Legal Question in Business Law in California

Re: Leasing

Yes; the fact that a deal purporting to be a lease has documentation showing a residual value of zero is, in and of itself, insufficient to determine whether the deal is a lease, a mortgage or loan, or something you didn't mention, a conditional sale agreement.

Determining which of the three the deal is requires reading the deal documentation as a whole, and seeing which category is the best fot for what is actually going on, and not the label the parties have placed on it. Further, the criteria and the result could be different depending upon whether the question arises in the context of a bankruptcy, income tax litigation, rights of the parties at the end of the contract period, or something else.

Here are some cases to look up and consider: For rights in bankruptcy, In re Rebel Rents, Inc. (2003) 291 B.R. 520. Loan versus conditional sale: Harkness v. Russell (1886) 118 U.S. 663, and Lundy Furniture Co. v White (1900) 128 Cal. 170. A modern case reviewing other decisions on distinguishing a lease from a conditional sale is General Security Insurance Co. v Reliance Insurance Co. (2002), published at 33 Fed.Appx. 310.

In general, see annotated versions of Commercial Code sections 1203 and 10103(a)(7) and (10). If the deal involves a motor vehicle, see Civil Code section 2981.

This was a hot topic in the days of tax-shelter leveraged leasing in the late 1970s, but there aren't many modern decisions.

Sorry it isn't possible to give you a simple answer; one would have to read the entire documentation and get a flavor of which category it seems to fit, and also know for what purpose (tax, etc.) the question arises.

Re: Leasing

Yes. The Commercial Code defines several parameters in this regard, with respect to leases. It will also depend upon whether or not the lease is a true finance lease.