N.M. Admin. Code § 12.16.35.7

Current through Register Vol. 35, No. 21, November 5, 2024

Section 12.16.35.7 - DEFINITIONS

A. A "net lease" is a lease under which the bank will not, directly or indirectly, provide or be obligated to provide for:

(1) the servicing, repair or maintenance of the leased property during the lease term;

(2) the purchasing of parts and accessories for the leased property; however, improvements and additions to the leased property may be leased to the lessee upon its request in accordance with the full payment requirements of this ruling;

(3) the loan of replacement or substitute property while the leased property is being serviced;

(4) the purchasing of insurance for the lessee, except where the lessee has failed in its contractual obligation to purchase or maintain the required insurance;

(5) the renewal of any license or registration for the property unless such action by the bank is clearly necessary to protect its interest as an owner or financier of the property.

B. A "full-payout" lease is one from which the lessor can reasonably expect to realize a return of its full investment in the leased property plus the estimated cost of financing the property over the term of the lease from:

(1) rentals;

(2) estimated tax benefits; and

(3) the estimated residual value of the property at the expiration of the initial term of the lease.

N.M. Admin. Code § 12.16.35.7

11/15/96; Recompiled 10/15/01