North Carolina General Statutes 20-106.2. Sublease and loan assumption arranging regulated
(a) As used in this section:
(1) “Buyer” means a purchaser of a motor vehicle under the terms of a retail installment contract. “Buyer” shall include any co-buyer on the retail installment contract.
Attorney's Note
Under the N.C. Gen. Statutes, punishments for crimes depend on the classification. In the case of this section:| Class | Prison | Fine |
|---|---|---|
| Class I felony | between 3 and 12 months |
Terms Used In North Carolina General Statutes 20-106.2
- Contract: A legal written agreement that becomes binding when signed.
- Conviction: A judgement of guilt against a criminal defendant.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
- following: when used by way of reference to any section of a statute, shall be construed to mean the section next preceding or next following that in which such reference is made; unless when some other section is expressly designated in such reference. See North Carolina General Statutes 12-3
- Injunction: An order of the court prohibiting (or compelling) the performance of a specific act to prevent irreparable damage or injury.
- 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
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Partnership: A voluntary contract between two or more persons to pool some or all of their assets into a business, with the agreement that there will be a proportional sharing of profits and losses.
- property: shall include all property, both real and personal. See North Carolina General Statutes 12-3
- Restitution: The court-ordered payment of money by the defendant to the victim for damages caused by the criminal action.
- Temporary restraining order: Prohibits a person from an action that is likely to cause irreparable harm. This differs from an injunction in that it may be granted immediately, without notice to the opposing party, and without a hearing. It is intended to last only until a hearing can be held.
(2) “Lease” means an agreement between a lessor and a lessee whereby the lessee obtains the possession and use of a motor vehicle for the period of time, for the purposes, and for the consideration set forth in the agreement whether or not the agreement includes an option to purchase the motor vehicle; provided, however, “lease” shall not include a residential rental agreement of a manufactured home which is subject to Chapter 42 of the N.C. Gen. Stat..
(3) “Lessor” means any person who in the regular course of business or as a part of regular business activity leases motor vehicles under motor vehicle lease agreements, purchases motor vehicle lease agreements, or any sales finance company that purchases motor vehicle lease agreements.
(4) “Lessee” means a person who obtains possession and use of a motor vehicle through a motor vehicle lease agreement. “Lessee” shall include any co-lessee listed on the motor vehicle lease agreement.
(5) “Person” means an individual, partnership, corporation, association or any other group however organized.
(6) “Security interest” means an interest in personal property that secures performance of an obligation.
(7) “Secured party” means a lender, seller, or other person in whose favor there is a security interest, including a person to whom accounts or retail installment sales contracts have been sold.
(8) “Sublease” means an agreement whether written or oral:
a. To transfer to a third party possession of a motor vehicle which is and will, while in that third party’s possession, remain the subject of a security interest which secures performance of a retail installment contract or consumer loan; or
b. To transfer or assign to a third party any of the buyer’s rights, interests, or obligations under the retail installment contract or consumer loan; or
c. To transfer to a third party possession of a motor vehicle which is and will, while in the third party’s possession, remain the subject of a motor vehicle lease agreement; or
d. To transfer or assign to a third party any of the lessee’s or buyer’s rights, interests, or obligations under the motor vehicle lease agreement.
(9) “Sublease arranger” means a person who engages in the business of inducing by any means buyers and lessees to enter into subleases as sublessors and inducing third parties to enter into subleases as sublessees, however such contracts may be called. “Sublease arranger” does not include the publisher, owner, agent or employee of a newspaper, periodical, radio station, television station, cable-television system or other advertising medium which disseminates any advertisement or promotion of any act governed by this section.
(10) “Third party” means a person other than the buyer or the lessee of the vehicle.
(11) “Transfer” means to transfer possession of a motor vehicle by means of a sale, loan assumption, lease, sublease, or lease assignment.
(b) A sublease arranger commits an offense if the sublease arranger arranges a sublease of a motor vehicle and:
(1) Does not first obtain written authorization for the sublease from the vehicle’s secured party or lessor; or
(2) Accepts a fee without having first obtained written authorization for the sublease from the vehicle’s secured party or lessor; or
(3) Does not disclose the location of the vehicle on the request of the vehicle’s buyer, lessee, secured party, or lessor; or
(4) Does not provide to the third party new, accurate disclosures under the Consumer Credit Protection Act, 15 U.S.C. § 1601, et seq.; or
(5) Does not provide oral and written notice to the buyer or lessee that he will not be released from liability; or
(6) Does not ensure that all rights under warranties and service contracts regarding the motor vehicle transfer to the third party, unless a pro rata rebate for any unexpired coverage is applied to reduce the third party’s cost under the sublease; or
(7) Does not take reasonable steps to ensure that the third party is financially able to assume the payment obligations of the buyer or lessee according to the terms of the lease agreement, retail installment contract, or consumer loan.
(c) It is not a defense to prosecution under subsection (b) of this section that the motor vehicle’s buyer or lessee, secured party or lessor has violated a contract creating a security interest or lease in the motor vehicle, nor may any sublease arranger shift to the lessee, buyer or third party the arranger’s duty under subdivision (b)(1) or (b)(2) to obtain prior written authorization for formation of a sublease.
(d) An offense under subdivision (b)(1) or (b)(2) of this section is a Class I felony.
(e) All other offenses under subsection (b) of this section are Class 1 misdemeanors. Each failure to disclose the location of the vehicle under subdivision (b)(3) shall constitute a separate offense.
(f) Any buyer, lessee, sublessee, secured party or lessor injured or damaged by reason of any act in violation of this section, whether or not there is a conviction for the violation, may file a civil action to recover damages based on the violation with the following available remedies:
(1) Three times the amount of any actual damages or fifteen hundred dollars ($1500), whichever is greater;
(2) Equitable relief, including a temporary restraining order, a preliminary or permanent injunction, or restitution of money or property;
(3) Reasonable attorney fees and costs; and
(4) Any other relief which the court deems just.
The rights and remedies provided by this section are in addition to any other rights and remedies provided by law.
(g) This section and N.C. Gen. Stat. § 14-114 and N.C. Gen. Stat. § 14-115 are mutually exclusive and prosecution under those sections shall not preclude criminal prosecution or civil action under this section. (1989 (Reg. Sess., 1990), c. 1011; 1993, c. 539, ss. 347, 1254; 1994, Ex. Sess., c. 24, s. 14(c).)