In NY, who bears risk of loss in a lease of goods, and what is the exception?

In NY, who bears risk of loss in a lease of goods, and what is the exception?

• A. Lessor bears RoL always; exception: lease from a Bank
• B. Lessee bears RoL; exception: lease from a Bank
• C. RoL always on Lessor; exception: a lease from a Bank
• D. RoL is determined by contract; exception: lease from a Bank

Answer: (C)

In a lease of goods in New York, the usual rule is that the party who owns the goods (the lessor) bears the risk of loss. That means if the goods are damaged or destroyed while under the lessor’s control, the loss falls on the owner rather than the user of the goods. The lessee’s responsibility is to use the goods as agreed and to obtain insurance, but the default allocation keeps the risk with the owner. The notable exception is when the lease is arranged by a bank. In bank-financed leases, the arrangement is treated more like a secured financing than a straightforward lease, so the risk of loss shifts to the lessee for the term of the lease. The bank retains its security interest, while the lessee bears the risk of loss during the lease period.

In a lease of goods in New York, the usual rule is that the party who owns the goods (the lessor) bears the risk of loss. That means if the goods are damaged or destroyed while under the lessor’s control, the loss falls on the owner rather than the user of the goods. The lessee’s responsibility is to use the goods as agreed and to obtain insurance, but the default allocation keeps the risk with the owner.

The notable exception is when the lease is arranged by a bank. In bank-financed leases, the arrangement is treated more like a secured financing than a straightforward lease, so the risk of loss shifts to the lessee for the term of the lease. The bank retains its security interest, while the lessee bears the risk of loss during the lease period.