Missouri Statute | Act | Code |Debtor-creditor Relations| US Code - US Statute

Notwithstanding any other law to the contrary, sections 427.011
to 427.041 provide the state of Missouri with a comprehensive body of law
limiting the lender's or a representative's liability for violations of
any state or local laws and ordinances relating to state environmental
requirements by persons or entities with or for whom the lender extended
or enhanced credit, or to whom a representative has a fiduciary duty. No
law of this state enacted after August 28, 1991, including any rules or
regulations enacted pursuant to the power contained in said law, shall
act retrospectively to impose environmental liability on representatives
holding property or acting in a fiduciary capacity or lenders extending
or enhancing credit secured by collateral, foreclosing, or otherwise
enforcing the creditor's interest in such property, or holding such
foreclosed property, provided the lenders or representatives meet the
conditions of sections 427.011 to 427.041. (L. 1991 S.B. 204)

As used in sections 427.011 to 427.041, the following terms mean:

(1) "Contaminate" or "pollute", contamination or pollution of air, water,
real or personal property, animals, or human beings from a location in
the state of Missouri, including, but not limited to, contamination or
pollution from hazardous substances or radioactive materials as otherwise
defined by subdivision (5) of section 260.500, RSMo;

(2) "Lender-owner", an individual, a bank, a bank holding company, a
savings and loan association, a credit union, an insurance company, a
consumer finance company, a mortgage company or an institution chartered
pursuant to the provisions of an act of Congress of the United States
known as the Farm Credit Act of 1971, which has or had a bona fide
security interest in or mortgage or lien on real or personal property,
which are hereafter referred to as financial institutions, which interest
was not obtained primarily for the purpose of avoiding environmental
liability arising from or at the site of such real or personal property,
including:

(a) A financial institution which forecloses on a debt;

(b) A financial institution which receives an assignment on a debt;

(c) A financial institution which receives a deed in lieu of foreclosure
or other conveyance in full or partial satisfaction of a debt;

(d) A financial institution which obtains a receiver in anticipation of
foreclosure, whether or not such financial institution becomes the owner
of such real or personal property; or

(e) A financial institution which is a regulated creditor principally in
the business of extending credit and which obtains title pursuant to an
execution of a judgment lien;

(3) "Participating in management" does not include monitoring a debtor's
business, acquiring title in lieu of a foreclosure or other agreement in
settlement of the operator's or property owner's debt;

(4) "Representative", any person or entity acting in the capacity of a
conservator, guardian ad litem, personal representative of a deceased
person, or trustee or fiduciary of real or personal property; except that
the terms "trustee" and "fiduciary" shall be limited either to entities
acting as trustee or fiduciary and which are chartered by the state
division of credit unions, or the division of finance, the office of the
United States Comptroller of the Currency, the National Credit Union
Administration, or the Office of Thrift Supervision, or an individual or
fiduciary of an irrevocable trust who does not have an interest as a
beneficiary either at the time the trust was established or amended,
provided that:

(a) Such trust was not established or assets were transferred to such
trust for the intended purpose of avoiding environmental liability; or

(b) Such individual trustee or fiduciary does not impair or obstruct
access by any governmental entity to any trust asset to contain, control,
or otherwise remediate hazardous substances;

(5) "Third parties", persons or entities, including governmental
entities, seeking to enforce environmental statutes, ordinances,
regulations, permits, or orders or asserting third-party liability as
defined below; without limiting the generality of the foregoing, a "third
party" includes any beneficiary of a trust held by a representative; and

(6) "Third-party liability", liability to third parties for any claims,
fines, damages or penalties arising out of or resulting from
contamination or pollution, including, without limitations, claims for
personal injury, consequential damages, lost profits, exemplary damages,
or property damages or in connection with the enforcement of
environmental statutes, ordinances, regulations, permits or orders. (L.
1991 S.B. 204, A.L. 1994 H.B. 1165)

Effective 7-6-94

1. No person or entity shall be deemed to be an owner or
operator of real or personal property, or a person having control over
hazardous substances who, without participating in the management of such
real or personal property, holds indicia of ownership primarily to
protect a security or lienhold interest in the subject real or personal
property or in the property in which such real or personal property is
located.

2. No lender-owner or representative shall, by virtue of becoming the
owner of real or personal property, be liable for any clean-up costs,
response costs or third-party liability arising from contamination or
pollution of or from said property prior to the date that title vests in
the lender-owner or representative including contamination or pollution
which continues thereafter without the lender-owner knowingly or
recklessly causing such contamination.

3. No lender-owner or representative shall, by virtue of becoming the
owner of real or personal property, be liable for any clean-up costs,
response cost, or third-party liability arising from contamination or
pollution of or from such property during the period of ownership so long
as, and to the extent that, he does not knowingly or recklessly cause new
contamination or pollution or does not knowingly or recklessly allow
others to cause new contamination or pollution. This subsection shall
apply to the lender-owner as long as he makes reasonable efforts to
resell the real or personal property. No representative shall be
personally liable to any beneficiary for diminution in the value of
property held in its fiduciary capacity due to compliance with
environmental laws. (L. 1991 S.B. 204)

In sections 427.011 to 427.041, the general assembly hereby
occupies and preempts the entire field of legislation imposing liability
on lenders-owners for precedent environmental conditions which result in
contamination or pollution, including by way of example and not of
limitation, lender liability for hazardous substances, toxic wastes,
clean air, clean water, solid waste disposal, and underground storage
tanks, to the complete exclusion of an order, ordinance or regulation by
any political subdivision of this state and by the federal government to
the extent permitted by the law except those state statutes pertaining to
the underground storage tank insurance fund. (L. 1991 S.B. 204, A.L. 1997
H.B. 257)

The consent of the state is hereby granted to, and all
appropriate powers are hereby conferred upon, any municipality or
political subdivision organized under the laws of the state to institute
any appropriate action authorized by any act of the Congress of the
United States relating to bankruptcy on the part of any municipality or
political subdivision. (L. 1995 S.B. 414)

Effective 4-11-95

Sections 427.110 to 427.190 may be cited as the "Collateral
Protection Act". As a part of their regular audit, state regulators may
audit creditors that elect coverage under sections 427.110 to 427.190;
when the creditor is primarily regulated by the state, the state agency
currently authorized to examine such creditor shall be the exclusive
agency permitted to audit such creditor for compliance. When the creditor
is chartered by the federal government or any agency thereunder, or is
unregulated, the Missouri attorney general may audit such creditor for
compliance and shall be the exclusive agency to monitor compliance,
except it may delegate such audit power to the division of finance. (L.
1997 H.B. 257)

In sections 427.110 to 427.190, unless the context otherwise
requires, the following words and phrases shall mean:

(1) "Collateral", any or all property pledged to secure payment,
repayment, or performance under a credit agreement, including, but not
limited to, personal property, real property, fixtures, inventory,
receivables, rights or privileges;

(2) "Collateral protection coverage":

(a) Insurance coverage that is:

a. Purchased unilaterally by a creditor subsequent to the date of a
credit agreement;

b. Purchased to provide monetary protection against loss of or damage to
the collateral or against liability arising out of the ownership or use
of the collateral;

c. Purchased according to the terms of a credit agreement as a result of
a debtor's failure to provide evidence of insurance or failure to
maintain adequate insurance to cover the collateral, with the costs of
such insurance, including interest and any other charges imposed by the
creditor in connection with the placement of such insurance, payable by
the debtor; and

d. Purchased to protect only the interest of the creditor or insurance
coverage that is purchased to protect both the interest of the creditor
and some or all of the interest of the debtor. The term of such coverage
may, but need not, extend to the full term of the credit transaction;

(b) Does not include insurance coverage that is:

a. Purchased by the creditor and not chargeable to the debtor;

b. Purchased at the inception of a credit transaction to which the debtor
is a party or agrees to the insurance coverage, whether or not the costs
are included in any payment plan under the credit transaction;

c. Purchased by the creditor following foreclosure, repossession, or a
similar event wherein the creditor gains possession or control over the
collateral;

d. Maintained by the creditor for the protection of any or all collateral
which may come into the possession or control of the creditor through
foreclosure, repossession, or a similar event;

e. Credit insurance, mortgage protection insurance, insurance issued to
cover the life or health of the debtor, or any other insurance maintained
to cover the inability or failure of the debtor to make payment under the
credit agreement, including any insurance governed by chapter 385, RSMo;

f. Title insurance;

g. Flood insurance required to be placed by creditors by 42 U.S.C.
4012(a), as amended, pursuant to the National Flood Insurance Reform Act
of 1994; or

h. Conditioned upon the default or delinquency of the debtor's loan
payments, or the repossession of the collateral;

(3) "Credit agreement", the written document or documents that set forth
the terms of the credit transaction;

(4) "Credit transaction", any transaction which requires the payment or
repayment of money, goods, services, property, rights, or privileges,
which is to be made on one or more future dates, where such obligation is
secured by collateral;

(5) "Creditor", any person, corporation, partnership, association, or
other venture, which is in the business of lending money or the vendor or
lessor of goods, services, property, rights, or privileges, for which
repayment is arranged through a credit transaction, and includes any
successor to the rights, title, interest, or liens of such lender,
vendor, or lessor;

(6) "Debtor", a borrower of money or a purchaser or lessee of goods,
services, property, rights, or privileges, for which payment or repayment
is arranged through a credit agreement. Debtor does not include any
person who is not the primary obligor under a credit transaction or who
is not jointly liable or jointly and severally liable with the debtor for
the obligation. (L. 1997 H.B. 257)

For protection under sections 427.110 to 427.190, a creditor may
place collateral protection coverage provided the following conditions
are met:

(1) The debtor has entered into a credit transaction with the creditor;

(2) The credit transaction has been reduced to a credit agreement, and
the credit agreement requires the debtor to maintain insurance on the
collateral; and

(3) A notice substantially similar to the following has been included in
the credit agreement or on a separate document provided to the debtor at
the time the credit agreement is entered: "Unless you provide evidence of
the insurance coverage required by your agreement with us, we may
purchase insurance at your expense to protect our interests in your
collateral. This insurance may, but need not, protect your interests. The
coverage that we purchase may not pay any claim that you make or any
claim that is made against you in connection with the collateral. You may
later cancel any insurance purchased by us, but only after providing
evidence that you have obtained insurance as required by our agreement.
If we purchase insurance for the collateral, you will be responsible for
the costs of that insurance, including the insurance premium, interest
and any other charges we may impose in connection with the placement of
the insurance, until the effective date of the cancellation or expiration
of the insurance. The costs of the insurance may be added to your total
outstanding balance or obligation. The costs of the insurance may be more
than the cost of insurance you may be able to obtain on your own." (L.
1997 H.B. 257)

1. Within thirty calendar days following the placement of
collateral protection coverage, the creditor shall mail to the debtor at
the last known address of any such person, a notice entitled "Notice of
Placement of Insurance" in a form substantially similar to the following:

"NOTICE OF PLACEMENT OF INSURANCE

Your credit agreement with us requires you to maintain adequate insurance
on your collateral until you pay off your credit agreement. You have not
given us proof that you have adequate insurance on your collateral. Under
the terms of your credit agreement, we have purchased insurance at your
expense to protect our interests in your collateral.

The insurance we purchased will pay claims made by us as the creditor.
The insurance we purchased may not pay any claims made by you or against
you in connection with your collateral.

You are responsible for the costs of this insurance, including the
insurance premium, interest and any other charges we may impose in
connection with the purchase of this insurance. The costs of this
insurance may be more than insurance you can buy on your own.

You still may obtain insurance of your own choosing on the collateral. If
you provide us with proof that you have obtained adequate insurance on
your collateral, we will cancel the insurance that we purchased and
refund or credit any unearned premiums to you. If, within thirty days
after the date this notice was sent to you, you provide us with proof
that you had adequate insurance on your collateral as of the date we
purchased or placed insurance on this debt and that you continue to have
the insurance that you purchased yourself, we will cancel the insurance
that we purchased without charging you any costs, interest, or other
charges in connection with the insurance that we purchased."

2. Provided the creditor otherwise complies with subsection 1 of this
section, a creditor may extend a grace period for sixty days or more from
the date the debtor defaults on providing proof of insurance in which
case collateral protection insurance placed at the expiration of the
grace period may include a premium charge for such coverage retroactive
to the date the debtor defaulted on the obligation to provide proof of
insurance. If such a premium charge is included, the creditor shall amend
the notice required by subsection 1 of this section to reflect that the
creditor will cancel the insurance with no cost to the debtor only if the
debtor provides proof of insurance that was effective as of the first day
of the grace period.

3. The terms for repayment of the costs of the collateral protection
coverage, which shall include interest and any other charges imposed by
the creditor in connection with the placement of the collateral
protection coverage, shall include one or more of the following:

(1) Full payment within thirty days after the date of the notice of
placement of insurance;

(2) A final balloon payment within thirty days after the last scheduled
payment required by the credit agreement; or

(3) Full amortization over the term of the credit transaction, the term
of the collateral protection insurance policy, or the term for which
amortization is used by the creditor. (L. 1997 H.B. 257, A.L. 1998 S.B.
792)

If any form of amortization is used by the creditor and a coupon
book was sent to the debtor at the inception of the credit transaction,
the creditor shall send to the debtor one of the following:

(1) A reprinted coupon book with revised calculations of the debtor's
payments that includes the amortized costs of the collateral protection
coverage;

(2) A supplemental coupon book with calculations of the debtor's
additional payments based upon the amortized costs of the collateral
protection coverage, for use by the debtor in addition to the original
coupon book; or

(3) A letter with both the amortized cost of the collateral protection
insurance and a calculation of the debtor's new payments including the
amortized cost of the insurance. Such letter shall state in bold letters
that the new payment obligation replaces the payment amount indicated in
the coupon book. (L. 1997 H.B. 257)

1. Any collateral protection coverage purchased unilaterally by
the creditor subsequent to the date of the credit agreement shall be
canceled whenever and for so long as:

(1) The debtor has in place substitute insurance of at least the level of
coverage required by the credit agreement to protect the collateral; and

(2) The debtor is able to provide the creditor with proper evidence of
such coverage.

2. If, within thirty days after notice is sent pursuant to subsection 1
or 2 of section 427.125, a debtor provides the creditor with proper
evidence that the debtor had insurance on the collateral as required by
the credit agreement on the date the collateral protection became
effective and that the debtor continues to have insurance on the
collateral as required by the credit agreement, the creditor shall cancel
the coverage that it purchased and may not charge the debtor any costs,
including insurance premiums, interest, or other charges in connection
with the coverage. (L. 1997 H.B. 257)

Upon cancellation or expiration of collateral protection
coverage, the amount of unearned premiums, if any, as calculated in
accordance with the policy approved by the department of insurance as
permitted by law, shall be refunded to the debtor. The amount of unearned
premiums, however, may not be calculated by the rule of 78 or sum of the
digits method. A refund of unearned premiums may be credited to the
debtor's obligation under the credit agreement or distributed directly to
the debtor by check or other means. (L. 1997 H.B. 257)

Collateral protection coverage may be placed with any insurance
carrier selected by the creditor that is licensed to underwrite the
insurance by the department of insurance. The insurance shall be
evidenced by an individual policy or a certificate of insurance. (L. 1997
H.B. 257)

A creditor that places collateral protection coverage in
substantial compliance with the terms of sections 427.110 to 427.190
shall not be directly or indirectly liable in any manner to a debtor,
cosigner, guarantor, or any other person in connection with the placement
of the collateral protection coverage. Notices and coupon books required
to be mailed to a debtor under sections 427.110 to 427.190 are not
required to be mailed to any person other than to the debtor, and shall
be mailed first class, postage prepaid, to the debtor's last known
address on file with the creditor. (L. 1997 H.B. 257)

Sections 427.110 to 427.190 do not impose a fiduciary
relationship between the creditor and the debtor. Placement of collateral
protection coverage is for the sole purpose of protecting the interest of
the creditor when the debtor fails to insure collateral as required by
the credit agreement. (L. 1997 H.B. 257)

A creditor is not required to purchase collateral protection
coverage or to otherwise insure collateral. A creditor shall not be
liable to a debtor or to any other person for failure to purchase
collateral protection coverage, as a result of the amount or level of
coverage of collateral protection coverage purchased by the creditor, or
because the creditor purchased collateral protection coverage that
protects only the interests of the creditor or less than all of the
interests of the debtor. Sections 427.110 to 427.190 shall not create a
cause of action for damages on behalf of the debtor or any other person
in connection with the placement of collateral protection coverage, and
violations of these sections shall not be deemed to violate the standard
of care under any common law cause of action. (L. 1997 H.B. 257)

The obligations and rights of the creditor and the debtor with
respect to the collateral as provided by the uniform commercial code are
not affected by sections 427.110 to 427.190. (L. 1997 H.B. 257)

The provisions of sections 427.110 to 427.190 are severable
under section 1.140, RSMo, and shall not impair any other remedies,
rights, or options available to a creditor pursuant to any law,
regulation, ruling, court order, contract, or agreement. (L. 1997 H.B.
257)

Any insurer, as defined in subdivision (5) of section 375.012,
RSMo, that underwrites collateral protection coverage for various
creditors, may claim the protection of sections 427.110 to 427.190. (L.
1997 H.B. 257)

An action to enforce an obligation, duty, or right to determine
liability for collateral protection coverage shall be commenced within
five years after the cause of action accrues. The cause of action shall
accrue when such collateral protection coverage is purchased. (L. 1997
H.B. 257)

Any person may hold personal property for lease, except as
otherwise provided by law. A lease shall be in writing and may be either
the functional equivalent of a loan or a true lease where the lessee pays
compensation for the use of the leased property which is returned to the
lessor at the end of the lease. A motor vehicle lease may include the
outstanding balance of a prior loan or lease of a motor vehicle used as a
trade-in, as well as other items that are capitalized or amortized during
the lease term. Lease payments shall be considered in the nature of rent
rather than interest, and the provisions of chapter 408, RSMo, relating
to interest, shall not apply. (L. 1999 S.B. 386)

1. Commissions paid to properly licensed employees or individual
agents of a depository institution or a related entity shall not be more
limited than commissions paid to employees or agents or any other
properly licensed insurance agency, but shall be disclosed at least
quarterly to the board of directors of the depository institution if
earned under a contract with the depository institution to facilitate the
sale of insurance; provided this subsection shall not apply to
commissions based on the sale of credit insurance regulated by chapter
385, RSMo.

2. Consideration given under a contract between a depository institution
and a related entity to facilitate the sale of insurance shall not be
more limited than under such a contract between a depository institution
and a nonrelated entity, except that the consideration from the related
entity, other than an operating subsidiary, must be at least equal to the
fair market value of the consideration from the depository institution.
The depository institution may establish the value of rights under a
contract by obtaining written bid commitments based on a nonrelated
entity's bid for a contract; provided:

(1) The parties to the contract may demonstrate fair market value by
illustrating the costs and benefits of the contract in a number of ways,
including but not limited to the following: providing a full accounting
of the calculations and compensation, including gross commissions to be
received by each party to the contract, and any fees or other payments
made to any bank officers, directors, employees and agents as a result of
the contract, as well as specifically disclosing the services, such as
standard light, heat, telephone, space plus office personnel and filing
space, and providing an accounting of new business to be generated, with
a comparison of depository institution and agency business, for the
parties to the contract;

(2) Information provided pursuant to this subsection shall be considered
proprietary and confidential pursuant to sections 361.070 and 361.080,
RSMo.

3. If the division determines enforcement action is necessary to protect
the safety and soundness of an institution that it regulates, it may take
enforcement action as otherwise permitted by law and may limit insurance
commissions or other payments to an amount other than permitted in this
section; provided the division has made a finding that enforcement action
was required to protect the safety and soundness of such institution.
Nothing in this section shall limit the application of sections 382.190
and 382.195, RSMo, to transactions between insurers and their affiliates.

4. For the purposes of this section, the following terms shall mean:

(1) "Commissions", in addition to insurance commissions, this term shall
include any other compensation received for the sale of insurance
products whether such compensation is classified within the depository
institution as salary, bonus or other remuneration;

(2) "Contract", any contract or arrangement;

(3) "Division", the division of finance or the division of credit union
supervision;

(4) "Fair market value", the value of an asset or service, which may
include determinable costs and a profit reasonable for the market and
shall not be limited to a specific rate of profit;

(5) "Operating subsidiary", any subsidiary of a depository institution
that is not a financial subsidiary as otherwise defined by law;

(6) "Related entity", any holding company, affiliate or subsidiary of the
depository institution or any entity controlled by common ownership with
the depository institution or by an individual or individuals who are
executive officers or directors of the depository institution. (L. 2001
H.B. 738 merged with S.B. 186)

1. Deceptive use of a financial institution's name in
notification or solicitation occurs when a business, or a person acting
on its behalf, engages in the following activity:

(1) Through advertisement, solicitation, or other notification, either
verbally or through any other means, informs a consumer of the
availability of any type of goods or services that are not free;

(2) The name of an unrelated and unaffiliated financial institution is
mentioned in any manner;

(3) The goods or services mentioned are not actually provided by the
unrelated and unaffiliated financial institution whose name is mentioned;

(4) The business on whose behalf the notification or solicitation is made
does not have a consensual right to mention the name of the unrelated and
unaffiliated financial institution; and

(5) Neither the actual name nor trade name of the business on whose
behalf the notification or solicitation is being made is stated, nor the
actual name or trade name of any actual provider of the goods or services
is stated, so as to clearly identify for the consumer a name that is
distinguishable and separate from the name of the unrelated and
unaffiliated financial institution whose name is mentioned in any manner
in the notification or solicitation, and thereby a misleading implication
or ambiguity is created, such that a consumer who is the recipient of the
advertisement, solicitation or notification may reasonably but
erroneously believe:

(a) That the goods or services whose availability is mentioned are made
available by or through the unrelated and unaffiliated financial
institution whose name is mentioned; or

(b) That the unrelated and unaffiliated financial institution whose name
is mentioned is the one communicating with the consumer.

2. Deceptive use of another's name in notification or solicitation occurs
when a business, or a person acting on its behalf, engages in the
following activity:

(1) Falsely states or implies that any person, product or service is
recommended or endorsed by a named third-person financial institution; or

(2) Falsely states that information about the consumer including but not
limited to the name, address, or phone number of the consumer has been
provided by a third-person financial institution, whether that person is
named or unnamed.

3. Only the financial institution whose name is deceptively used, as
provided in this section, may bring a private civil action and recover a
minimum amount of ten thousand dollars, court costs, and attorney fees
plus any damages such financial institution may prove at trial.

4. For the purposes of this section, a financial institution includes a
commercial bank, savings and loan association, savings bank, credit
union, mortgage banker, or consumer finance company, or an institution
chartered pursuant to the provisions of an act of the United States known
as the Farm Credit Act of 1971. (L. 2004 H.B. 959)

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