Ownership of a lemon car – a vehicle with a repeated and irreparable manufacturer defect – is protected under both state and federal law via a series of potential financial remedies.
In the most extreme instances, where the vehicle has undergone multiple unsuccessful repair attempts, is rendered inoperable, or the defect results in a devaluation in excess of the car’s total loss value, manufacturers may be forced to reacquire the lemon vehicle through a lemon law buyback.
Once a lemon is reacquired by a vehicle manufacturer, it will be registered and titled in the manufacturer’s name, undergo corrective repairs (if applicable), potentially be re-listed for sale with a lemon law buyback title designation, and may once again return to public roadways.
The availability of lemons on the new and used car marketplaces present a series of unique questions and concerns for consumers and vehicle owners.
What is a Lemon Law Buyback?
A lemon law buyback refers to the process in which a vehicle manufacturer is either forced to or voluntarily reacquires a vehicle because of a warranty defect which substantially impairs the use, safety, and value of the vehicle. A buyback generally takes place at the conclusion of a lemon law dispute, following arbitration and trials (if necessary).
Typically, these buybacks result in a full refund of funds spent towards the purchase or lease of the vehicle (including down payments, monthly payments, registration), alongside reimbursement for incidental expenses such as a rental car or towing costs.
Any outstanding balances on automobile loans related to the vehicle will also be paid off in full by the manufacturer.
The main exception to the blanket refunds associated with lemon law buybacks is known as a “usage fee,” which a manufacturer is entitled to deduct based upon the period of time the vehicle was operated absent issue and the value of the miles placed on the vehicle prior to the first time it was taken in for repairs. You may also be responsible for additional taxes, if applicable.
Lemon Law Title
Following a lemon law buyback, a manufacturer is required to contact their state’s respective Department of Transportation and change the Certificate of Title and Vehicle Registration to reflect its status as a lemon law buyback.
Once that designation has been made it may never be removed from the vehicle’s title and will remain on the vehicle’s history report indefinitely.
Lemon Buyback Disclosure Requirements and Implications
As lemon laws in the United States lack uniformity, each state has its statutory requirements related to the disclosure of vehicle history and the sale of repurchased “lemons.”
These respective requirements present unique implications for both manufacturers and consumers.
Vehicle History Reports and Disclosure Requirements
Under Pennsylvania Lemon Law, manufacturers and dealers are prohibited from reselling, transferring or leasing vehicles purchased as lemon law buybacks, unless they:
- Provide a written statement of the vehicle’s history as a lemon law buyback (Vehicle History Report)
- Clearly and conspicuously display and disclose the manufacturer’s written statement and Vehicle History Report detailing the vehicle’s history as a lemon
- Ensure consumers are made aware of the Vehicle History Report prior to purchase, via an approval of the report from the Attorney General and a signed receipt from the purchaser
- Apply for a receive a branded title from the Pennsylvania Department of Transportation
New Jersey Lemon Law requirements dictate that, prior to sale, all vehicles purchased by manufacturers as lemon law buybacks:
- Have the title stamped “R” (for “Returned to the Manufacturer Under Lemon Law or Other Proceeding”)
- Have a copy of the title submitted to the New Jersey Motor Vehicle Commission to be permanently branded “L” (for “Lemon”) on its NJ Title
New York Lemon Law places significant restrictions on both dealer and manufacturer sales of repurchased “lemon” vehicles. In order to lawfully sell a vehicle acquired by lemon law buyback, manufacturers must:
- Provide the purchaser with an explicit statement, in all-capital type, reading “IMPORTANT: THIS VEHICLE WAS RETURNED TO THE MANUFACTURER OR DEALER BECAUSE IT DID NOT CONFORM TO ITS WARRANTY AND THE DEFECT OR CONDITION WAS NOT FIXED WITHIN A REASONABLE TIME AS PROVIDED BY NEW YORK LAW.”
- Print the aforementioned notice on the vehicle’s certificate of title
- Get the purchaser to sign a statement acknowledging the vehicle history as a lemon prior to executing the sale
- Mail a notice of the repurchased to the Department of Motor Vehicles within five days of sale
Regardless of state, if a sale is made in violation of any of the aforementioned conditions, the dealer or manufacturer may be subject to civil penalties and be required to replace or refund the entire cost of the vehicle.
Lemon Title Purchase and Implications for Consumers
Consumers interested in purchasing vehicles previously acquired as lemon law buybacks should make sure they are as informed as possible regarding the vehicle’s history and value.
In a lemon title purchase, a person should be:
- Reviewing a vehicle’s entire history
- Assessing the relative worth of the vehicle and severity of the problems leading to its lemon status
- Discussing all repairs made to address those problems with the manufacturer or dealer
- Ensuring the seller and manufacturer have complied with all state guidelines regarding the title, registration, and sale of repurchased lemons
Ultimately, as a purchaser, it should be explicitly clear that the vehicle being purchased is a lemon title vehicle and has been in compliance with state regulations throughout its history.
Conversely, those engaged in the sale of repurchased lemon vehicles should ensure they’ve complied with all state guidelines and kept all relevant service records to demonstrate an attempt to resolve the issues which led to the vehicle’s lemon status.
Of the utmost importance, however, is ensuring that potential buyers are made aware of the vehicle’s lemon title prior to purchase to avoid disputes and confusion.
Questions Regarding Lemon Law Buybacks?
The lemon law buyback and purchase processes can be quite complex and overwhelming. Luckily, the dedicated and highly qualified team of attorneys at Robison Lemon Law Group LLC is here to guide you through each step of the process and answer any questions you may have regarding lemon law buybacks, lemon law rights, or any other lemon law related topics.
Contact us today via email or call us at (844) 214-6053 to schedule your free consultation.