Overview of States' Lemon Law Statutes

The purpose of the Lemon Law is twofold. First, the Lemon Law were enacted to take defective automobiles off the road. Second, the Lemon Law offers a direct redress to consumers who have purchased those defective automobiles. The primary goals of the Lemon Law are (1) encouraging resolution of warranty-related disputes between motor-vehicle manufacturers and buyers outside of court; and (2) leveling the playing field for vehicle purchasers over the deep pockets of the manufacturers.

Lemon Laws were enacted to provide consumers with remedies beyond the insufficient, tentative, and expensive remedies of the Uniform Commercial Code (UCC) or the Magnuson-Moss Warranty Act. There are warranty enforcement statutes that provide important rights to motor vehicle owners, which reduce the troublesomeness, the cost, the frustration, and the emotional trauma that "lemon" owners endure.

A vehicle manufacturer can be liable for nonconformities in an engine under the Lemon Laws even though the engine was not covered in manufacturer's express warranty. Typically, legislatures did not limit the scope of the Lemon Laws to a manufacturer's express warranty.

J. D. Power & Associates, a leading automobile market research company, indicated that between two percent and eight percent of all automobiles sold violate the provisions of a standard statutory lemon law. This would yield approximately 300,000 lemons each year. Since the average automobile now costs approximately $15,000, this is a $5 billion problem. A 2015 J. D. Power & Associates study reveals that dependability rates of vehicles has decline for the first time in over a decade.

Forty-seven states and the District of Columbia have motor vehicle warranty statutes. These statutes are designed to provide protections to consumers who purchase new motor vehicles from an authorized motor vehicle dealer. Some states included leased or used vehicles. A few state statutes define a "consumer" as an owner who uses their vehicles for personal use. Generally, the term "motor vehicle" includes automobiles, vans, and pickup trucks. However, many statutes, including Louisiana, extend their protections to owners of motorcycles, motorhomes, and even heavy trucks.

Most statutes provide protections for vehicles with repeated warranty defects that occur within the earlier of a time and mileage period. Louisiana Lemon Law statute provides for a term within the warranty term or during a period of one year after the date of the original delivery to the consumer.

Manufacturers are responsible under state lemon laws, not dealers.

The typical statute is violated if, within the protection period, the vehicle suffers a substantial defect that is warranted, which is the subject of four or more unsuccessful repairs or the vehicle is out of service for at least 30 days for any number of substantial warranty nonconformities. The warranty nonconformity is considered to be substantial if it substantially impairs the use, safety or value of the vehicle. Key factors in establishing that the defect was substantial are: (1) whether affects the operation of the vehicle; (2) the repair cost; (3) the amount of time or number of attempts it takes to repair the vehicle; (4) the loss of confidence in the vehicle. Generally, the repair attempts do not have to result in the creation of a repair order and no actual repair has to be made. For example, if a vehicle was taken to a dealer and only test-driven or subjected to diagnostic tests.

Many state statutes do not require that the consumer give notice to the manufacturer before commencing an action; however, other statutes require some sort of oral or written notice. Some statutes require notice by certified mail and one additional opportunity to repair the vehicle.

Most statutes provide that if a manufacturer offers an arbitration mechanism that conforms to the Magnuson-Moss Warranty Act a consumer must first participate in such before they can bring a Lemon Law claim.

Examples of Defective Conditions Require Substantial Impairment of Use

Defects in rear window seal and molding on a luxury automobile sufficiently impaired automobile's use and value to buyer, supporting buyer's claim against manufacturer and authorized dealer under Nevada's Lemon Law. The automobile was repaired four or more times within the first year for conditions which dealer never successfully repaired, automobile was out of service for repair cumulative total of 55 days during the first year, and responsibility for timeliness of repair rested with the dealer.

Evidence that, within one month of purchase, plaintiff's new van purchased from defendant required repairs for stalling, lack of engine power, and smoke, and that such problems could not be repaired or even diagnosed after repeated efforts by the defendant, amply warranted a finding of breach of warranty of merchantability.

Plaintiff was entitled to recover under used car New York Lemon Law, where (1) the within warranty period, plaintiff returned the car to the dealership because of a coolant leak, (2) first repair was not successful, (3) on second repair dealership traced leak to crack in the engine block, (4) plaintiff accepted car after repair and drove the car beyond expiration of the warranty period without further incident, (5) some months later, leak reappeared at the same location.

In a motor vehicle warranty case, the substantial defect lessens the value of the motor vehicle. Indeed, sometimes the defect is so substantial that the motor vehicle is undriveable and not resaleable. Thus, one element of damages is the value of the motor vehicle. All statutes provide for either replacement of the vehicle with a new comparable motor vehicle or refund of the purchase price. In some statutes provide the consumer chooses the remedy and in other statutes the manufacturer chooses the remedy.

In states that allow the consumer to choose the remedy, it is generally advisable to choose a comparable new motor vehicle rather than a refund of the purchase price because the price might have increased. Moreover, some statutes provide a setoff for use if the consumer requests a refund of the purchase price, but not if the consumer requests a comparable new motor vehicle. Thus, if the mileage is high, a vehicle substitution may be superior to a refund.

If a consumer accepts a refund of the purchase price, some statutes provide a formula to determining the setoff. Some only provide that it must be reasonable, leaving it for the fact-finder to determine the amount of the setoff. However, some states like Louisiana, "freeze" the setoff at the first report of a substantial defect to the dealer or manufacturer. Thus, it may be prudent to record the mileage of the vehicle at the time of the first report of a substantial defect to the dealer or manufacturer.

Most motor vehicle purchases involve financing as well. Because finance interest charges do not lower the balance as loan payments are made, the interest charges further damage the consumer. If the chosen remedy is a purchase price refund, most statutes allow for the recovery of finance charges.

The statutes require that the repairs are covered by the manufacturer's written warranty; thus, typically the consumer will not have paid anything for the repairs to his vehicle. However, the consumer might incur other incidental costs due to the mechanical failure or repair of the vehicle. For example, tow charges, storage charges, rental car expenses, lost earnings, and additional mileage on a companion vehicle in returning the vehicle for repairs are among the typical incidental costs incurred by consumers. Most statutes provide for recovery of incidental costs that were actually incurred.

In addition, most statutes cover costs incurred in the original purchase of the vehicle, such as state sales taxes, license and title fees, and lien recordation fees. If accessories added after taking delivery of the vehicle, such as custom wheels and tires, a sunroof, floor mats, seat covers etc. are not removable without damaging the vehicle or are not transferable to another vehicle, they are recoverable as well.

Most statutes provide for recovery of attorney's fees and litigation expenses. Most courts hold a hearing on the attorney's fees issue after the verdict or ask for affidavits and briefs to be submitted after the verdict.