As with any other business or industry, there are situations where well intended parties find themselves in an unintended
conflict that they cannot resolve. Add to that the situation where a dishonest individual intentionally commits fraud
upon a leasing company and absconds with money where an underlying lease does not exist. An example of the multitude
of problems can arise in the processing of an equipment lease are:
Advance Fees. One
of the most common issues of dispute on both legal and ethical grounds are those that involve the retention or return of advance
fees. The resolution of the issue involves an analysis of documentation, the facts to determine how the potential lease unwound,
whether or not an actual approval for leasing was obtained, costs involved in obtaining the approval and the ethical consideration
of a potential economic windfall associated with the retention of advance fees. Not only can this dispute arise between the
lessee and the lessor, but it can arise between a broker and a funding source as well.
Fraud in the Leasing
Process. Appreciating that the leasing process itself is multi-dimensional and involves multiple disciplines, the opportunity
to commit fraud in the leasing process is available to all those involved in putting a lease together, including brokers,
funders, customers, equipment vendors and even funding sources. No one in the process is immue from being the potential victim
of fraud.
Broker/Funder Relations. Leasing is an industry where third party originators generate a tremendous
amount of leasing volume for their funding sources. The various rights and responsiblities of funders to brokers and brokers
to funders must be contractually defined and if there is such a contract, the terms and conditions of such a contract should
be understood by both the broker and the funder.
Vendor Relations. Are vendors entitled to be paid referral
fees from leasing companies that they refer lease transactions to? Even if they are entitled, is it ethical for vendors
to remit such fees at the expense of the lessee? If it can be done, how should it be done? This issue can cause problems for
everyone in a lease transaction.
Documentation. The constant struggle between aggressive marketing and
legal protection revolves around sophistocated documentation. And just because a creative document says something, does that
mean that it is enforceable? And a lease is not a lease. The type of lease determines legal rights and obligations
of the parties involved.
