We have some exciting news regarding Section 535 of the Service Member Civil Relief Act, which might excite you. We know that we have plenty of military personnel living in Honolulu and Oahu, Hawaii, and because of that we want to ensure that you know your rights! Under Section 535, it reads:
Termination of motor vehicle leases* Sec.305
(a) Termination by lessee.
- (1) In general. The lessee on a lease described in subsection (b) may, at the lessee’s option, terminate the lease at any time after – (a) the lessee’s entry into military service; or (b) the date of the lessee’s military orders described in paragraph (1)(B) of (2)(B) of subsection (b), as the case may be.
- (2) Joint leases. A lessee's termination of a lease pursuant to this subsection shall terminate any obligation a dependent of the lessee may have under the lease.
(b) Covered leases. This section applies to the following leases:
- (2) Leases of motor vehicles. A lease of a motor vehicle used, or intended to be used, by a servicemember or a servicemember's dependents for personal or business transportation if -(A) the lease is executed by or on behalf of a person who thereafter and during the term of the lease enters military service under a call or order specifying a period of not less than 180 days (or who enters military service under a call or oder specifying a period of 180 days or less and who, without a break in service, receives orders extending the period of military service to a period of not less than 180 days); or (B) the servicemember, while in military service, executes the lease and thereafter receives military orders - (i) for a change of permeant station - (I) from a location in the continental United States to a location outside of the continental United States; or (II) from a location in a State outside the continental United States to any location outside that State; or (ii) to deploy with a military unit or as an individual in support of a military operation for a period of not less than 180 days
(c) Manner of termination
- (1) In general. Termination of a lease under subsection (a) is made - (A) by delivery by the lessee of written notice of such termination, and a copy of the servicemember's military order, to the lessor (or the lessor's grantee), or to the lessor's agent (or the agent's grantee); and (B) in the case of a lease of a motor vehicle, by return of the motor vehicle by the lessee to the lessor (or the lessor's grantee), or to the lessor's agent (or the agent's grantee), not later than 15 days after the date of the delivery of written notice under subparagraph (A).
- (2) Delivery of notice. Delivery of notice under paragraph (1)(A) may be accomplished - (A) by hand delivery; (B) by private business carrier; or (C) by placing the written notice in an envelope with sufficient postage and with return receipt requested, and addressed as designated by the lessor (or the lessor's grantee) or to the lessor's agent (or the agent's grantee), and depositing the written notice in the United States mails.
(d) Effective date of lease termination
- (2)Lease of motor vehicles. In the case of a lease described in subsection (b)(2), termination of the lease under subsection (a) is effective on the day on which the requirements of subsection (c) are met for such termination.
(e) Arrearages and other obligations and liabilities
- (2) Leases of motor vehicles. Lease amounts for a lease described in subsection (b)(2) that are unpaid for the period preceding the effective date of the lease termination shall be paid on a prorated basis. The lessor may not impose an early termination charge, but any taxes, summonses, title and registration fees, or other obligations and liabilities of the lessee in accordance with the terms of the lease, including reasonable charges to the lessee for excess wear or use and mileage, that are due and unpaid at the time of termination of the lease shall be paid by the lessee.
(f) Rent paid in advance. Rents or lease amounts paid in advance for a period after the effective date of the termination of the lease shall be refunded to the lessee by the lessor (or the lessor's assignee or the assignee's agent) within 30 days of the effective date of the termination of the lease.
(g) Relief to lessor. Upon application by the lessor to a court before the termination date provided in the written notice, relief granted by this section to a servicemember may be modified as justice and equity require.
(h) Misdemeanor. Any person who knowingly seizes, hold, or detains the personal effects, security deposit, or other property of a servicemember or a servicemember's dependent who lawfully terminates a lease covered by this section, or who knowingly interferes with the removal of such property from premises covered by such lease, for the purpose of subjecting or attempting to subject any of such property to a claim for rent accruing subsequent to the date of termination of such lease, or attempts to do so, shall be fined as provided in title 18, United States Code, or imprisoned for not more than one year, or both.
- (1) Military orders. The term "military orders", with respect to a servicemember, means official military orders, or any notification, certification, or verification from the servicemember's commanding officer, with respect to the servicemember's current or future military duty status.
- (2) CONUS. The term 'continental United States' means the 48 contiguous States and the District of Columbia.
*50 U.S.C. App. §535 is among the most frequently amended sections in the SCRA. Congress has continued to amend the section as a result of the continuing efforts of landlords and leasing companies to try and defeat the purpose of the section, which is to allow service members to terminate premises and vehicle leases when they are not in a position to utilize the premises or vehicles because of their military service. The principal amendments to this section have been made by P.L. 108-454, effective December 10, 2004, and P.L. 111-275, effective October 13, 2010.
What Does This Mean For You?
Active duty military members can terminate their residential or motor vehicle leases under certain circumstances. If you have a lease and get deployed for 180 days, the banks will help you by terminating the contract. This section is set in place to keep you from defaulting on a vehicle that you're no longer driving. We want to ensure that our military members in Honolulu, Hawaii can get the help they need while they are deployed.
Will It Impact Your Credit?
The answer is, no, ending your lease under Section 535 does not affect credit as the banks are the ones terminating the lease. Using Section 535 is beneficial because it relinquishes you of financial responsibility without impacting your credit report. Once you're back from deployment, you should be able to get another lease with zero problems!
Have Questions? Contact Us!
If any of the above information is confusing or you find that you have questions about the services available to you, please contact us. Our finance department can easily explain the leasing laws to you and help you understand your rights.