What is the Lemon Law for New Cars? (FAQs)

The Lemon Law for New Cars was established as a consumer protection for the buyers of new cars. A lemon is a car that has been unsatisfactorily repaired several times for the same defect.

The defect of the car should be something that impairs its use, safety or market value. The lemon law seeks to protect the buyers by creating special guidelines on how the buyer can request for a refund or a replacement of a purchased “lemon” car.

lemon law for new cars

Vehicles Covered Under the Lemon Law

Not all vehicles are covered by the Lemon Law. Any motorcycle, car, van and truck that were purchased within the state are covered by the Lemon Law for New Cars within a specific time (usually, one year) or until after a number of miles (i.e. 15,000 miles) were reached.

This is regardless if the vehicle is for personal or family purposes. The Lemon Law for New Cars also covers the vehicles even if they are resold during the one-year or 15,000-mile period.

The vehicles not covered by the Lemon Law for New Cars are motor homes, off-road vehicles, vehicles for business purposes, and vehicles that have defects due to the mishandling and misuse of owners, vandalisms, accidents and unauthorized repair of the vehicles.

Term of Protection Under the Lemon Law for New Vehicles

The term of protection in the Lemon Law for new vehicles specifies the period of time or number of miles accumulated after the delivery of the car during which the problem defects have occurred.

If the required number of repairs was done during this period and the vehicle is still defective, the car may now be classified as a lemon. However, the last repair attempt of the car manufacturer may be done after the specified term.

What are the Defects Covered Under the Lemon Law for New Cars

The defects covered are those that prejudice the use, market value and/or safety of the car.

The defect does not necessarily mean that it is substantial. In order to apply the lemon law for new vehicles on the defective car, the owner must justify that the defect affects the use, market value or the safety of the vehicle.

What are the Number of Repair Attempts Under the Lemon Law

The Lemon Law for New Cars defines the number of unsuccessful repair attempts that need to be done before the vehicle is classified as a lemon.

In many states, there should be three attempts to repair and the problem still continues or recurs during the term specified under the lemon law. Also, if the total number of business days that it took to repair the car on several attempts is more than 15 days, the car may also be classified as a lemon.

Other Frequently Asked Questions on Lemon Law for Cars

Since my lemon car claim has been approved for arbitration, am I immediately entitled to a refund or to another vehicle as a replacement?

The Lemon Law for cars prescribes fundamental guidelines in determining the appropriate remedies.

So, on the basis of these guidelines the arbitration panel studies the merits of each individual case in determining which of the following awards may be applicable to your claim:

  • A purchase price refund, which may include an additional amount representing expenses you have incurred for repairs and other attendant costs supported with corresponding receipts. However, the manufacturer may also be entitled to slap a mileage deduction on the purchase price refund for your use of the vehicle. The legal prescription for mileage deduction is the present mileage reading multiplied by the purchase price and dividing the product by 120,000.

or

  • An entitlement to a replacement with an equivalent vehicle.

However, if in the judgment of the arbitration panel, the defects in your lemon car claim do not adversely affect the performance, safety or value of the vehicle, it frees the manufacturer from any responsibility on your claim by handing down a “no action” decision.

At this point, you are now precluded from applying for Lemon Law for cars arbitration for the same defect and your only course of action would be to consult your lawyer for the possibility of filling of a suit in court against the manufacturer.

When can I expect an arbitration decision?

The Department exerts its best effort to render a decision within 60 days from its receipt of your formal application for Lemon Law for cars arbitration.

And, once a decision is rendered it is deemed final and can no longer be rescinded, recalled or amended by the Department or any of the arbitrators.

What can I do if I am not satisfied with the arbitration decision?

Generally, the arbitration decision is final and cannot be appealed for consideration of the court except in exceptional cases.

But, if you are contemplating to seek legal relief through court action, your best recourse is to consult your private lawyer on the best way to appeal a decision before you sign the Agreement to Arbitrate.

When is the manufacturer expected to abide by the arbitration award?

The formal arbitration decision will state the exact date of compliance and the arbitrator will try his best to assure the speedy resolution of the problem.

The Department will get in touch with you within 10 days from the date of compliance stated in the arbitration decision to check if the manufacturer has fulfilled his obligation as stated therein. Otherwise, your case is passed on to the Office of the Attorney General.

Can the manufacturer and I resolve the problem ourselves even after I have requested for arbitration?

Yes, you and the seller can enter into an amicable settlement prior to the rendition of an arbitration decision.

In such a case, you must inform the Department of the terms and conditions of your amicable settlement, particularly the following:

  1. The date when you agreed to the manufacturer’s offer for an amicable settlement.
  2. The terms and conditions of the amicable settlement, namely:

– The kind of remedy agreed upon such as repair of defect, replacement of vehicle or refund of contract price.

– If it’s a replacement of vehicle, how much is the difference in the model upgrade and who shoulders this amount?

– Will the manufacturer be entitled to a mileage deduction?

– Who takes care of the registration of the new vehicle and its attendant expenses?

– Who will shoulder the sales tax difference?

– If both parties agreed to a repair of the vehicle, what is the course of action if the repair fails to fix the defect?

– What kind of warranty will be issued for either the replacement or repair?

– What are the monetary responsibilities of both the consumer and manufacturer?

  1. The date of compliance with the amicable settlement.

The Department has no authority over an amicable settlement. That is why for your own protection, be sure that all costs involved in the settlement are put in writing to prevent the occurrence of “hidden costs” when the settlement is implemented.

What should I do if the manufacturer does not comply with the terms and conditions of the amicable settlement?

If, within a reasonable period after the stated date of compliance, the manufacturer does not fulfill his undertaking as stated in the settlement, you should notify in writing the Lemon Law Office of the Department of Consumer Protection so that a new hearing can be schedules.

The aim is to resume the arbitration process because the Lemon Law for cars has no jurisdiction over amicable settlements entered into between the parties prior to the issuance of an arbitration decision.

Manufacturer’s Arbitration Program

Certified –

In cases where the manufacturer has an arbitration program duly approved and certified by the Office of the Attorney General, you will be obliged to take advantage of that program. In the event the manufacturer’s arbitration program fails to resolve the problem, only then can you be allowed to seek relief from the Lemon Law for cars arbitration program. Presently, however, the Office of the Attorney General has not certified any third party resolution program.

If you have been harmed or placed at a disadvantage by the arbitration process under the certified manufacturer’s program, you may file a complaint with the Office of the Attorney General and appeal for an arbitration hearing. The procedure and fees are similar to those implemented under the arbitration program of the Department of Consumer Protection.

Non-certified –

If your manufacturer offers you its arbitration program which happens to be non-certified by the Office of the Attorney General, you have the option to either use that program or elevate your case directly to the Department of Consumer Protection. If you opt to use a non-certified program, you stand to lose some rights to seek other remedies. That is why you should think twice before deciding to avail of a non-certified program. Read carefully your manufacturer’s warranty to determine if your manufacturer is a participant in a third party dispute resolution program.

The Lemon Law for cars concerns only the consumers and manufacturers. That is why if a manufacturer does not have any certified arbitration program, the concerned car dealerships that carry the manufacturer’s brand are required to post a notice of this fact in a conspicuous place in its premises and indicating therein the arbitration program of the government.