Lemon Law
The joys of buying a brand-new or used vehicle are memorable. But what happens when you realize it has defects? Or, that despite frequent repairs, issues continue to persist?The odds are, you may have a lemon or a defective automobile.
Fortunately, the U.S. has adopted the lemon law — a statute to protect your consumer rights from the sale of faulty automobiles. The scope of the law may be overwhelming, and your first instinct may be to hire a lemon law attorney. However, while that is the preferred and often advised route, it helps to have a basic understanding of the lemon law.
Here is everything you need to know.
What Is Lemon Law?
It is a set of laws that are in place to protect consumers against the sale of defective automobiles by manufacturers or dealers. It empowers consumers to seek compensation for the malfunctioning vehicle through a refund or exchange.
The lemon law exists in all 50 states, each with unique conditions. However, if the state law does not cover a particular issue, consumers can still appeal under federal law (the Magnuson-Moss Warranty Act).
Commonly Used Terminologies
The legal terminology within lemon law may be overwhelming. Here's a simplified glossary of some of the most commonly used terms.
Lemon
Lemon is slang used to describe a defective automobile. The term “lemon” was initially used in the 1962 Volkswagen Beetle print ad and later popularized in a seminal article by George Akerlorf called The Market for "Lemons."
Substantial Defect
A substantial defect is any issue that impedes the vehicle's utility, safety, and value. These include engine failures, brake failures, noises or fires in the engine, ignition troubles, and more.
Reasonable Repair Attempts
This pertains to the number of repair opportunities given to the manufacturer to fix the issue. While this may vary between states, the average number of attempts is four.
Magnuson-Moss Warranty Act
Commonly referred to as the federal lemon law, the Magnuson-Moss Warranty Act provides respite for consumers in states where the lemon law might not cover a particular defect.
The Magnuson-Moss law also encompasses vehicles such as boats or motorhomes, which state lemon law does not always cover.
Warranties
A warranty is a set of conditions and duration during which a vehicle manufacturer must replace, repair, and compensate the consumer for defective vehicle parts for free.
Arbitration
Within lemon law,arbitration can either be conducted through a state-run arbitration process or a more private panel or group. The buyer and the seller present their arguments with evidence, and the appointed arbitrator or panel will determine the outcome.
How Does Lemon Law Work?
Lemon law safeguards the interests of an aggrieved vehicle owner who owns a lemon. It requires documentation of proof and arbitration to come to a settlement between the owner and manufacturer or dealer.
When Does the Law Apply?
The conditions under which consumers can apply for the lemon law vary from repeated engine failures to suspension issues, leaks, risks of fires, steering issues, and more.
Here are a few landmark lemon law cases:
- The buyer of a used BMW X-6 experienced several engine issues and was even charged for the fixture of a new engine, despite a valid warranty. The buyer received a full refund of $50,000, including repayment for engine repairs, upon proving the defects and violation of the warranty.
- A faulty 2006 Pontiac had a leaking trunk and a defective steering wheel that failed twice while driving, posing a grave safety risk. General Motors paid a full refund to the consumer, with additional repair charges and attorney fees.
What Types of Vehicles Are Eligible?
Generally, cars, trucks, SUVs, vans, boats, and recreational and motor homes are all considered under the lemon law.
Is Your Vehicle a Motor Home?
A vehicle is a motor home if it offers mobile living facilities. It is a type of self-propelled recreational vehicle (RV).
In the context of lemon law, owners of motor homes can still appeal in the case of defective chassis and drivetrains. Leakages may not be covered in certain states, in which case, owners can then appeal under the Magnuson-Moss Warranty Act, which compensates for all types of defects.
Lemon Law Requirements
The criteria to file an appeal under lemon law may vary across states, but the general overview of the law includes:
The vehicle's defect should be substantial and covered by a warranty.
Vehicle ownership for approximately 1-2 years and should have a certain amount of mileage covered.
The consumer should prove with repair records that the defect in the vehicle persisted after three to four repair attempts.
The vehicle should be out of service for a stipulated number of days within its first or second year.
Since the requirements of lemon law vary across states, it is advisable to consult an attorney to ensure your claims are valid in your jurisdiction.
Types of Defects Covered Under the Lemon Law
The law covers two kinds of defects based on the complexity of the issues and their impact on the motor's reliability, value, and safety.
A defect that substantially compromises the vehicle's utility, value, and safety, and decreases its overall resale value.
A severe impairment of the vehicle that impacts the motor owner's ability to operate the vehicle securely and threatens his safety.
Claim Categories Under the Lemon Law
During an arbitration hearing, there are four categories within which a buyer can claim a refund or vehicle exchange from the seller.
Unrepaired Nonconformity
A buyer can make an "Unrepaired Nonconformity" claim when:
The nonconformity has been subject to diagnosis or repairs over four times, at least once during the period of the manufacturer's written warranty, during the “eligibility period.”
The defect continues to exist.
A written request was made by the consumer asking for repurchase or replacement.
Failure by the manufacturer to respond or find a solution within 40 days.
Unrepaired Serious Safety Defect
A buyer can make an “Unrepaired Serious Safety Defect” claim when:
The serious safety defect has been subject to an investigation or repairs at least two or more times, at least once within the written warranty period and eligibility period.
The defect continues to exist.
A written request was made by the consumer asking for repurchase or replacement.
Failure to respond or find a solution within 40 days.
Multiple Serious Safety Defects
A buyer can make this claim when two or more different “serious safety defects” (whether or not repaired) are covered in the warranty and:
The defects occur within twelve months during the first two years of purchase and 24,000 miles.
Each defect has been subject to an investigation and repairs one or more times within the warranty duration.
A written request was made by the consumer asking for repurchase or replacement.
Failure to respond or find a solution within 40 days.
Days Out of Service
Your vehicle's day out of service is calculated by the number of repair attempts on one or more “nonconformities” or “serious safety defects.”
Total of 30 or more cumulative calendar days.
At least 15 days occurred during the period of the manufacturer's written warranty and the "eligibility period."
A written request was made by the consumer asking for repurchase or replacement.
Failure to respond or find a solution within 40 days.
How Do I Know If My Vehicle Is a Lemon?
Identifying if your vehicle is a lemon can be challenging. Sometimes, your vehicle's flaws aren't that evident and surface months to even a year later.
A common telltale sign that your vehicle is a lemon is if you notice one or more substantial defects in your vehicle that impair its overall utility, safety, and value. Another indicator is when these defects persist after a sizable number of repairs within the warranty period.
What Is a Warranty?
In the context of the lemon law, a warranty is an obligation that a manufacturer or a car dealer has to a consumer to investigate and repair covered parts in a malfunctioning vehicle, free of charge.
Warranties can be written (express warranties) or implied by law.
What Is a Manufacturer's Written Warranty?
A manufacturer's Written (express) warranty often accompanies the purchase of most new or used vehicles. It is effectively a promise by the manufacturer that the car sold is in good operating condition.
It enlists the types of defects a manufacturer will cover and the duration of time they will be repaired for free.
What Is the Eligibility Period?
The eligibility period in lemon law varies between states. However, it is determined by mileage and time limits.
Are Used Vehicles Also Covered Under Lemon Law?
The case for used car coverage under lemon law also varies by state. While some states mention their exclusion, others do not mention them at all. For states that do not mention used car coverage, an aggrieved consumer will then have to depend on the statutory guidelines of that state to file a dispute claim.
For states that do cover used vehicles:
- Require a used car to be registered and purchased in that state only;
- Refer to the original purchase date or in-service date of the vehicle and not when it was bought second-hand;
- Have a limit on the motor vehicle’s age and mileage for when a dispute can be filed; and
- Only address disputes reported to the dealer or manufacturer within a specific timeframe.
Substantial Defects — Qualifying Factors
A substantial defect impairs the vehicle's value and makes it unsafe for its intended use. While a noisy windshield wiper or an AC that blows extra cool air can be an annoyance, they don’t qualify as substantial enough to make a claim.
However, transmission problems, braking and steering difficulties, acceleration defects, faulty airbags, electric failures, and more qualify as substantial defects.
How To Build a Lemon Law Case
Building a lemon law case works as follows:
1. Notice a Substantial Defect
You must identify a substantial defect in your vehicle covered by warranty. Defects can include issues in the engine, electrical and transmission systems, brakes, and acceleration.
2. Notify Your Manufacturer
The vehicle manufacturer should be given reasonable chances to repair the defect. This typically averages around four repairs in the U.S.
3. Contact a Lemon Law Attorney
With a lemon on your hands, contacting a lemon law attorney who can guide you through the application process based on the law in your state is essential.
Reviewing your records, the attorney will collect evidence to substantiate your claim. They will then approach the manufacturer and the panel for the arbitration hearing. The board will ascertain the type of compensation you will receive.
Federal Vs. State Lemon Laws
The laws about defective vehicles differ between states. However, federal law protects consumer rights should a particular state not cover a specific claim.
The Magnuson-Moss Warranty Act
Federal law safeguards the rights of consumers of any product above $25 with a written warranty. Its guidelines are set in place to prevent manufacturers from drafting unfair warranties.
The Uniform Commercial Code
The UCC is uniformly adopted nationwide, giving consumers the right to seek a refund or replacement for a lemon.
State-specific Lemon Laws
State lemon laws also protect consumer rights against selling defective vehicles. However, these laws have statutes of limitations on the mileage and duration of ownership of the lemon.
What Do You Do With Your Lemon Next?
At the end of the day, you may still find yourself stuck with your lemon. You may be wondering what you could do to rid yourself of it. There are some options:
- Destroy it
If it’s in bad shape, has no value, and is unsafe for other drivers, then the right thing to do is destroy it.
However, if a buyer is interested in your lemon, you should always disclose the vehicle’s issues upfront. - Minimum trade-in value
Regardless of the issues, many dealerships will pay $100 to $2500 for lemons. Instead of earning nothing by destroying your vehicle, you can make a small sum by selling it to a dealership that offers trade-in compensations.
Conclusion
We hope this legal guide sheds light on what the Lemon Law is and how it protects your rights as a consumer. Whether you have a lemon or not, knowing your rights as a vehicle user is essential. While the government and states may have variations to the lemon law, the broader criteria for what qualifies as a lemon remains essentially the same.
Filing a claim and attending arbitration hearings on your own can be challenging. Auto manufacturers and dealers are equipped to deal with claims against defective new vehicles and also have experience with the lemon law for used cars. Hence, working with an experienced lemon law attorney who is familiar with local laws and can arbitrate on your behalf successfully is paramount.
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Frequently Asked Questions
It is always advisable to hire a lemon law attorney. Car manufacturers and dealers have highly equipped law professionals and are experienced in dealing with consumer claims. Hiring an attorney can help safeguard a claim and win a dispute for consumers.
Some attorneys are specialized in only dealing with defective vehicle claims. They are the ones who assist you during a dispute.
Finding the right lemon law attorney can seem daunting, especially if you’re unsure where to start. However, legal ecosystems are an excellent place to start. You can simply enter the practice area and your state and gain access to innumerable lawyers.
If you win your case, you are entitled to receive a full refund or a replacement for your lemon. Should you choose a refund, you will be reimbursed for the cost of the vehicle, extra charges incurred in repairs, towing, and more. Further, you will also be reimbursed for all or a portion of your attorney’s fees.
Do not be disheartened if your car does not qualify for a lemon law claim. While eligibility criteria are in place to standardize the type of claims made, you could still benefit from a buyback, refund, or cash settlement, depending on the details of your claim.
In such matters, involving an attorney is essential.
No, you do not have to be the original owner of a vehicle to request arbitration. A later owner can also request arbitration if the purchase corresponds to the criteria covered by the state’s lemon laws.
Generally, a claim is void if:
- The defects in the car are due to the abuse and neglect of the owner;
- After-market parts and modifications are made that cause it to become a lemon;
- Failure to meet the reasonable number of repair attempts;
- Minor defects; and
- A claim made after the expiry of statutes of limitations
Different states have different limitations on the age of the car under the Lemon Law. It is important to understand the laws in your state before making a claim.