1203 - Lease distinguished from security interest.

     § 1203.  Lease distinguished from security interest.        (a)  Factual determination.--Whether a transaction in the     form of a lease creates a lease or security interest is     determined by the facts of each case.        (b)  Sufficient attributes for security interest.--A     transaction in the form of a lease creates a security interest     if the consideration that the lessee is to pay the lessor for     the right to possession and use of the goods is an obligation     for the term of the lease and is not subject to termination by     the lessee, and:            (1)  the original term of the lease is equal to or        greater than the remaining economic life of the goods;            (2)  the lessee is bound to renew the lease for the        remaining economic life of the goods or is bound to become        the owner of the goods;            (3)  the lessee has an option to renew the lease for the        remaining economic life of the goods for no additional        consideration or for nominal additional consideration upon        compliance with the lease agreement; or            (4)  the lessee has an option to become the owner of the        goods for no additional consideration or for nominal        additional consideration upon compliance with the lease        agreement.        (c)  Insufficient attributes for security interest.--A     transaction in the form of a lease does not create a security     interest merely because:            (1)  the present value of the consideration the lessee is        obligated to pay the lessor for the right to possession and        use of the goods is substantially equal to or is greater than        the fair market value of the goods at the time the lease is        entered into;            (2)  the lessee assumes risk of loss of the goods;            (3)  the lessee agrees to pay, with respect to the goods,        taxes, insurance, filing, recording or registration fees or        service or maintenance costs;            (4)  the lessee has an option to renew the lease or to        become the owner of the goods;            (5)  the lessee has an option to renew the lease for a        fixed rent that is equal to or greater than the reasonably        predictable fair market rent for the use of the goods for the        term of the renewal at the time the option is to be        performed; or            (6)  the lessee has an option to become the owner of the        goods for a fixed price that is equal to or greater than the        reasonably predictable fair market value of the goods at the        time the option is to be performed.        (d)  Nominal consideration.--Additional consideration is     nominal if it is less than the lessee's reasonably predictable     cost of performing under the lease agreement if the option is     not exercised. Additional consideration is not nominal if:            (1)  when the option to renew the lease is granted to the        lessee, the rent is stated to be the fair market rent for the        use of the goods for the term of the renewal determined at        the time the option is to be performed; or            (2)  when the option to become the owner of the goods is        granted to the lessee, the price is stated to be the fair        market value of the goods determined at the time the option        is to be performed.        (e)  Remaining economic life and reasonable predictability.--     The "remaining economic life of the goods" and "reasonably     predictable" fair market rent, fair market value or cost of     performing under the lease agreement shall be determined with     reference to the facts and circumstances at the time the     transaction is entered into.        Cross References.  Section 1203 is referred to in section     1201 of this title.