessee in a finance lease to the extent the promises are consideration for the right to possession and use of the leased goods.

(2) If the lease-of-goods aspects predominate, this division applies to the transaction, but does not preclude application in appropriate circumstances of other law to aspects of the lease which do not relate to the lease of goods.

(Amended by Stats. 2023, Ch. 210, Sec. 74. (SB 95) Effective January 1, 2024.)

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