Georgia Appeals Court Recharacterizes Sale Leasebacks As Usurious Loans

A Georgia Court of Appeals recently found that transactions entered into by a finance business with customers needing "fast cash," that were structured as sale leasebacks of personal property owned by the customers, were nothing more than disguised illegal payday loans subject to usury, and not true sales of property. Implicit in the Georgia court's decision was that the "substance over form doctrine", when applied to recharacterize a sale leaseback transaction as a secured loan, operates in the same manner and without regard to whether the subject property being sold and leased back is personal property or real property.

For the long version of this post, see Georgia Appellate Court Recharacterizes Sale Leasebacks As Usurious Loans, on the companion to this blog, The Home Equity Theft Reporter Cases & Articles.

For the court decision itself, see Clay v. Oxendine, 285 Ga. App. 50; 645 S.E.2d 553, (Ga. App. Ct., 1st Div., 3-27-07).