So, you’ve got a lemon. Ugh!
Wondering what your options are? Read on to know your rights.
When you buy a car, you obviously expect it to work seamlessly. But unfortunately, there are instances when buyers get stuck with a dud. Things don’t work quite as they should and you immediately know something isn’t right. Ideally, the car manufacturer/dealership steps in to set things right, but what to do if your car isn’t still working properly even after numerous trips to the repair facility?
Should you bring it back to the manufacturer/dealer again and again? Do you just live with it? Fortunately, the answer is no; all states in the U.S. have laws to protect consumers from buying faulty cars. If the vehicle is found to have the defect(s) impairing the safety, use, and/or value of the car, the manufacturer is obligated by law to either replace or repurchase your vehicle.
What is the Lemon Law?
The lemon law is a state consumer protection law, which originated in 1970 to protect consumers from the auto manufacturer and dealer frauds. It was included within the Song-Beverly Consumer Warranty Act. At present, these laws are governed by the state and refer to the individual state laws with the goal to safeguard the interests of the automobile consumers.
Lemon law has three basic elements –
- The vehicle (or other consumers good, for example, boat, RV, solar panels) was purchased or leased in the same state
- The vehicle has or had a substantial defect(s) that impairs its use, safety, and value
- The manufacturer/dealership was given a reasonable repair opportunity to resolve the problem.
Then, the law mandates the manufacturer to either refund the consumer’s money or replace the defective car with an equivalent model.
When it comes to “reasonable repair attempts”, there are a few standards the consumers must meet to be protected under their particular state’s lemon law. These are:
- For a serious safety defect that involves the engine, brakes, airbags, or steering, one repair attempt is allowed to the manufacturer/dealership.
- The car must remain in the repair facility for a certain number of days i.e. 30 days altogether within a one-year period in order to fix one or more substantial defects.
- For non-safety defects, the manufacturer/dealership must resolve the problem within 3-4 repair attempts (varies from state to state).
In addition, the sustainable defect must be covered by manufacturer’s warranty and must seriously affect the car’s functionality in order to be considered as a lemon.
What is a Warranty?
Manufacturers sometimes produce defective cars. A lot of things can go wrong with a car that puts you and those around you at risk. For this reason, a warranty is issued to safeguard your interest.
In simple terms, a warranty is an acknowledgment by the manufacturer or seller that if the vehicle (or other goods) does not perform as it is supposed to or if something goes wrong within the specified period, the manufacturer will repair the issue or provide a replacement. According to Wikipedia, “warranty has various meanings but generally means a guarantee or promise, which provides assurance by one party to the other party that specific facts or conditions are true or will happen. This factual guarantee may be enforced regardless of materiality, which allows for a legal remedy if that promise is not true or followed”.
The warranty period usually differs depending on the product you are buying. For new cars, it usually lasts three years, and you can get covered for an extended distance if your manufacturer allows. While a warranty ensures that you don’t have to pay for any faults within the said period, it doesn’t cover any kind of cosmetic or other damages or normal wear and tear to your car due to user abusive. It strictly covers the car and any accessories fitted in the factory and/or by the dealership.
This manufacturer’s warranty is the most important legal document you have in your arsenal when filing a lemon lawsuit. It is therefore essential to review the terms of the warranty while purchasing your new car.
Once your car qualifies as a lemon, you are entitled to get a refund or a replacement from the manufacturer, including the amount you paid for your down payment, registration and taxes, monthly payments, and other incidental expenses like car rental or towing costs. In addition, lemon law mandates that the manufacturer must compensate the consumer for the attorney fees and legal costs they have had to pay because of the defective car. This compensation constitutes the consumers’ lemon right. But before discussing that, let’s take a look at the defects that make your car a lemon.
What Makes a Car Lemon:
Safety Defects vs. Non-Safety Defects?
According to Nolo.com, 150,000 cars produced each year are lemons. A car is qualified as a lemon if the defect(s)/problem(s) was discovered under the initial protection period i.e. 12 months or 18,000 miles, whichever comes first (it differs from state to state). Although repairs can go longer than this said period, the problem must be detected within this timeframe. And if the defect(s) can’t be fixed even after reasonable repair attempts, you are entitled to get your money back or get a replacement car of the similar feature under the lemon law.
As mentioned earlier, lemon law only identifies defects that affect the safety, use, or value of the car. These defects include a long list of features, ranging from defective automatic mirrors and wiring systems to faulty safety features. For example, consider the recent accidents and 15 deaths in the U.S. caused by the faulty Takata airbags, which forced cars made by 19 different automakers to be recalled. In addition, there are many such defects that can affect the safety of your car and those riding it.
Some of the safety and usability defects include (but are not limited to):
➢ Braking defects (excluding squeaking)
➢ Accelerator controls malfunctioning
➢ Headlight/ Brake light malfunctions
➢ Malfunctioning speedometers and fuel gauges
➢ Steering problems
➢ Defective wiring systems
➢ Batteries that repeatedly die
➢ Diminished acceleration
➢ Malfunctioning door locks
➢ Windshield wiper malfunction
➢ Defective wheels
➢ Repeated check engine light warnings
➢ Malfunctioning mirrors and windshield wipers
➢ Failing to start
➢ Transmissions that lurch when starting or stopping
➢ Inoperable air conditioning system
➢ Faulty airbags
There is no specific list of defects that fall under the safety exception; however, the National Highway Traffic Safety Administration has a list of defects that are usually considered for a safety recall. In fact, you can also look-up recalls for the last 15 years by using your Vehicle Identification Number or VIN.
In addition, there are certain defects which don’t impair the safety or performance of the car but do have a negative effect on its value. For example, a paint that bubbles or strips away, a horrible smell inside the car, or a loose radio knob. Generally, these defects diminish a new car’s value and proving them in the court often depends on the opinion of a professional automobile appraiser. Some of these non-safety defects, that can make a good case for lemon lawsuit, include:
➔ Squeaking brakes
➔ Problem with Radio/Speaker/Audio System
➔ Malfunctioning A/C
➔ Faulty screen
➔ Defective navigation system
➔ Problem with trunk latch, upholstery, dashboard, and sunroof etc.
➔ Defective paint
➔ Obnoxious interior smell
➔ Faulty door handle
However, there are some non-safety problems that do not diminish a car’s fair market value. For example, let’s say your car has a defect common in other cars of the same model, make, and year, and its price was reduced because of this. Chances are, there will be no diminution in the car’s value, as the price you paid has already been affected by the defect.
Once a car meets the state’s lemon law requirements, the consumer can obtain either a replacement car or a refund from the manufacturer. However, before filing a lawsuit, all the states require the consumer to first notify the manufacturer about the defect(s). If a satisfactory settlement is not reached, the consumer may need to go to arbitration before filing a lawsuit. It is advisable to select a state consumer protection agency arbitration program, instead of opting for a private one or a manufacturer’s in-house program. Consult a lemon lawyer to understand more about your legal rights before reaching for a settlement.
What Are Your Lemon Law Rights
If the arbitrator determines your car to be a lemon, you will be allowed to make a final decision to get refunded or receive a replacement from the manufacturer. The arbitrator cannot make any changes to your choice of repurchase or replacement, once the hearing is over. In case of any change of mind, you need to negotiate directly with the manufacturer.
If you are selecting the replacement remedy, you can get your lemon car replaced with a new one. It must be “identical or reasonably equivalent” to your lemon car as it was during the original purchase. This means you are free to choose any model as long as it is in the same price range. The replacement car must include all the warranties of a new car and must be delivered to you. Additionally, it is the manufacturer’s responsibility to pay the license and registration fees, sales tax, and any other incidental and collateral charges accompanied with the replacement car, including the towing costs and attorney’s fees.
If you have any existing loans, the manufacturer must also pay off the finance charges. Nevertheless, it is better to contact your lender early in the process, as you need to make a new loan for the replacement car and the terms may vary.
Additionally, you are obligated to pay an “offset for use” to the manufacturer, depending on the original “purchase price” and your attributable use mileage when you first brought the car to the repair facility to fix the lemon problem(s). And lemon law vehicle buy-back calculated as follows:
(Number of miles “attributable to consumer use” x Purchase price) / 120,000
Therefore, if your purchase price is $50,000 and your attributable to a consumer’s use is 10,000 miles, the offset for use will be: ($50,000) x (10,000 miles)/ 120,000 = $4166.
In case of a leased car, use the car’s capitalized cost mentioned in the lease agreement as your purchase price to calculate the offset for use. It is important to note that the manufacturers cannot be forced to accept this remedy if they are in favor of a repurchase or buyback.
❖ Repurchase or Buyback
If you choose the repurchase or reimbursement remedy, the manufacturer is obligated to refund you the original purchase price (minus the manufacturer’s rebate and offset for use) along with any collateral charges such as down payment, the prorated portion of your registration, monthly payments, as well as tax and finance charges. It is also known as the buyback. The balance on your loan will also be fully paid. The repurchase includes, but is not limited to:
➢ Credits/allowances for any trade-in cars
➢ License and registration fees, sales tax, and other finance charges
➢ Costs of any add-ons and modifications added by the manufacturer/authorized dealership
➢ Cost for the car rental while the original car was in the repair facility or out of service due to the lemon defect(s)
➢ Cost for extended manufacturer’s/subsidiary’s/agent’s warranty coverage
➢ Cost for expert and attorney fees and other legal costs
In case of a leased car, the refund will include all lease payments made by you, including security deposits and inception payments along with all other incidental costs and collateral charges. However, it does not include any kind of late payment penalties, which are consumers’ responsibility.
❖ Collateral Damages
The manufacturers are obligated by lemon law to pay for all collateral charges, including (but not limited to) license fees, sales tax, registration fees, finance charges, title fees, dealer add-ons, interest, monthly payments, and factory-installed options. In addition, they need to pay for the incidental damages such as costs related to the car’s care and custody, use of a rental car, towing charges, costs related to repair attempts, mileage to and from the repair shop, attorney’s fees, and so on.
However, the manufacturer is not obligated to refund, replace or re-install any item you have added to the lemon car after purchasing it. Sometimes, the manufacturer may agree to buy them from you, but you need to negotiate to deal with such aftermarket add-ons or you can remove them. Also note that although you are required to return the car to its original condition after removing the aftermarket add-ons, you are obligated to return or replace all original equipment that you have removed from the car for the aftermarket add-ons in case you are removing them.
❖ California Lemon Law Civil Penalties
Under California Lemon Law, found as the Song-Beverly Consumer Warranty Act, section 1790 in California’s Civil Code, was designed to safeguard consumers against defective cars, motorcycles, trucks, recreational vehicles, and other consumer goods. Under California Lemon Law, consumers are entitled to replacement or repurchase remedies for all collateral and incidental damages. The manufacturer is also obligated to pay the consumer’s attorney’s fees and other litigation costs if the car is determined to be a lemon.
If the auto manufacturer intentionally violated the lemon law, the consumer is entitled to be compensated for punitive damages or civil penalties, which is a monetary award that should not exceed 2 times actual damages. The penalty is a considerably large amount, as California Lemon Law Civil Penalties was designed to punish the auto manufacturers for their wilful misconduct as well as discourage them from violating the law.
Without an Attorney, The Manufacturer Will Challenge Your Rights
It’s generally a safe bet that the manufacturer will challenge your lemon law claim, even if you have a valid case. Both the replacement and the repurchase remedies cost a substantial amount to the manufacturer, which prompts them to challenge your claim. They may argue that abuse and negligence on your part were the cause of the defect(s), or perhaps you used the car in an unauthorized and/or unreasonable way, causing the defect(s).
Keep in mind, the auto industry is VERY well equipped with the legal defense. Having an experienced lemon law attorney representing your case will help you win your rightful claim against the big manufacturers. Furthermore, it is a win-win situation for you as a consumer, since the attorney’s fees and costs will be paid by the manufacturer, meaning you don’t have to pay anything out of pocket.