Equipment Leases in CT - New Disclosure Requirement Coming

By: Richard C. Feldman

this statement be conspicuous. The relevant portion of the new statute is as follows:

Sec. 3 (NEW) (Effective October 1, 2009) (a) If any insurance is
required to be obtained for a lease pursuant to subsection (e) of Section 42a-2A-305 of the general statutes, any such agreement as set forth in said subsection shall disclose in a conspicuous manner: (1) Whether the insurance is included in the lease for no additional charge (2) if the insurance is not included in the lease or if there is an additional charge for obtaining insurance through the lessor, that the lessee may purchase the required insurance from an insurer of the lessee’s choice, subject to the lessor’s right to reject that insurer for reasonable cause; and (3) that the insurance policies offered by the lessor may duplicate coverage already provided by a lessee’s personal insurance policies.

(b) If insurance on the leased goods is neither required nor provided in such lease or by agreement, the lease must contain or be accompanied by a conspicuous statement in a record substantially as follows: “No insurance coverage for the leased goods, or loss of the leased goods, is provided under this lease.”

The new bill provides that if any insurances are required to be obtained for a lease under Connecticut General Statutes §42a-2A-305, a similar conspicuous disclosure must be made. Before its revision, that section merely stated that “(e) The parties, by agreement, may determine that one or more parties have an obligation to obtain and pay for insurance covering the goods and determine the beneficiary of the proceeds of the insurance.”

The “Conspicuous” Trap

Lessors doing business in Connecticut may need to revise their leases to include the specific statutory language even though there is currently a provision relating to insurance coverage. The proposed statute, does, however, provide that the required language may be incorporated in a separate document. Wherever it appears, the new language must be “conspicuous.” If it is not, the lessor may not be able to enforce the insurance provisions of the lease and the lessee may attempt to use the lack of conspicuous notice as a defense to enforcement of the lease. There is no statutory definition of “conspicuous” but we can look to other statutes that require conspicuous language for guidance, for example waivers of prejudgment hearings.

Incorporating Prejudgment Remedy Waivers

Connecticut law permits a commercial lessor to include a waiver of prejudgment remedy in its documents. This statutory waiver enables the lessor to obtain an order of replevin, to take back its equipment, without the necessity of prior notice and a hearing. It is a very effective collection tool and could shave weeks or months off the litigation process. Similar waivers also enable the attachment of real or personal property of a lessor at the commencement of a lawsuit, also an effective collection tool. Inclusion of the waiver avoids the necessity of a prior court hearing and can save weeks or months of delay in obtaining relief. These waivers must also be “conspicuous.”

If a lessor is considering revising its lease to include the new insurance language, they should also consider adding these statutory waivers. Both the waivers and the insurance language could be included in a separate endorsement or addendum to the lease which could be used exclusively for Connecticut transactions. Doing so now will save significant time and aggravation later.

If you would like any additional information please feel free to call Richard Feldman at (203) 772-4900 or rcfeldman@snet.net


Evans, Feldman & Ainsworth serves the legal and credit departments of financial institutions, commercial finance companies, leasing companies and banks by providing cost effective representation throughout the State of Connecticut.

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