Re: SOL on vehicle lease in NC after Jan 98 ?

Posted by lawguy (216.30.212.58) on April 01, 2003 at 14:49:06:

In Reply to: SOL on vehicle lease in NC after Jan 98 ? posted by C lemon on April 01, 2003 at 12:21:24:

I actually am involved in two deficiency suits brought by Ford Motor Credit for vehicles sold in NC and repossesed in NC. (Suits are in WV as clients have since relocated here).

SOL is actually the 3 year SOL for written contracts, not the 4 year UCC SOL. (One of the suits is past SOL) NC is in the minority of states here, as the NC courts have held that the 4 year UCC SOL applies only to the "pure sales aspects" of the agreement, and not to the credit aspect governed by Article 9. (Most states apply the Article 2 SOL to agreements governed by Article 9) Hence, the court has applied the 3 year written contract SOL to suits based on repossession and deficiency.

Under NC law (and the law of most if not all states) the SOL for installment sales contracts begins for each installment as that installment comes due. However, in the event of a default AND the creditor's acceleration of the loan, the SOL begins from the date of acceleration. Thus, the SOL for a deficiency suit will begin "no later than" the date of notice of repossession or actual repossession (as that is implicitly an acceleration of the loan), and could begin running sometime before that.

NC does not have a "strict" notice law, i.e. no deficiency if notice not given exactly as set out. (Compare with Maryland, which holds that notice is a prerequisite to deficiency.) It uses a "reasonable" test. NC requires that the debtor be given "reasonable notice" for repossession and that the sale of the repossessed property be done in a "commercially reasonable" fashion. If this is not done in such reasonable fashion, then the courts will credit the deficiency as if it were done in a reasonable fashion. The creditor can still then recover the portion of unpaid principal that would have been had the sale been done in a commercially reasonable manner.

To be honest though, I am not sure how a vehicle lease agreement would be treated, if it would be the same or different from a regular credit sale transaction...

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