CLFP EXAM - Leasing Law 2024-2025 ACTUAL EXAM TEST BANK 200 QUESTIONS & CORRECT DETAILED A, Exams of Nursing

Download CLFP EXAM - Leasing Law 2024-2025 ACTUAL EXAM TEST BANK 200 QUESTIONS & CORRECT DETAILED A and more Exams Nursing in PDF only on Docsity! CLFP EXAM - Leasing Law 2024-2025 ACTUAL EXAM TEST BANK 200 QUESTIONS & CORRECT DETAILED ANSWERS WITH RATIONALES| GRADE D A. CLFP EXAM - Leasing Law 2024-2025 ACTUAL EXAM TEST BANK 200 QUESTIONS & CORRECT DETAILED ANSWERS WITH RATIONALES| GRADE D A. A transaction does not create a security interest merely because of what? - ANS1.) the present value of the consideration the lessee is obligated to pay the lessor for the right of possession and use is substantially equal to or greater than the FMV at the time the lease was entered 2.) the lessee assumes the risk of loss of the goods or agrees to pay taxes, insurance, filings, maintenance etc related to the property 3.) the lessee has the option to renew or own 4.) The lessee has the option to renew for a fixed rent equal to or greater then the FMV at the time of the option 5.) The lessee has an option to become the owner of the goods at a price >= FMV at the time of the option Contrast True Lease/Secured Loan - Bankruptcy - ANSGenerally, a lessor under a true lease has better rights to recover equipment in a bk. Contrast True Lease/Secured Loan - Collateral - ANSIt is incorrect to referred to leased equipment as collateral but it is appropriate for a secured loan. Both require good maintenance of the equipment. Lease has return provisions Contrast True Lease/Secured Loan - Filing/Title - ANSIt is not required for a lessor to file a UCC for a true lease. Leases are not governed by UCC Article 9 and there is not filing requirement under article 2A. Contrast True Lease/Secured Loan - Interest/Usury - ANSInterest is charged on a secured loan, but not on a lease. Therefore a true lease may avoid usury laws. True lease has rent payments whereas a secured loan has interest/principal payments. Contrast True Lease/Secured Loan - Liability - ANSGenerally speaking their is more exposure to the lessor on a true lease for liability Contrast True Lease/Secured Loan - Residual - ANSWith respect to vehicles, aircraft and other titled equipment true leases require the lessor to be shown as the owner. Whereas secured loans require notation on certificate of title of the lender's interest. Contrast True Lease/Secured Loan - UCC Rights - ANSUCC distinguishes true lease and loans in several ways. True Lease = UCC 2A. Secured Loan = UCC 9. In a lease, CLFP EXAM - Leasing Law 2024-2025 ACTUAL EXAM TEST BANK 200 QUESTIONS & CORRECT DETAILED ANSWERS WITH RATIONALES| GRADE D A. lessor owns equipment. In a loan, the lessee owns the equipment and the lender has security interest Describe the Bankruptcy Procedure. - ANS1.) filing petition (voluntary or involuntary) 2.) Automatic Stay - prohibit action against debtor other than through the court. 3.) If Chapter 11, prepare Plan of Reorganization which outlines repayment of debt. 4.) Assumption/Rejection of debt. Submitted prior to Plan of Reorganization, if accepted must be paid by debtor per agreement. If rejected, lessor can recover equipment; How are "reasonably predictable" and "useful economic life" determined? - ANSwith reference to the facts and circumstances at the time the transaction is entered. How does Article 2A define Fiance Lease? - ANSRefers to a lease which is 1.) a true lease in which 2.) lessor is not the manufacturer or vendor of the property. 3.) the lessor does not select the equipment or lease it from inventory 4.) lessor makes sure lessee is apprised of its rights with the supplier How is "residual position" used by courts to designate lease vs. loan? - ANSIf the lease allows the lessee to purchase the asset for substantially less than the FMV, the lease will be deemed a secured loan What are a Lessee's disadvantages for failing to "qualifying to do business" in a state? - ANS1.) cannot obtain written confirmation for teh state that it has legal right to transaction business in the state, has not dissolved or failed to pay taxes 2.) certain legal rights in a foreign foreign jurisdiction may be impaired What are a Lessor's disadvantages for failing to "qualifying to do business" in a state? - ANS1.) potential penalty 2.) may not sue or use courts within the state 3.) both can be cured by retroactively filing to do business (and pay retroactive fees) in the state What are other consideration the courts use in determining lease vs. loan treatment? - ANS1.) length of term vs. economic useful life 2.) responsibility to pay state and local tax, 3.) operating expenses and insurance 4.) benefit and burden of ownership What are Preferences in Bankruptcy? - ANSPayments made within 90 days prior to filing bankruptcy petition (one year if payments made to debtor owner). Such payments may need to be returned to bankruptcy estate for apportionment among creditors. Timely payments made in ordinary course of business are not considered preferences CLFP EXAM - Leasing Law 2024-2025 ACTUAL EXAM TEST BANK 200 QUESTIONS & CORRECT DETAILED ANSWERS WITH RATIONALES| GRADE D A. What is Contract Law? - ANSGenerally a matter of state law. Although certain statues are important to contract enforcement, case law plays a major role in each state. Requirements for a "valid enforceable contract" include "an offer and acceptance evidencing a mutual agreement on principal terms and consideration, or something of value, given or promised by each party." What is Debtor in Possession? - ANSIn Chapter 11 bk, debtor stays in control of its business What is Federal Law? - ANSEncompasses laws adopted by the US Congress such as the IRS and Bankruptcy Code. Although federal case precedent may be important in interpreting these and other statutory laws, federal common law generally has little application to equipment leasing and finance transactions What is Legality? - ANSA requirement often used to prohibit enforcements of secured financings that exceed the legal usury limit, but also available to prohibit leases of equipment used in illegal activity, such as gambling where it is not permitted by applicable law What is Present Value? - ANSthe amount as of the date of one or more future payments discounted to the certain date. If not specified by the contract, the discount rate is determined by the courts as a commercially reasonable at the time the transaction was entered. What is Regulatory Law? - ANSConsists of regulations adopted by public bodies. Examples of regulatory law are regulations issued by the Internal Revenue Service (IRS) or the Securities Exchange Commission (SEC). Generally regulatory laws are not binding up the courts in the manner or statutory laws, but may be subject to broader interpretation What is significant about Article 2A? - ANSArticle 2A deals only with true leases. Similar to 2, includes implied warranty. What is significant about UCC Article 2? - ANSDeals with the sale of goods which are generally described as tangible personal property. Article 2 is relevant when the lessor may be the supplier or vendor of the equipment. Article 2 offers "implied warranties" where the goods are assumed fit for use for ordinary purposes. What is significant about UCC Article 9? - ANSDeals exclusively with the creation of security interest in personal property. It has not impact on leases, just secured loans. CLFP EXAM - Leasing Law 2024-2025 ACTUAL EXAM TEST BANK 200 QUESTIONS & CORRECT DETAILED ANSWERS WITH RATIONALES| GRADE D A. What is State Law? - ANSGeneral more relevant to the day to day leasing operations. State law include the UCC and cases interpreting it. Particular sate statutory tax laws are also important in leasing consideration What is Statute of Frauds? - ANSProvides that certain types of contracts are not enforceable unless in writing. Example under UCC, a lease contract with payments in excess of $1,000 are not enforceable unless written. What is Statutory Law? - ANSIncludes law enacted by legislative bodies such as state legislatures and US Congress. The Uniform Commercial Code or "UCC" is a body of the state statutory law. What is the UCC? - ANSA body of laws proposed by the National Conference of Commissioners on Uniform State Laws and the American Law Institute What is unique about California licensing requirements? - ANS1.) California Finance Lender Law (CFLL) contains Division 9 of the California Finance Code which requires lenders to be licensed for transaction business and defines finance lender as "any person who is engaged in the business of making consumer loans or making commercial loans" What rights does a lessee enjoy in a Secured Loan? - ANSRight to purchase the equipment at the end of the lease. The lessee also has rights to the asset appreciation What rights does a lessee enjoy in a True Lease? - ANSUse and enjoyment of the leased equipment free from interference of the lessor as long as the lessee has not defaulted. What rights does a lessor enjoy in Secured Loan? - ANSRights to rents, indemnification and other benefits stated in the lease document. What rights does the lessor enjoy in a True Lease? - ANSThe rights of ownership including tax benefits and the right to increase in value What tax consideration must be made in multi state operations? - ANS1.) Property tax is property is located regardless of whether the owner is registered to do business 2.) Sale & Use tax are payable on equipment purchased in the state 3.) Income tax are generally payable whenever a lessor's business is generated When is a lease renewal not nominal? - ANS1.) when the option to renew is granted the rent is stated to be fair market rent determined at the time of the option 2.) when the option to renew is granted the price is stated to be fair market value at the time of the option CLFP EXAM - Leasing Law 2024-2025 ACTUAL EXAM TEST BANK 200 QUESTIONS & CORRECT DETAILED ANSWERS WITH RATIONALES| GRADE D A. When is the first a transaction create a security interest? - ANSIf the consideration the lessee is to pay the lessor for the right to possession and use of the goods is an obligation for the term of the lease not subject to termination by the lessee 1.) the term of the lease is equal to or greater than the remaining economic life of the goods 2) the lessee is bound to renew for economic life or own the property 3.) the lessee has the option to renew the lease for no or nominal consideration upon compliance with the lease 4.) the lessee has the option to own the goods for no or nominal consideration upon compliance of the lease Where is the legal definition of a lease found? - ANSUCC Article 1-201. Article 2A for true lease. Article 9 for secured loan Who is covered by CFLL requirements? - ANSBrokers and originators defined as "any person engaged in the business of negotiating or performing an act as a broker in connection with loans made by a finance lender Why is Finance Lease significant to the lessor? - ANS1.) all warranties offered by the supplier are deemed to pass to the lessee automatically 2.) hell or higher water clause which indicates the lessee must pay the payments regardless of the performance of the equipment.