New York Commercial Disclosure Regulations Approved
On February 1, 2023, the New York State Department of Financial Services (“DFS”) adopted final regulations related to its new Commercial Finance Disclosure Law (“CFDL”) found in Article 8, Sections 801-811 of the New York Financial Services Law.
As a reminder, here are the major provisions of the CFDL:
- The law only applies to transactions which are less than $2.5 million;
- Banks and similar financial institutions are exempt;
- True (operating) leases are exempt;
- Commercial transactions secured by real property are exempt;
- Anyone who makes no more than 5 transactions in New York in a 12 month period is exempt;
- Certain vehicle dealers (for transactions which exceed $50k) are exempt;
- Disclosures must be made at the time of extending a specific offer; and
- Generally, the disclosures must include the amount of financing, APR, repayment amounts, term, finance charge, and description of collateral, if any.
Pursuant to the 53 pages of regulation, the CFDL:
- Applies only to transactions where the recipient is in New York;
- Exemptions extend to all majority owned subsidiaries of banks (because they are subject to consolidated oversight);
- Does not require disclosure of broker compensation in the disclosure forms, but still requires disclosure of broker fees in writing;
- Requires that APR be calculated in accordance with either the United States Rule or Appendix J of Reg Z;
- Allows for a digital signature by the recipient on the disclosure forms;
- Has font, rows and column requirements virtually identical to California law;
- Limits the duties of brokers to transmittal of disclosures and providing financer with evidence of transmission. There does not appear to be a document retention requirement like the one in California.
The New York regulations are quite similar to the California rules.
One important difference between the two is the $2.5 million threshold for New York versus the $500k threshold in California. Another major distinction between the two is the express inclusion of bank subsidiaries in the New York law, whereas the California regulations are unclear on this issue.
The compliance date for these regulations is six months after publication of the Notice of Adoption in the State Register. That appears to have happened already, so prepare for compliance on or before August 1, 2023.
This article is presented by the Law Office of Kenneth Charles Greene. All copyrightable text, the selection, arrangement, and presentation of all materials (including information in the public domain), and the overall design of this presentation are the property of the Law Office of Kenneth Charles Greene. All rights reserved. Permission is granted to download and reprint materials from this article for the purpose of viewing, reading, and retaining for reference. Any other copying, distribution, retransmission, or modification of information or materials from this article, whether in electronic or hard copy form, without the express prior written permission of Kenneth C. Greene, is strictly prohibited. The materials available from this article are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to these materials does not create an attorney-client relationship between the Law Office of Kenneth Charles Greene and the user or viewer. The opinions expressed herein are the opinions of the individual author.Last modified: March 28, 2023
Ken Greene is an attorney and Editor of Leasing News. To contact Ken, email: firstname.lastname@example.org.