County of Los Angeles Department of Consumer Affairs New Consumer Laws 2007

Rent-To-Own-Agreements

Civil Code Section 1812.622 et al

The Karnette Rental-Purchase Act defines and regulates the terms of rent-to-own agreements. This new law adds a number of consumer protection provisions to the rent-to-own law, including:

• Requires all rental-purchase contracts to disclose the total sale amount and the total number of payments needed own the item.
• Gives consumers the right to buy the item within three months of the date they sign a rental-purchase contract by paying the cash price and any past due fees, minus any payments made. After the expiration of the three-month period, consumers have the right to buy the item by paying all past due payments and a portion of the cash price.
• Provides that if a store willfully lists a cash price or a total of payments that exceeds the amount permitted, the contract is void, the consumer gets to keep the property without any obligation, and the store has to refund to the consumer all monies paid.
• Prohibits any rental-purchase contract from listing a cash price for any item that exceeds:
  • For the rental of the item, 1.65 times the store's cost for computer systems and appliances, 1.7 times the store's cost for electronic sets, 1.9 times the store's cost for furniture, and 1.65 times the store's costs for all other items not noted; or,
  • For the second and subsequent rentals, the maximum total of payments for the item divided by 2.25.
• Prohibits any rental-purchase contract from listing a total of payments that exceeds:
  • For the first rental of the item, 2.25 times the cash price; or
  • For the second and subsequent rentals, the total of payments allowed for the first rental minus one-third or one-half (depending on the type of item) of all payments paid to the store by previous consumers who rented the item.
• Defines "cash price" as the price the consumer may pay in cash to the store at the inception of the rental-purchase contract to buy the item.

For more information:
County of Los Angeles Department of Consumer Affairs
B-96 Kenneth Hahn Hall of Administration
500 W. Temple Street * Los Angeles, CA 90012-2706
Telephone (800) 593-8222 (within the County) * (213) 974-1452
web site: dca.lacounty.gov