Leasing into Canada from the US

Are you a US based lessor or vendor who has clients in Canada who want to lease? Can you handle this business? The answer is yes but the question remains should you do it yourself?

If my lessee was unwilling or unable to pay me I face major expenses and legal headaches in collecting, recovering equipment and if required suing for my deficiency (& will my docs hold up in the US?)

My preference would be to call a US funder/broker to handle the transaction. The customer will get direct contact and service as well hopefully, from a funder/broker who understands the local scene better.

  • Let me put it another way! As a Canadian lessor I would be very leery of attempting to lease to a US lessee. No reflection on the client but there are a number of reasons for my concern.
  • I am unfamiliar with US Federal or State laws.
  • I am vaguely aware that some States have a reputation of being (from a lessor's point of view) "debtor's paradises".
  • My documents are not designed for US law or US use.
  • I know I have to file a registration under UCC (uniform commercial code) -& probably could arrange for same but am personally not well informed on UCC.
  • I am not registered to do business in the US and would be deemed to be earning income and therefore subject to withholding tax at Federal, State and municipal level!

So back to the original question! In Canada

  • Some western Provinces (BC and Alberta) have seize or sue provisions unless the lessee is a business and expressly waives its rights.
  • Newfoundland gives the landlord the right to distrain leased equipment on the premises.
  • Quebec requires the landlord be notified when equipment goes on its premises as a basis for recovery and etc etc.
  • All Provinces have PPSA registration requirements (conceptually similar to UCC filing).
  • Canada if aware will require the lessee of a foreign lessor to withhold up to 25% of the rent due (less under certain tax treaties or if income can be argued as interest) and remit same to Revenue Canada as a (income tax) non resident withholding tax (as the US also does). The US lessor can offset against US tax due - unfortunately a well managed lessor does not pay income tax - hence there is probably nothing to offset the charge against!
  • Privacy legislation introduced in 2004 requires specific wording be signed off by the lessee (who is an individual).

Some US leasing Cos are active in Canada (ie Wells Fargo) and may be able to arrange the funding via their US office near you. Alternatively if you are a US vendor with Canadian offices - doubtless the Canadian office would handle for you (but wouldn't it be their deal anyway?). Perhaps you could contact a Canadian leasing co per CF&LA member list . We suspect you may find all of the above somewhat lethargic in their response. You could also contact the writer mreid@leasingcanada.com or by phone 905-577-9922!!