CHAPTER 106 SENATE BILL No. 462
      An Act concerning the uniform consumer credit code; relating to definitions of certain
      terms; amending K.S.A. 16a-2-304 and 16a-2-309 and K.S.A. 1997 Supp. 16a-1-301 and
      repealing the existing sections.

Be it enacted by the Legislature of the State of Kansas:

Section 1. K.S.A. 1997 Supp. 16a-1-301 is hereby amended to read
as follows: 16a-1-301. In addition to definitions appearing in subsequent
articles, in K.S.A. 16a-1-101 through 16a-9-102, and amendments thereto:

(1) ``Actuarial method'' means the method, defined by rules and reg-
ulations adopted by the administrator, of allocating payments made on a
debt between the amount financed and the finance charge pursuant to
which a payment is applied first to the accumulated finance charge and
the balance is applied to the unpaid amount financed.

(2) ``Administrator'' means the consumer credit commissioner ap-
pointed pursuant to K.S.A. 16-403, and amendments thereto.

(3) ``Agreement'' means the bargain of the parties in fact as found in
their language or by implication from other circumstances including
course of dealing or usage of trade or course of performance.

(4) ``Amount financed'' means the total of the following items:

(a) In the case of a sale, the cash price of the goods, services, or
interest in land, less the amount of any down payment whether made in
cash or in property traded in, and the amount actually paid or to be paid
by the seller pursuant to an agreement with the buyer to discharge a
security interest in, a lien on, or a debt with respect to property traded
in;

(b) in the case of a loan, the net amount paid to, receivable by, or
paid or payable for the account of the debtor, plus the amount of any
discount excluded from the finance charge (paragraph (b) of subsection
(18) of K.S.A. 16a-1-301); and

(c) in the case of a sale or loan, to the extent that payment is deferred
and the amount is not otherwise included and is authorized and disclosed
to the customer:

(i) Amounts actually paid or to be paid by the creditor for registration,
certificate of title, or license fees, and

(ii) permitted additional charges ( K.S.A. 16a-2-501).

(5) ``Billing cycle'' means the time interval between periodic billing
statement dates.

(6) ``Cash price'' of goods, services, or an interest in land means the
price at which they are offered for sale by the seller to cash buyers in the
ordinary course of business and may include (a) the cash price of acces-
sories or services related to the sale, such as delivery, installation, alter-
ations, modifications, and improvements, and (b) taxes to the extent im-
posed on a cash sale of the goods, services, or interest in land. The cash
price stated by the seller to the buyer in a disclosure statement is pre-
sumed to be the cash price.

(7) ``Closing costs'' with respect to a debt secured by an interest in
land includes:

(a) The actual fees paid a public official or agency of the state or
federal government, for filing, recording or releasing any instrument re-
lating to the debt; and

(b) reasonable expenses not included in the origination fee or payable
to an assignee incurred by the lender in connection with the making,
closing, disbursing, extending, readjusting or renewing the debt which
are payable to third parties not related to the lender, except that reason-
able fees for an appraisal made by the lender or related party are per-
missible.

(8) ``Conspicuous'': A term or clause is conspicuous when it is so
written that a reasonable person against whom it is to operate ought to
have noticed it. Whether a term or clause is conspicuous or not is for
decision by the trier of fact.

(9) ``Consumer'' means the buyer, lessee, or debtor to whom credit
is granted in a consumer credit transaction.

(10) ``Consumer credit sale'':

(a) Except as provided in paragraph (b), a ``consumer credit sale'' is
a sale of goods, services, or an interest in land in which:

(i) Credit is granted either by a seller who regularly engages as a seller
in credit transactions of the same kind or pursuant to a credit card other
than a lender credit card,

(ii) the buyer is a person other than an organization,

(iii) the goods, services, or interest in land are purchased primarily
for a personal, family or household purpose,

(iv) either the debt is by written agreement payable in installments
or a finance charge is made, and

(v) with respect to a sale of goods or services, the amount financed
does not exceed $25,000.

(b) A ``consumer credit sale'' does not include:

(i) A sale in which the seller allows the buyer to purchase goods or
services pursuant to a lender credit card; or

(ii) unless the sale is made subject to K.S.A. 16a-1-101 through 16a-9-
102, and amendments thereto, by agreement ( K.S.A. 16a-1-109), a sale
of an interest in land, other than sales governed by subsection (10)(b)(iii)
of this section, if the finance charge does not exceed 12% per year cal-
culated according to the actuarial method on the unpaid balances of the
amount financed on the assumption that the debt will be paid according
to the agreed terms and will not be paid before the end of the agreed
term; or

(iii) a sale by contract for deed of real estate the interest rate of which
is governed by subsection (b) or (h) of K.S.A. 16-207, and amendments
thereto.

(11) ``Consumer credit transaction'' means a consumer credit sale,
consumer lease, or consumer loan or a modification thereof including a
refinancing, consolidation, or deferral.

(12) ``Consumer lease'' means a lease of goods:

(a) Which a lessor regularly engaged in the business of leasing makes
to a person, other than an organization, who takes under the lease pri-
marily for a personal, family or household purpose;

(b) in which the amount payable under the lease does not exceed
$25,000;

(c) which is for a term exceeding four months; and

(d) which is not made pursuant to a lender credit card.

(13) ``Consumer loan'':

(a) Except as provided in paragraph (b), a ``consumer loan'' is a loan
made by a person regularly engaged in the business of making loans in
which:

(i) The debtor is a person other than an organization;

(ii) the debt is incurred primarily for a personal, family or household
purpose;

(iii) either the debt is payable in installments or a finance charge is
made; and

(iv) either the amount financed does not exceed $25,000 or the debt
is secured by an interest in land.

(b) Unless the loan is made subject to K.S.A. 16a-1-101 through 16a-
9-102, and amendments thereto, by agreement ( K.S.A. 16a-1-109), a
``consumer loan'' does not include:

(i) A loan secured by a first real estate mortgage; or

(ii) a loan secured by a second or other subordinate mortgage if the
second or other subordinate mortgage is granted to the same lender as
the first mortgage; or

(iii) a loan made by a qualified plan, as defined in section 401 of the
internal revenue code, to an individual participant in such plan or to a
member of the family of such individual participant.

(14) ``Credit'' means the right granted by a creditor to a debtor to
defer payment of debt or to incur debt and defer its payment.

(15) ``Credit card'' means any card, plate or other single credit device
that may be used from time to time to obtain credit. Since this involves
the possibility of repeated use of a single device, checks and similar in-
struments that can be used only once to obtain a single credit extension
are not credit cards.

(16) ``Creditor'' means a person who regularly extends credit in a
consumer credit transaction which is payable by a written agreement in
more than four installments or for which the payment of a finance charge
is or may be required and is the person to whom the debt arising from
the consumer credit transaction is initially payable on the face of the
evidence of indebtedness or, if there is no such evidence of indebtedness,
by written agreement. In the case of credit extended pursuant to a credit
card, the creditor is the card issuer and not another person honoring the
credit card.

(17) ``Earnings'' means compensation paid or payable to an individual
or for such individual's account for personal services rendered or to be
rendered by such individual, whether denominated as wages, salary, com-
mission, bonus, or otherwise, and includes periodic payments pursuant
to a pension, retirement, or disability program.

(18) ``Finance charge'':

(a) ``Finance charge'' means the sum of:

(i) All charges payable directly or indirectly by the consumer and
imposed directly or indirectly by the creditor as an incident to or as a
condition of the extension of credit, including any of the following types
of charges which are applicable; interest or any amount payable under a
point, discount or other system of charges, however denominated; time
price differential, service, carrying or other charge, however denomi-
nated; premium or other charge for any guarantee or insurance protecting
the creditor against the consumer's default or other credit loss; and

(ii) charges incurred for investigating the collateral or credit-worthi-
ness of the consumer.

(b) The term does not include:

(i) Charges as a result of default, additional charges ( K.S.A. 16a-2-
501) or delinquency charges ( K.S.A. 16a-2-502), or

(ii) if a lender makes a loan to a debtor by purchasing or satisfying
obligations of the debtor pursuant to a lender credit card and the purchase
or satisfaction is made at less than the face amount of the obligation, the
discount, or

(iii) closing costs as defined in K.S.A. 16a-1-301(7), and amendments
thereto.

(19) ``Goods'' includes goods not in existence at the time the trans-
action is entered into and merchandise certificates, but excludes money,
chattel paper, documents of title, and instruments.

(20) Except as otherwise provided, ``lender'' includes an assignee of
the lender's right to payment but use of the term does not in itself impose
on an assignee any obligation of the lender with respect to events occur-
ring before the assignment.

(21) ``Interest bearing'' means the finance charge on a consumer
credit transaction is computed on the unpaid principal balances by the
actuarial method.

(22) ``Lender credit card'' means a credit card issued by a supervised
lender.

(23) ``Loan'':

(a) Except as provided in paragraph (b), a ``loan'' includes:

(i) The creation of debt by the lender's payment of or agreement to
pay money to the debtor or to a third party for the account of the debtor;

(ii) the creation of debt either pursuant to a lender credit card or by
a cash advance to a debtor pursuant to a credit card other than a lender
credit card;

(iii) the creation of debt by a credit to an account with the lender
upon which the debtor is entitled to draw immediately; and

(iv) the forbearance of debt arising from a loan.

(b) A ``loan'' does not include the payment or agreement to pay
money to a third party for the account of a debtor if the debt of the
debtor arises from a sale or lease and results from use of either a credit
card issued by a person primarily in the business of selling or leasing
goods or services or any other credit card which may be used for the
purchase of goods or services and which is not a lender credit card.

(24) ``Merchandise certificate'' means a writing issued by a seller not
redeemable in cash and usable in its face amount in lieu of cash in
exchange for goods or services.

(25) ``Official fees'' means:

(a) Fees and charges prescribed by law which actually are or will be
paid to public officials for determining the existence of or for perfecting,
releasing, or satisfying a security interest related to a consumer credit
sale, consumer lease, or consumer loan; or

(b) premiums payable for insurance in lieu of perfecting a security
interest otherwise required by the creditor in connection with the sale,
lease, or loan, if the premium does not exceed the fees and charges de-
scribed in paragraph (a) which would otherwise be payable.

(26) ``Open end credit'' means an arrangement pursuant to which:

(a) A creditor may permit a consumer, from time to time, to purchase
goods or services on credit from the creditor or pursuant to a credit card,
or to obtain loans from the creditor or pursuant to a credit card;

(b) the unpaid balance of amounts financed and the finance and other
appropriate charges are debited to an account;

(c) the finance charge, if made, is computed on the outstanding un-
paid balances of the consumer's account from time to time; and

(d) the consumer has the privilege of paying the balances in install-
ments.

(27) ``Organization'' means a corporation, government or govern-
mental subdivision or agency, trust, estate, partnership, cooperative, or
association.

(28) ``Origination fee'' means a fee associated with the making, closing
or disbursing of a consumer credit transaction by a lender or assignee of
the lender which is intended to compensate the lender or assignee of the
lender for all costs incurred in making, closing or disbursing a consumer
credit transaction, exclusive of: Closing costs defined in K.S.A. 16a-1-
301(7) and amendments thereto, interest rate reduction charges paid by
the consumer at closing and broker fees paid to third parties not related
to the lender or assignee of the lender.

(28) (29) ``Payable in installments'' means that payment is required
or permitted by agreement to be made in (a) two or more periodic pay-
ments, excluding a down payment, with respect to a debt arising from a
consumer credit sale pursuant to which a finance charge is made, (b) four
or more periodic payments, excluding a down payment, with respect to
a debt arising from a consumer credit sale pursuant to which no finance
charge is made, or (c) two or more periodic payments with respect to a
debt arising from a consumer loan. If any periodic payment other than
the down payment under an agreement requiring or permitting two or
more periodic payments is more than twice the amount of any other
periodic payment, excluding the down payment, the consumer credit
transaction is ``payable in installments.''

(29) (30) ``Person'' includes a natural person or an individual, and an
organization.

(30) (31) ``Person related to'' with respect to an individual means (a)
the spouse of the individual, (b) a brother, brother-in-law, sister, sister-
in-law of the individual, (c) an ancestor or lineal descendant of the indi-
vidual or the individual's spouse, and (d) any other relative, by blood,
adoption or marriage, of the individual or such individual's spouse who
shares the same home with the individual. ``Person related to'' with re-
spect to an organization means (a) a person directly or indirectly con-
trolling, controlled by or under common control with the organization,
(b) an officer or director of the organization or a person performing sim-
ilar functions with respect to the organization or to a person related to
the organization, (c) the spouse of a person related to the organization,
and (d) a relative by blood, adoption or marriage of a person related to
the organization who shares the same home with such person.

(31) (32) ``Presumed'' or ``presumption'' means that the trier of fact
must find the existence of the fact presumed unless and until evidence is
introduced which would support a finding of its nonexistence.

(32) (33) ``Principal'' means the total of the amount financed and the
prepaid finance charges as authorized by subsection (9) of K.S.A. 16a-2-
401, and amendments thereto.

(33) (34) ``Sale of goods'' includes any agreement in the form of a
bailment or lease of goods if the bailee or lessee agrees to pay as com-
pensation for use a sum substantially equivalent to or in excess of the
aggregate value of the goods involved and it is agreed that the bailee or
lessee will become, or for no other or a nominal consideration has the
option to become, the owner of the goods upon full compliance with such
bailee's or lessee's obligations under the agreements.

(34) (35) ``Sale of an interest in land'' includes a lease in which the
lessee has an option to purchase the interest and all or a substantial part
of the rental or other payments previously made by the lessee are applied
to the purchase price.

(35) (36) ``Sale of services'' means furnishing or agreeing to furnish
services and includes making arrangements to have services furnished by
another.

(36) (37) ``Seller'': Except as otherwise provided, ``seller'' includes an
assignee of the seller's right to payment but use of the term does not in
itself impose on an assignee any obligation of the seller with respect to
events occurring before the assignment.

(37) (38) ``Services'' includes (a) work, labor, and other personal serv-
ices, (b) privileges with respect to transportation, hotel and restaurant
accommodations, education, entertainment, recreation, physical culture,
hospital accommodations, funerals, cemetery accommodations, and the
like, and (c) insurance.

(38) (39) ``Supervised financial organization'' means a person, other
than an insurance company or other organization primarily engaged in an
insurance business:

(a) Organized, chartered, or holding an authorization certificate un-
der the laws of this state or of the United States which authorize the
person to make loans and to receive deposits, including a savings, share,
certificate or deposit account; and

(b) subject to supervision by an official or agency of this state or of
the United States.

(39) (40) ``Supervised lender'' means a person authorized to make or
take assignments of supervised loans, either under a license issued by the
administrator (K.S.A. 16a-2-301 and amendments thereto) or as a super-
vised financial organization (K.S.A. 16a-1-301(38)(39) and amendments
thereto).

(40) (41) ``Supervised loan'' means a consumer loan, including a loan
made pursuant to open end credit, in which the rate of the finance charge,
calculated according to the actuarial method, exceeds 12% per year.

(41) (42) ``Written agreement'' means an agreement such as a prom-
issory note, contract or lease that is evidence of the indebtedness. A letter
that merely confirms an oral agreement does not constitute a written
agreement for purposes of this subsection.

(42) (43) ``Written administrative interpretation'' means any written
communication from the consumer credit commissioner which is the of-
ficial interpretation as so stated in said written communication by the
consumer credit commissioner of the Kansas uniform consumer credit
code and rules and regulations pertaining thereto.

Sec. 2. K.S.A. 16a-2-304 is hereby amended to read as follows: 16a-2-
304. (1) Every licensee and any assignee or servicer of a consumer credit
transaction shall maintain records in conformity with generally accepted
accounting principles and practices in a manner that will enable the ad-
ministrator and, in the case of a supervised financial organization its su-
pervisory official or agency, to determine whether the licensee, assignee
or servicer is complying with the provisions of K.S.A. 16a-1-101 through
16a-9-102, and amendments thereto. The record keeping system of a
licensee, assignee or servicer shall be sufficient if the licensee, assignee
or servicer makes the required information reasonably available. The re-
cords need not be kept in the place of business where supervised loans
are made, if the administrator or supervisory official or agency is given
free access to the records wherever located. Every licensee and any as-
signee of a consumer credit transaction shall provide the administrator
with the name, address, telephone number, contact person and any other
reasonable information regarding the location and availability of current
records of a consumer credit transaction. The records pertaining to any
loan need not be preserved for more than two years after making the
final entry relating to the loan, but in the case of a revolving loan account
the two years is measured from the date of each entry.

(2) On or before April 15 of each year every licensee shall file with
the administrator and, in the case of a supervised financial organization
with its supervisory official or agency, a composite annual report in the
form prescribed by the administrator relating to all supervised loans made
by such licensee. The administrator shall consult with comparable officials
in other states for the purpose of making the kinds of information re-
quired in annual reports uniform among the states. Information contained
in annual reports shall be confidential and may be published only in com-
posite form.

Sec. 3. K.S.A. 16a-2-309 is hereby amended to read as follows: 16a-2-
309. (a) A licensee may conduct the business of making loans under K.S.A.
16a-1-101 through 16a-9-102 within any office, room or place of business
in which any other business is solicited or engaged in, or in association
or conjunction therewith, unless the commissioner shall find, after a hear-
ing, that the other business is of such nature that such conduct tends to
conceal evasion of such portion of this act or of the rules and regulations
made thereunder and shall order such licensee in writing to desist from
such conduct.

(b) (1) Except as provided in subsection (2), no licensee authorized
to make supervised loans pursuant to section 16a-2-301 may engage in
the business of selling or leasing of goods, at a location where supervised
loans are made. In this section, ``location'' means the entire space in which
supervised loans are made and must be separated from any space where
goods are sold, leased, or displayed by walls which may be broken only
by a passageway to which the public is not admitted.

(2) This section does not apply to

(a) sales or leases of goods or services pursuant to a lender credit card
made at a place of business other than that of a licensee;

(b) occasional sales of property used in the ordinary course of busi-
ness of the licensee;

(c) sales of items of collateral of which the licensee has taken pos-
session; or

(d) sales of items by a licensee who is also authorized by law to op-
erate as a pawnbroker.

Sec. 4. K.S.A. 16a-2-304 and 16a-2-309 and K.S.A. 1997 Supp. 16a-
1-301 are hereby repealed.

Sec. 5. This act shall take effect and be in force from and after its
publication in the Kansas register.

Approved April 10, 1998

Published in the Kansas Registers April 23, 1998

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