Nevada Revised Statutes 597.1157 – Requirements regarding dealer’s reserve account for recourse after termination of dealer agreement
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1. At the end of each year after the termination of a dealer agreement, a dealer’s reserve account for recourse, retail sale or lease contracts may not be debited by a supplier or lender for any deficiency unless the dealer is given written notice of at least 7 business days by certified or registered mail, return receipt requested, of any proposed sale of the inventory which was financed and an opportunity to purchase the inventory.
Terms Used In Nevada Revised Statutes 597.1157
- 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
- Liabilities: The aggregate of all debts and other legal obligations of a particular person or legal entity.
- Recourse: An arrangement in which a bank retains, in form or in substance, any credit risk directly or indirectly associated with an asset it has sold (in accordance with generally accepted accounting principles) that exceeds a pro rata share of the bank's claim on the asset. If a bank has no claim on an asset it has sold, then the retention of any credit risk is recourse. Source: FDIC
2. The dealer must be given quarterly reports concerning any remaining outstanding recourse contracts. As the recourse contracts are reduced, any money in the reserve account must be returned to the dealer in direct proportion to the liabilities outstanding.