Chapter 411

411.219(1) (1) Except in the case of a finance lease, risk of loss is retained by the lessor and does not pass to the lessee. In the case of a finance lease, risk of loss passes to the lessee.

411.219(2) (2) Subject to s. 411.220, if risk of loss is to pass to the lessee and the time of passage is not stated, all of the following apply:

411.219(2)(a) (a) If the lease contract requires or authorizes the goods to be shipped by carrier and the lease contract does not require delivery at a particular destination, the risk of loss passes to the lessee when the goods are delivered to the carrier; but if the lease contract does require delivery at a particular destination and the goods are tendered while in the possession of the carrier, the risk of loss passes to the lessee when the goods are so tendered as to enable the lessee to take delivery.

411.219(2)(b) (b) If the goods are held by a bailee to be delivered without being moved, the risk of loss passes to the lessee on acknowledgment by the bailee of the lessee’s right to possession of the goods.

411.219(2)(c) (c) In any case not within par. (a) or (b), the risk of loss passes to the lessee on the lessee’s receipt of the goods if the lessor, or, in the case of a finance lease, the supplier, is a merchant; otherwise the risk passes to the lessee on tender of delivery.

411.219 History History: 1991 a. 148.

411.220 411.220 Effect of default on risk of loss.

411.220(1) (1) If risk of loss is to pass to the lessee and the time of passage is not stated, all of the following apply:

411.220(1)(a) (a) If a tender or delivery of goods so fails to conform to the lease contract as to give a right of rejection, the risk of their loss remains with the lessor, or, in the case of a finance lease, the supplier, until cure or acceptance.

411.220(1)(b) (b) If the lessee rightfully revokes acceptance, the lessee, to the extent of any deficiency in his or her effective insurance coverage, may treat the risk of loss as having remained with the lessor from the beginning.

411.220(2) (2) Whether or not risk of loss is to pass to the lessee, if the lessee as to conforming goods already identified to a lease contract repudiates or is otherwise in default under the lease contract, the lessor, or, in the case of a finance lease, the supplier, to the extent of any deficiency in his or her effective insurance coverage may treat the risk of loss as resting on the lessee for a commercially reasonable time.

411.220 History History: 1991 a. 148.

411.221 411.221 Casualty to identified goods. If a lease contract requires goods identified when the lease contract is made, and the goods suffer casualty without fault of the lessee, the lessor or the supplier before delivery, or the goods suffer casualty before risk of loss passes to the lessee under the lease agreement or s. 411.219, then all of the following apply:

411.221(1) (1) If the loss is total, the lease contract is avoided.

411.221(2) (2) If the loss is partial or the goods have so deteriorated as to no longer conform to the lease contract, the lessee may nevertheless demand inspection and at his or her option either treat the lease contract as avoided or, except in a finance lease that is not a consumer lease, accept the goods with due allowance from the rent payable for the balance of the lease term for the deterioration or the deficiency in quantity but without further right against the lessor.

411.221 History History: 1991 a. 148.

subch. III of ch. 411 SUBCHAPTER III

EFFECT OF LEASE CONTRACT

411.301 411.301 Enforceability of lease contract. Except as otherwise provided in this chapter, a lease contract is effective and enforceable according to its terms between the parties, against purchasers of the goods and against creditors of the parties.

411.301 History History: 1991 a. 148.

411.302 411.302 Title to and possession of goods. Except as otherwise provided in this chapter, this chapter applies whether the lessor or a 3rd party has title to the goods, and whether the lessor, the lessee, or a 3rd party has possession of the goods, notwithstanding any statute or rule of law that possession or the absence of possession is fraudulent.

411.302 History History: 1991 a. 148.

411.303 411.303 Alienability of party’s interest under lease contract or of lessor’s residual interest in goods; delegation of performance; transfer of rights.

411.303(1) (1) In this section, “creation of a security interest” includes the sale of a lease contract that is subject to ch. 409 under s. 409.109 (1) (c).

411.303(2) (2) Except as provided in sub. (3) and s. 409.407, a provision in a lease agreement that prohibits the voluntary or involuntary transfer, including a transfer by sale, sublease, creation or enforcement of a security interest, or attachment, levy, or other judicial process, of an interest of a party under the lease contract or of the lessor’s residual interest in the goods, or that makes such a transfer an event of default, gives rise to the rights and remedies provided in sub. (4), but a transfer that is prohibited or is an event of default under the lease agreement is otherwise effective.

411.303(3) (3) A provision in a lease agreement that prohibits a transfer of a right to damages for default with respect to the whole lease contract or of a right to payment arising out of the transferor’s due performance of the transferor’s entire obligation, or that makes such a transfer an event of default, is not enforceable, and such a transfer is not a transfer that materially impairs the prospect of obtaining return performance by, materially changes the duty of, or materially increases the burden or risk imposed on, the other party to the lease contract within the purview of sub. (4).

411.303(4) (4) Subject to sub. (3) and s. 409.407:

411.303(4)(a) (a) If a transfer is made which is made an event of default under a lease agreement, the party to the lease contract not making the transfer, unless that party waives the default or otherwise agrees, has the rights and remedies under s. 411.501 (2).

411.303(4)(b) (b) If par. (a) is not applicable and if a transfer is made that is prohibited under a lease agreement or that materially impairs the prospect of obtaining return performance by, materially changes the duty of, or materially increases the burden or risk imposed on the other party to the lease contract, unless the party not making the transfer agrees at any time to the transfer in the lease contract or otherwise, then, except as limited by contract, all of the following apply:

411.303(4)(b)1. 1. The transferor is liable to the party not making the transfer for damages caused by the transfer to the extent that the damages could not reasonably be prevented by the party not making the transfer.

411.303(4)(b)2. 2. A court having jurisdiction may grant other appropriate relief, including cancellation of the lease contract or an injunction against the transfer.

411.303(5) (5) A transfer of “the lease” or of “all my rights under the lease”, or a transfer in similar general terms is a transfer of rights and, unless the language or the circumstances, as in a transfer for security, indicate the contrary, the transfer is a delegation of duties by the transferor to the transferee. Acceptance by the transferee constitutes a promise by the transferee to perform those duties. The promise is enforceable by either the transferor or the other party to the lease contract.

411.303(6) (6) Unless otherwise agreed by the lessor and the lessee, a delegation of performance does not relieve the transferor as against the other party of any duty to perform or of any liability for default.

411.303(7) (7) In a consumer lease, to prohibit the transfer of an interest of a party under the lease contract or to make a transfer an event of default, the language must be specific, by a writing and conspicuous.

411.303 History History: 1991 a. 148; 2001 a. 10.

411.304 411.304 Subsequent lease of goods by lessor.

411.304(1) (1) 

411.304(1)(a) (a) Subject to s. 411.303, a subsequent lessee from a lessor of goods under an existing lease contract obtains, to the extent of the leasehold interest transferred, the leasehold interest in the goods that the lessor had or had power to transfer, and except as provided in sub. (2) and s. 411.527 (4), takes subject to the existing lease contract.

411.304(1)(b) (b) A lessor with voidable title has power to transfer a good leasehold interest to a good faith subsequent lessee for value, but only to the extent set forth in par. (a).

411.304(1)(c) (c) If goods have been delivered under a transaction of purchase, the lessor has that power even if any of the following occurs:

411.304(1)(c)1. 1. The lessor’s transferor was deceived as to the identity of the lessor.

411.304(1)(c)2. 2. The delivery was in exchange for a check that is later dishonored.

411.304(1)(c)3. 3. It was agreed that the transaction was to be a cash sale.

411.304(1)(c)4. 4. The delivery was procured through fraud and is punishable under s. 943.20 or 943.34.

411.304(2) (2) A subsequent lessee in ordinary course of business from a lessor who is a merchant dealing in goods of that kind to whom the goods were entrusted by the existing lessee of that lessor before the interest of the subsequent lessee became enforceable against that lessor obtains, to the extent of the leasehold interest transferred, all of that lessor’s and the existing lessee’s rights to the goods, and takes free of the existing lease contract.

411.304(3) (3) A subsequent lessee from the lessor of goods that are subject to an existing lease contract and that are covered by a certificate of title issued under a statute of this state or of another jurisdiction takes no greater rights than those provided by this section and by the certificate of title statute.

411.304 History History: 1991 a. 148.

411.305 411.305 Sale or sublease of goods by lessee.

411.305(1) (1) 

411.305(1)(a) (a) Subject to s. 411.303, a buyer or sublessee from the lessee of goods under an existing lease contract obtains, to the extent of the interest transferred, the leasehold interest in the goods that the lessee had or had power to transfer, and, except as provided in sub. (2) and s. 411.511 (4), takes subject to the existing lease contract.

411.305(1)(b) (b) A lessee with a voidable leasehold interest has power to transfer a good leasehold interest to a good faith buyer for value or a good faith sublessee for value, but only to the extent set forth in par. (a).

411.305(1)(c) (c) When goods have been delivered under a transaction of lease the lessee has that power even if any of the following occurs:

411.305(1)(c)1. 1. The lessor was deceived as to the identity of the lessee.

411.305(1)(c)2. 2. The delivery was in exchange for a check that is later dishonored.

411.305(1)(c)3. 3. The delivery was procured through fraud and is punishable under s. 943.20 or 943.34.

411.305(2) (2) A buyer in ordinary course of business or a sublessee in ordinary course of business from a lessee who is a merchant dealing in goods of that kind to whom the goods were entrusted by the lessor obtains, to the extent of the interest transferred, all of the lessor’s and lessee’s rights to the goods, and takes free of the existing lease contract.

411.305(3) (3) A buyer or sublessee from the lessee of goods that are subject to an existing lease contract and that are covered by a certificate of title issued under a statute of this state or of another jurisdiction takes no greater rights than those provided by this section and by the certificate of title statute.

411.305 History History: 1991 a. 148.

411.306 411.306 Priority of certain liens arising by operation of law. If a person in the ordinary course of his or her business furnishes services or materials with respect to goods subject to a lease contract, a lien upon those goods in the possession of that person given by statute or rule of law for those materials or services takes priority over any interest of the lessor or lessee under the lease contract or this chapter unless the lien is created by statute and the statute provides otherwise or unless the lien is created by rule of law and the rule of law provides otherwise.

411.306 History History: 1991 a. 148.

411.307 411.307 Priority of liens arising by attachment or levy on, security interests in, and other claims to goods.

411.307(1) (1) Except as provided in s. 411.306, a creditor of a lessee takes subject to the lease contract.

411.307(2) (2) Except as provided in sub. (3) and ss. 411.306 and 411.308, a creditor of a lessor takes subject to the lease contract unless the creditor holds a lien that attached to the goods before the lease contract became enforceable.

411.307(3) (3) Except as otherwise provided in ss. 409.317, 409.321, and 409.323, a lessee takes a leasehold interest subject to a security interest held by a creditor of the lessor.

411.307 History History: 1991 a. 148; 2001 a. 10.

411.308 411.308 Special rights of creditors.

411.308(1) (1) A creditor of a lessor in possession of goods subject to a lease contract may treat the lease contract as void if as against the creditor retention of possession by the lessor is fraudulent under any statute or rule of law, but retention of possession in good faith and current course of trade by the lessor for a commercially reasonable time after the lease contract becomes enforceable is not fraudulent.

411.308(2) (2) Nothing in this chapter impairs the rights of a creditor of a lessor if all of the following occur:

411.308(2)(a) (a) The lease contract becomes enforceable, not in current course of trade but in satisfaction of or as security for a preexisting claim for money, security or the like.

411.308(2)(b) (b) The lease contract is made under circumstances that under any statute or rule of law apart from this chapter would constitute the transaction a fraudulent or voidable transfer or voidable preference.

411.308(3) (3) A creditor of a seller may treat a sale or an identification of goods to a contract for sale as void if as against the creditor retention of possession by the seller is fraudulent under any statute or rule of law, but retention of possession of the goods under a lease contract entered into by the seller as lessee and the buyer as lessor in connection with the sale or identification of the goods is not fraudulent if the buyer bought for value and in good faith.

411.308 History History: 1991 a. 148; 2023 a. 246.

411.309 411.309 Lessor’s and lessee’s rights when goods become fixtures.

411.309(1) (1) In this section:

411.309(1)(a) (a) “Construction mortgage” means a mortgage that secures an obligation incurred for the construction of an improvement on land including the acquisition cost of the land, if the recorded writing so indicates.

411.309(1)(b) (b) “Encumbrance” includes real estate mortgages and other liens on real estate and all other rights in real estate that are not ownership interests.

411.309(1)(c) (c) “Fixture filing” means a filing, in the office where a record of a mortgage on real estate would be filed or recorded, of a financing statement covering goods that are or are to become fixtures and conforming to the requirements of s. 409.502 (1) and (2).

411.309(1)(d) (d) “Fixtures” means goods that become so related to particular real estate that an interest in them arises under real estate law.

411.309(1)(e) (e) “Purchase money lease” means a lease unless the lessee has possession or use of the goods or the right to possession or use of the goods before the lease agreement is enforceable.

411.309(2) (2) Under this chapter a lease may be of goods that are fixtures or may continue in goods that become fixtures, but no lease exists under this chapter of ordinary building materials incorporated into an improvement on land.

411.309(3) (3) This chapter does not prevent creation of a lease of fixtures under real estate law.

411.309(4) (4) The perfected interest of a lessor of fixtures has priority over a conflicting interest of an encumbrancer or owner of the real estate if any of the following occurs:

411.309(4)(a) (a) The lease is a purchase money lease, the conflicting interest of the encumbrancer or owner arises before the goods become fixtures, the interest of the lessor is perfected by a fixture filing before the goods become fixtures or within 10 days thereafter, and the lessee has an interest of record in the real estate or is in possession of the real estate.

411.309(4)(b) (b) The interest of the lessor is perfected by a fixture filing before the interest of the encumbrancer or owner is of record, the lessor’s interest has priority over any conflicting interest of a predecessor in title of the encumbrancer or owner, and the lessee has an interest of record in the real estate or is in possession of the real estate.

411.309(5) (5) The interest of a lessor of fixtures, whether or not perfected, has priority over the conflicting interest of an encumbrancer or owner of the real estate if any of the following applies:

411.309(5)(a) (a) The fixtures are readily removable factory or office machines, readily removable equipment that is not primarily used or leased for use in the operation of the real estate, or readily removable replacements of domestic appliances that are goods subject to a consumer lease, and before the goods become fixtures the lease contract is enforceable.

411.309(5)(b) (b) The conflicting interest is a lien on the real estate obtained by legal or equitable proceedings after the lease contract is enforceable.

411.309(5)(c) (c) The encumbrancer or owner consents in writing to the lease or disclaims an interest in the goods as fixtures.

411.309(5)(d) (d) The lessee has a right to remove the goods as against the encumbrancer or owner. If the lessee’s right to remove terminates, the priority of the interest of the lessor continues for a reasonable time.