A fine-print trap?

0 Comments | Deseret News (Salt Lake City), Jul 16, 2006

Following is the controversial fine print in "purchase, renewal or return" -- or PRR-type -- leases that critics say could trap the unwary into perpetual, inescapable and expensive lease renewals if lessors merely refuse to negotiate on other options.

This paragraph comes from a lease signed by Flying J Oil Co. with Matrix Financial. Controversial portions that could lead to automatic extensions are put in bold:

At the end of the Initial Period of any Lease, or upon any expiration of any renewal or extension thereof as provided for in option (2) herein or otherwise, Lessee shall, provided at least one hundred eighty (180) days prior written notice is received by Lessor from Lessee via certified mail, do one of the following (1) purchase the Property for a price to be determined by Lessor and Lessee, (2) extend the Lease for twelve (12) additional months at the rate specified on the respective Schedule, or (3) return the Property to Lessor at Lessee's expense to a destination within the continental United States specified by Lessor and terminate the Schedule; provided, however that for option (3) to apply, all accrued but unpaid late charges, interest, taxes, penalties, and any other sums due and owing under the Schedule must first be paid in full, the provisions of Sections 6(c) and (d) and 7(c) must be specifically complied with, and Lessee must enter into a new Schedule with Lessor to lease Property which replaces the Property listed on the old Schedule. With respect to options (1) and (3), each party shall have the right in its absolute and sole discretion to accept or reject any terms of purchase or of any new Schedule, as applicable. In the event Lessor and Lessee have not agreed to either option (1) or (3) by the end of the Initial Period or any renewal or extension period then in effect, or if Lessee fails to give written notice of its option via certified mail at least one hundred eighty (180) days prior to the termination of the Initial Period or any renewal or extension period then in effect, then option (2) shall apply at the end of the Initial Period or any renewal or extension period then in effect.