Could Washington sellers use a variable finance charge on a manufactured home installment sale in 1982?

Plain-English summary

A Washington representative asked whether the Retail Installment Sales Act barred a variable service charge in an installment contract for a manufactured home. The AG said no, provided the maximum rate did not exceed the applicable statutory ceiling. The opinion considered a manufactured home sold as personal property before assembly and placement on land. It also noted that state law accepted compliance with federal Truth in Lending disclosures and that federal regulations addressed variable-rate disclosures.

“there is nothing further to be found in the act which would otherwise preclude a seller from imposing a variable rate of service charge.” (Official opinion)

Currency note

This opinion was issued in 1982. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Did the 1982 retail-installment law ban variable rates?
A: No. The AG said a variable rate was possible under the act.

Q: Could the charge rise above the statutory ceiling?
A: No. Staying within the applicable ceiling was the AG's express condition.

Q: Did the opinion address disclosure of variable charges?
A: Yes. It noted that the federal regulations provided a disclosure procedure recognized by the state act.

Background and statutory framework

RCW 63.14.130(1) set the service-charge ceiling for covered contracts. RCW 63.14.151 linked state disclosure compliance to the federal consumer-protection disclosures.

Citations and references

The opinion discussed RCW 63.14.130(1), RCW 63.14.151.

Source

• Landing page: https://www.atg.wa.gov/ago-opinions/legality-variable-rate-service-charge-under-washington-retail-installment-sales-act

Original opinion text

Attorney General Ken Eikenberry

CONTRACTS ‑- SALES ‑- INTEREST ‑- SERVICE CHARGE ‑- LEGALITY OF VARIABLE RATE SERVICE CHARGE UNDER WASHINGTON RETAIL INSTALLMENT SALES ACT

So long as the maximum rate does not exceed that which is permitted by RCW 63.14.130(1) in those instances where that statute applies, the Washington Retail Installment Sales Act, as codified in chapter 63.14 RCW, does not prohibit a retail seller from imposing a variable rate of service charge in a retail installment contract for the purchase of a manufactured home.

September 23, 1982

Honorable Bruce Addison
State Representative, 34th District
4509 S. W. Holgate
Seattle, Washington 98116

Cite as: AGO 1982 No. 12

Dear Sir:

By letter previously acknowledged you requested our opinion on a question which we paraphrase as follows:

Does the Washington Retail Installment Sales Act, as codified in chapter 63.14 RCW, prohibit a retail seller from imposing a variable rate of service charge on a retail installment contract for the purchase of a manufactured home?

We answer the foregoing question in the negative subject to the caveat set forth in our analysis below.

ANALYSIS

The Washington Retail Installment Sales Act regulates the terms and conditions of,interalia, retail installment contracts for the sale of personal property‑-such as a manufactured home prior to its assembly and placement on a lot or parcel of land. Among the provisions of that act is RCW 63.14.130(1) which provides as follows:

"(1) The service charge, in retail installment contract, shall not exceed the highest of the following:

[[Orig. Op. Page 2]]

"(a) A rate on outstanding unpaid balances which exceeds six percentage points above the average, rounded to the nearest one‑quarter of one percent, of the equivalent coupon issue yields (as published by the Federal Reserve Bank of San Francisco) of the bill rates for twenty-six week treasury bills for the last market auctions conducted during February, May, August and November of the year prior to the year in which the retail installment contract is executed; or

"(b) Ten dollars." (Emphasis supplied)

A service charge which is, for any given period covered by the contract, equal to or less than the statutory ceiling is, therefore, permissible insofar as the Retail Installment Sales Act is concerned. And, in turn, so long as the maximum rate does not exceed the limit thus set forth in RCW 63.14.130(1),supra (in those instances where that section of the law applies), there is nothing further to be found in the act which would otherwise preclude a seller from imposing a variable rate of service charge.

We also note the following provision of RCW 63.14.151, codifying § 9, chapter 77, Laws of 1981:

"Any retail installment contract or retail charge agreement which complies with the disclosure requirements of Title I of the federal consumer protection act (82 Stat. 146, 15 U.S.C. 1601) which is also known as the truth in lending act, as of the date upon which said retail installment contract or revolving charge agreement is executed, shall be deemed to comply with the disclosure provisions of chapter 63.14 RCW."

With that section of the law in mind we have reviewed the federal legislation (also known as the Truth in Lending Act) to which reference is thus made as well as the administrative regulations which have been promulgated thereunder. And what we have found, basically, is that the subject federal regulations not only contemplate the possibility of, but specifically provide a procedure for disclosing, a variable rate finance charge arrangement. See in particular the disclosure provisions contained in § 226.18(f), Appendix H-4 and Appendix H-14 of Federal Regulation Z the use of which, in accordance with RCW 63.14.151,supra, would be deemed to be in compliance with the Washington Retail Installment Sales Act.

[[Orig. Op. Page 3]]

Therefore, subject to the caveat that the maximum rate may not exceed that which is permitted by RCW 63.14.130(1),supra, we answer your question in the negative;i.e., the Washington Retail Installment Sales Act, as codified in chapter 63.14 RCW, does not prohibit a retail seller from imposing a variable rate of service charge in a retail installment contract for the purchase of a manufactured home.

We trust that the foregoing will be of assistance to you.

Very truly yours,
KENNETH O. EIKENBERRY
Attorney General

JAY UCHIDA
Assistant Attorney General