Basic Presumption – This provision creates the basic presumption by defining what constitutes a reasonable number of repair attempts or days out of service before a vehicle is presumed to be a lemon. The majority of state lemon laws provide that 3 repair attempts for a defect that substantially impairs the safety, use or value of the vehicle or 30 days out of service qualifies as a lemon. However, a big loophole in some states is giving the manufacturer one final attempt to repair the problem. South Dakota has the worst provision in giving a manufacturer a final repair attempt after 4 repair attempts or 30 days out of service in which the manufacturer has up to 21 more days to remedy a lemon after notification from the consumer. In some states, the consumer can avoid stretching of the basic presumption by notifying the auto maker of the non-conformity after the second repair attempt so the third attempt will be done by the manufacturer and can be considered the final attempt. The best basic presumption provision is one like that of New Jersey which creates a presumption after 3 repair attempts or 20 calendar days out of service. Although New Jersey gives the manufacturer one final repair attempt within 10 calendar days of the notice, the statute wisely provides that the consumer can give the required notice to the manufacturer after the second repair attempt or 20 days out of service.
New Jersey Statutes Annotated
56:12-33 Presumption of inability to correct nonconformity; written notification.
a. It is presumed that a manufacturer or its dealer is unable to repair or correct a nonconformity within a reasonable time if, within the first 18,000 miles of operation or during the period of two years following the date of original delivery of the motor vehicle to a consumer, whichever is the earlier date: (1) Substantially the same nonconformity has been subject to repair three or more times by the manufacturer or its dealer and the nonconformity continues to exist; or (2) The motor vehicle is out of service by reason of repair for one or more nonconformities for a cumulative total of 20 or more calendar days since the original delivery of the motor vehicle and a nonconformity continues to exist.
b. The presumption contained in subsection a. of this section shall apply against a manufacturer only if the manufacturer has received written notification, by or on behalf of the consumer, by certified mail return receipt requested, of a potential claim pursuant to the provisions of this act and has had one opportunity to repair or correct the defect or condition within 10 calendar days following receipt of the notification. Notification by the consumer shall take place any time after the motor vehicle has had substantially the same nonconformity subject to repair two or more times or has been out of service by reason of repair for a cumulative total of 20 or more calendar days.
c. The two-year term and the 20-day period specified in this section shall be extended by any period of time during which repair services are not available to the consumer because of a war, invasion or strike, or a fire, flood, or other natural disaster.
Safety Lemon – An addition to the basic presumption; this creates a lower thresh hold presumption that a vehicle is a lemon if the nonconformity is likely to cause serious bodily injury or death. It exists because a consumer should not have to risk their life multiple times for a safety defect. 15 states have this extra safety lemon protection. Most of them create the presumption for a serious safety problem that is likely to cause death or serious injury, while a few limit the protection to a failure of brakes or steering. The District of Columbia, Hawaii, Ohio, Virginia and West Virginia have the best provision in creating the presumption after one unsuccessful repair attempt. The following is Hawaii's provision:
Hawaii Revised Statutes
481I-3 Motor vehicle: express warranties, return.
(d) It shall be presumed that a reasonable number of attempts have been undertaken to conform a motor vehicle to the applicable express warranties, if, during the lemon law rights period, any of the following occurs: . . . .
(2) The nonconformity has been subject to examination or repair at least once by the manufacturer, its agents, distributors, or authorized dealers, but continues to be a nonconformity which is likely to cause death or serious bodily injury if the vehicle is driven;
Length – This provision defines the time period when the required number of repair attempts or days out of service must occur to invoke the presumption that a vehicle is a lemon. It is important to note that the duty to refund or replace continues at least through the express warranty and is not limited to the length of the presumption period in almost all states. Kentucky has the worst provision of all the states in limiting both the presumption and the refund/replace period to the earlier of 12 months or 12,000 miles.
Some states extend the period if one of the repair attempts occurred during the original period stated â€“ e.g., Alabama extends its presumption period to 24 months/24,000 miles if one repair attempt or one day out of service occurred within the first 12 months/12,000 miles. The most common lemon period is 24 months and various miles with 11 states having 24 months/24,000 miles, 7 with 24 months/18,000 miles and 2 with 24 months/unlimited miles. Illinois, Kentucky, Oregon and Pennsylvania are the worst in only providing a lemon presumption through the earlier of 12 months/12,000 miles. Since the average new vehicle travels 15,000 miles during the first year of use, lemon protection in these states runs out after 9 months.
The best states are New Hampshire and Vermont which provide that the lemon law protection period is the length of the express warranty which is typically 3 years/36,000 miles. South Carolina also provides the lemon law protection period is the length of the express warranty but requires the non-conformity to first appear during the earlier of 12 months/12,000 miles. The following is Vermont's provision.
Vermont Statutes Annotated, Title 9
4172 Enforcement Of Warranties.
(a) Every new motor vehicle as defined in section 4171of this title sold in this state must conform to all applicable warranties.
(g) It shall be presumed that a reasonable number of attempts have been undertaken to conform a motor vehicle to the applicable warranties if:
(1) the same nonconformity as identified in any written examination or repair order has been subject to repair at least three times by the manufacturer, its agent or authorized dealer and at least the first repair attempt occurs within the express warranty term and the same nonconformity continues to exist, or
(2) the vehicle is out of service by reason of repair of one or more nonconformities, defects or conditions for a cumulative total of 30 or more calendar days during the term of the express warranty. The term of any warranty and the 30-day period shall be extended by any period of time during which repair services were not available to the consumer because of war, invasion, strike, fire, flood or other natural disaster. If an extension of time is necessitated due to these conditions, the manufacturer shall cause provision for the free use of a vehicle to the consumer whose vehicle is out of service. A vehicle shall not be deemed out of service if it is available to the consumer for a major part of the day.
Garden Variety Lemon – An addition to the basic presumption; this creates a presumption that a vehicle is a lemon if a set number of any non-conformities occur. It exists because some cars have parts fail from the front bumper to the rear but never have the same problem twice, let alone three or four times as required by the basic lemon presumption.. Three states (Arkansas, Kansas and Ohio) have this provision with Arkansas having the best provision with 5 repairs creating the presumption as set forth below:
Â§ 4-90-410. Presumption of reasonable attempts to repair . . . .
(a) A rebuttable presumption of a reasonable number of attempts to repair is considered to have been undertaken to correct a nonconformity if: . . . .
(3) There have been five (5) or more attempts, on separate occasions, to repair any nonconformities that together substantially impair the use and value of the motor vehicle to the consumer.
Offset – When a consumer receives a refund for or replacement of a lemon vehicle, state lemon laws vary significantly on whether the manufacturer can deduct an offset for use of the vehicle. Almost all states recognize that a consumer should not be charged for troubled use, â€“ i.e., the consumer should only be charged for use that is trouble free. Some state lemon laws only provide for a “reasonable” offset leaving it up to the courts to decide what, if any, offset is reasonable. State lemon laws that provide a formula generally provide that the manufacturer is entitled to an offset for use only up to the first repair attempt for the non-conformity that resulted in the vehicle being a lemon. The two most common formulas used were to divide the number of miles driven up to the first repair attempt by either 100,000 or 120,000 and multiply that number by the purchase price. This would be how much is deducted as an offset for use. States with older lemon laws use 100,000 miles but recent laws used 120,000 miles as vehicles have a longer useful life today. Some states have bad offset provisions that reward a manufacturer for dragging out buying back a lemon and penalize a consumer for even the most troubled use. Florida is bad by requiring a mandatory offset for all miles of use up to the date of a settlement agreement or arbitration hearing which rewards a manufacturer for stonewalling the consumer until the last possible moment. Ohio and West Virginia have the best provisions on offsets because their lemon laws contain no offset for use. The following is Ohio's provision:
Ohio Revised Code
1345.72 Duty to repair nonconforming new motor vehicles.
Consumer's options when repairs unsuccessful. . . .
(B) If the manufacturer, its agent, or its authorized dealer is unable to conform the motor vehicle to any applicable express warranty by repairing or correcting any defect or condition that substantially impairs the use, safety, or value of the motor vehicle to the consumer after a reasonable number of repair attempts, the manufacturer shall, at the consumer's option, and subject to division (D) of this section replace the motor vehicle with a new motor vehicle acceptable to the consumer or accept return of the vehicle from the consumer and refund each of the following:
(1) The full purchase price including, but not limited to, charges for undercoating, transportation, and installed options;
(2) All collateral charges, including but not limited to, sales tax, license and registration fees, and similar government charges;
(3) All finance charges incurred by the consumer;
(4) All incidental damages, including any reasonable fees charged by the lender for making or canceling the loan.
Penalty – Recognizing that auto makers often ignore the requirements of the lemon law to drag out taking back lemons so that consumers give up in frustration, some states impose a civil penalty or exemplary damages for willful violation of the lemon law. Such provisions create a deterrent to auto companies stonewalling consumers and outright misleading consumers about their lemon law rights. California, North Carolina, Oregon, and Wisconsin lead the way by providing for the award to the consumer double or treble damages for violations of the lemon law. Maryland provides for a $10,000 damage award to consumers for manufacturers who act in bad faith. North Carolina and Wisconsin have the best provisions by providing for mandatory treble and double damages respectively.
North Carolina General Statutes
In any action brought under this Article, the court may grant as relief:
(1) A permanent or temporary injunction or other equitable relief as the court deems just;
(2) Monetary damages to the injured consumer in the amount fixed by the verdict. Such damages shall be trebled upon a finding that the manufacturer unreasonably refused to comply with G.S. 20-351.2 or G.S. 20-351.3. The jury may consider as damages all items listed for refund under G.S. 20-351.3;
Wisconsin Statutes Annotated, 281.015
(7) In addition to pursuing any other remedy, a consumer may bring an action to recover for any damages caused by a violation of this section. The court shall award a consumer who prevails in such an action twice the amount of any pecuniary loss, together with costs, disbursements and reasonable attorney fees, and any equitable relief the court determines appropriate.
Vehicles Covered – This provision defines what vehicles are covered under the law. Some states arbitrarily restrict the coverage of the lemon law. For example, Indiana is the worst by excluding conversion vans, motor homes and motorcycles. Massachusetts and New York have explicit used car lemon laws while other including California and Minnesota apply the new car lemon law to used cars which still are under the express factory warranty when sold. Louisiana specifically covers all-terrain vehicles and water craft. Some states excludes passenger vehicles used for business purposes. Such provisions are open to dispute and may exclude people such as day care providers, real estate agents, rural mail carriers, nurses and other small business operators who can only afford a single vehicle. Newer versions of lemon laws such as California's have extended the protection of the lemon law to small businesses. Maine serves as a good example in covering all vehicles under 8,500 pounds and only excluding commercial vehicles over 8,500 pounds.
Maine Revised Statutes Annotated, Tit. 10
3. Motor Vehicle. “Motor vehicle” means any motor driven vehicle, designed for the conveyance of passengers or property on the public highways, which is sold or leased in this State, except that the term “”motor vehicle”” does not include any commercial vehicle with a gross vehicle weight of 8,500 pounds or more.
State Run Arbitration – State run arbitration programs are fairer to consumers than the manufacturer run arbitrations programs. State run programs have better trained personnel, are not biased by industry funding, publicly report on their decision, meet their deadlines and are more likely to give all available relief under the lemon law. Most state-run programs use their own resources but a few like New York use the American Arbitration Association. The best state lemon laws like New Jersey give consumers the choice to use the state run programs and award attorney fees during the arbitration or go to court when a manufacturer refuses to voluntarily buy back a vehicle that is a lemon under the law. Even a well run state program will take 70 to 100 days before the consumer actually gets rid of the lemon. An experienced lemon lawyer in a state with a good lemon law can get a consumer out of a lemon faster with some lawyers able to turn a lemon around within 30 days. New Jersey has the best state-run arbitration program by making it optional and providing for attorney fees if the consumers opts for the program.
New Jersey Statutes Annotated
56:12-37 Dispute resolution.
a. A consumer shall have the option of submitting any dispute arising under section 4 of this act to the division for resolution. The director may establish a filing fee, to be paid by the consumer, fixed at a level not to exceed the cost for the proper administration and enforcement of this act. This fee shall be recoverable as a cost under section 14 of this act. Upon application by the consumer and payment of any filing fee, the manufacturer shall submit to the State hearing procedure. The filing of the notice in subsection b. of section 5 of P.L.1988, c.123 (C.56:12-33) shall be a prerequisite to the filing of an application under this section.
b. The director shall review a consumer's application for dispute resolution and accept eligible disputes for referral to the Office of Administrative Law for a summary hearing to be conducted in accordance with special rules adopted pursuant to the “Administrative Procedure Act,” P.L.1968, c.410 (C.52:14B-1 et seq.), by the Office of Administrative Law in consultation with the director. Immediately upon acceptance of a consumer's application for dispute resolution, the director shall contact the parties and arrange for a hearing date with the Clerk of the Office of Administrative Law. The hearing date shall, to the greatest extent possible, be convenient to all parties, but shall be no later than 20 days from the date the consumer's application is accepted, unless a later date is agreed upon by the consumer. The Office of Administrative Law shall render a decision, in writing, to the director within 20 days of the conclusion of the summary hearing. The decision shall provide a brief summary of the findings of fact, appropriate remedies pursuant to this act, and a specific date for completion of all awarded remedies. The director, upon a review of the proposed decision submitted by the administrative law judge, shall adopt, reject, or modify the decision no later than 15 days after receipt of the decision. Unless the director modifies or rejects the decision within the 15-day period, the decision of the administrative law judge shall be deemed adopted as the final decision of the director. If the manufacturer unreasonably fails to comply with the decision within the specified time period, the manufacturer shall be liable for penalties in the amount of $5,000.00 for each day the manufacturer unreasonably fails to comply, commencing on the day after the specified date for completion of all awarded remedies.
c. The Office of Administrative Law is authorized to issue subpoenas to compel the attendance of witnesses and the production of documents, papers and records relevant to the dispute.
d. A manufacturer or consumer may appeal a final decision to the Appellate Division of the Superior Court. An appeal by a manufacturer shall not be heard unless the petition for the appeal is accompanied by a bond in a principal sum equal to the money award made by the administrative law judge plus $2,500.00 for anticipated attorney's fees and other costs, secured by cash or its equivalent, payable to the consumer. The liability of the surety of any bond filed pursuant to this section shall be limited to the indemnification of the consumer in the action. The bond shall not limit or impair any right of recovery otherwise available pursuant to law, nor shall the amount of the bond be relevant in determining the amount of recovery to which the consumer shall be entitled. If a final decision resulting in a refund to the consumer is upheld by the court, recovery by the consumer shall include reimbursement for actual expenses incurred by the consumer for the rental of a motor vehicle equivalent to the consumer's motor vehicle and limited to the period of time after which the consumer's motor vehicle was offered to the manufacturer for return under this act, except in those cases in which the manufacturer made a comparable vehicle available to the consumer free of charge during that period. If the court finds that the manufacturer had no reasonable basis for its appeal or that the appeal was frivolous, the court shall award treble damages to the consumer. Failure of the Office of Administrative Law to render a written decision within 20 days of the conclusion of the summary hearing as required by subsection b. of this section shall not be a basis for appeal.
e. The Attorney General shall monitor the implementation and effectiveness of this act and report to the Legislature after three years of operation, at which time a recommendation shall be made either to continue under the procedures set forth in this act or to make such modifications as may be necessary to effectuate the purposes of this act.
56:12-39 Decision binding.
A consumer shall not be required to participate in a manufacturer's informal dispute settlement procedure or the division's summary hearing procedure before filing an action in the Superior Court. However, a decision rendered in a proceeding brought pursuant to the division's summary hearing procedure shall be binding on the consumer and the manufacturer, subject to the right of appeal as set forth in subsection d. of section 9 of this act, and shall preclude the institution of any other action in the Superior Court under this act. (Emphasis added.)
56:12-42 Attorney, expert fees; costs.
In any action by a consumer against a manufacturer brought in Superior Court or in the division pursuant to the provisions of this act, a prevailing consumer shall be awarded reasonable attorney's fees, fees for expert witnesses and costs. (Emphasis added.)
56:12-43 Use of funds.
All fees, penalties and costs collected by the division pursuant to this act shall be appropriated for purposes of offsetting costs associated with the handling and resolution of consumer automotive complaints.
Attorney Fees – If a consumer must retain an attorney to go to court or through a state arbitration proceeding with a manufacturer, the lemon law must provide for the award of attorney fees to make the consumer. Otherwise, the cost of the attorney will make it economically impractical for the consumer to exercise their lemon law rights in court or arbitration. Prior to lemon laws, the retort of the manufacturer to the lemon owner was to sue us knowing that it would cost more to sue than to trade the lemon in. Unless the lemon law provides for award of attorney fees, manufacturers will continue to tell consumers “so sue us” knowing most consumers will give up and go away. To protect consumers and make them whole, 16 states mandate the award of attorney fees to the consumer while 17 states make their award discretionary. Colorado provides for mandatory attorney fees to the prevailing party which ensures no consumer will file a lemon lawsuit for risk of having to pay for an expensive corporate law firm. Colorado and New Mexico have similar bad provisions by providing auto companies can receive discretionary fees and mandatory fees for frivolous actions respectively. The risk of having to pay auto companies' attorney fees chills the right to bring a lemon law suit. The following are the better mandatory attorney fee provisions for the consumer from Louisiana and New Jersey.
Louisiana Revised Statutes Annotated 51:1941 to 51:1948
Â§ 1947. Attorney fees
If the motor vehicle does not conform to applicable express warranties after the consumer has complied with the requirements of this Chapter, the consumer shall be entitled to reasonable attorney fees actually incurred if a judgment is rendered in part or whole in his favor.
New Jersey Statutes Annotated
56:12-42 Attorney, expert fees; costs.
In any action by a consumer against a manufacturer brought in Superior Court or in the division pursuant to the provisions of this act, a prevailing consumer shall be awarded reasonable attorney's fees, fees for expert witnesses and costs.
Damages – When consumers buy or lease lemons, they should get back everything they paid with no offset for use because owning a lemon is often a nightmare. Consumers take time off from work, miss vacations, get stranded, worry about their safety – i.e., when and where the vehicle will next break down, and even have strains within the family when inflicted with a lemon. In recognition of this, West Virginia includes “annoyance or inconvenience” as damages to be recovered as shown below. Unless the lemon law specifies particular items to be recovered, auto manufacturers will argue that it is not covered. While the consumer may win the battle of having a vehicle declared a lemon, they may lose the war of what should be reimbursed to the extent they are no better off than if they traded in the vehicle.
To be fair to consumers and receive a good rating, a state lemon law must specify that in addition to purchase price which includes optional equipment, a refund must include: (a) taxes, tags, title and other fees, (b) incidental and consequential damages including towing, repairs, insurance, (c) interest payments and finance charges, (d) rental car, alternate transportation and loss of use, (e) inconvenience. Illinois has one of the worst laws in the country for damages because the consumer does not even recover taxes. Often manufacturers contend consumers should not get the full trade-in value. Some states such as California have had to take care of this through administrative agencies but New Hampshire does a good job in its lemon law by specifying the refund includes “the full purchase price as indicated in the purchase contract and all credits and allowances for any trade-in or down payment.”
West Virginia Code
46A-6A-4 Civil action by consumer.
(b) In any action under this section, the consumer may be awarded all or any portion of the following:
(1) Revocation of acceptance and refund of the purchase price, including, but not limited to, sales tax, license and registration fees, and other reasonable expenses incurred for the purchase of the new motor vehicle, or if there be no such revocation of acceptance, damages for diminished value of the motor vehicle;
(2) Damages for the cost of repairs reasonably required to conform the motor vehicle to the express warranty;
(3) Damages for the loss of use, annoyance or inconvenience resulting from the nonconformity, including, but not limited to, reasonable expenses incurred for replacement transportation during any period when the vehicle is not out of service by reason of the nonconformity or by reason of repair; and
(4) Reasonable attorney fees.
North Carolina General Statutes
20-351.3 Replacement or refund; disclosure requirement.
(1) The full contract price including, but not limited to, charges for undercoating, dealer preparation and transportation, and installed options, plus the non-refundable portions of extended warranties and service contracts;
(2) All collateral charges, including but not limited to, sales tax, license and registration fees, and similar government charges;
(3) All finance charges incurred by the consumer after he first reports the nonconformity to the manufacturer, its agent, or its authorized dealer; and
(4) Any incidental damages and monetary consequential damages.
New Hampshire Revised Statutes Annotated
357-D:3 Enforcement of Warranties.
(V) . . . . In those instances in which a refund is tendered, the manufacturer shall refund to the consumer the full purchase price as indicated in the purchase contract and all credits and allowances for any trade-in or down payment, license fees, finance charges, credit charges, registration fees, and any similar charges and incidental and consequential damages . . . .
Center for Auto Safety
November 4, 2002