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The State of North Carolina
Department of Justice explains exactly what rights you have as a
consumer when purchasing or leasing a new vehicle. In a nutshell,
if you have had a vehicle in the shop for the same repair 4 times
or your vehicle has been out-of-commission for 20 business days
during any 12-month period of your warranty, then you probably have
yourself a lemon.
The Lemon Law: Your Rights as a New Car Buyer or Lessee
Introduction
State of North Carolina
Office of Attorney General
Consumer Protection
The 1987 General Assembly enacted a "lemon law" to give
better remedies to North Carolina consumers who buy or lease a new
car that is a "lemon." The lemon law (a) defines clearly
what cars are lemons, (b) spells out exactly the relief to which
the purchaser of, and consumer leasing a lemon is entitled and (c)
provides that a manufacturer who unreasonably refuses to grant to
the buyer of or consumer leasing a lemon the relief to which he
is entitled must pay the consumer triple damages and attorney's
fees.
What Vehicles are Covered?
The lemon law does not apply just to passenger cars. It covers any
new motor vehicle other than a house trailer, provided that the
vehicle does not have a gross vehicle weight of 10,000 pounds or
more. Thus, the law covers pickup trucks, motorcycles and most vans,
as well as cars. And the purpose for which the vehicle is purchased
or leased is not relevant. But, any cars purchased or leased prior
to October 1, 1987 is not covered by the lemon law.
When is a Car a Lemon?
A vehicle is a lemon if it is "seriously defective" and
could not be repaired in a "reasonable number of attempts."
"Seriously Defective"
A serious defect is "any defect or condition or series of
defects or conditions which substantially impair the value of the
motor vehicle to the consumer." The defect must be in a part
of the car covered by the manufacturer's express warranty, but it
is not limited to things which make the car driveable. Leaks, lack
of air conditioning or heat or serious paint problems, to name a
few, could be defects which substantially impair the value of the
vehicle to the buyer.
Also, in order for the vehicle to be seriously defective, the defect
must have appeared within the express warranty period. The lemon
law requires all vehicles to have an express warranty of at least
twelve months or twelve thousand miles. If the express warranty
period exceeds 24 months or 24,000 miles, the consumer's right to
a replacement or refund is limited to defects which first occur
within that first 24 months or 24,000. For warranty defects which
occur after within the warranty period, but after the lemon law's
24 month/24,000 mile limitation, the consumer would have to seek
compensation for failure to repair if the vehicle is not repaired
after a reasonable number of attempts. Compensation for failure
to repair is the difference in the value of the car as it is and
the value it would have if repaired, or the cost of repairs.
Note that the express warranty on a new motor vehicle stated in
a number of miles begins from the date the vehicle is delivered
to the consumer. For example, if a demonstration model with a 24,000
mile warranty has 4,000 miles on it when the consumer buys it, the
warranty will remain in effect until the vehicle has 28,000 miles
on it.
"Reasonable Number of Attempts"
The law presumes that "a reasonable number of attempts have
been undertaken" to fix the defects if:
1. The same defect has been presented to the manufacturer, or its
authorized dealer for repair four or more times without success,
or
2. The vehicle has been out of service during or while awaiting
repair of a defect or series of defects for a cumulative total of
20 or more business days during any 12 month period of the warranty,
provided that the consumer has notified the manufacturer directly
in writing of the existence of the defects or series of defects
and allowed the manufacturer a reasonable period, but not more than
15 calendar days, to fix them. This last requirement makes it vital
that customers write the manufacturer directly about the problems
early on if the dealer is having trouble getting them fixed. Do
not let the dealer talk you out of writing the manufacturer directly.
You must do this to get your rights under the law.
What Remedies Are Available to the Consumer?
If the manufacturer has not fixed the vehicle after a reasonable
number of attempts, the purchaser or leasing consumer is entitled
to choose a comparable, new replacement vehicle or a refund. The
statute is not specific as to what is a comparable new replacement
vehicle, though it would clearly include an identical make and model.
However, the consumer may choose a refund instead of a replacement.
The statute is very specific about how to determine the amount of
the refund. A purchaser is entitled to a refund of:
1. The full contract price including, but not limited to, charges
for undercoating, dealer-preparation and installed options, plus
the non-refundable portions of extended warranties and service contracts;
2. All supplemental or 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 defect to the manufacturer, its agent, or its authorized
dealer; and
4. Any incidental damages and monetary consequential damages, less
a reasonable allowance for the consumer's use of the vehicle.
Incidental damages include, among other things, reasonable expenses
for inspecting and transporting the vehicle (e.g., towing expenses),
costs to cover alternate transportation (e.g., rental car fees),
and hotel expenses, if any. Monetary consequential damages include
the value of lost use generally.
A leasing consumer is entitled to a refund of:
1. All sums previously paid by the leasing consumer under the terms
of the lease;
2. All sums previously paid by the leasing consumer in connection
with entering into the lease agreement, including, but not limited
to, any capitalized cost reduction, sales tax, license and registration
fees, and similar government charges; and
3. Any incidental and monetary consequential damages.
Because it is the manufacturer that is responsible for the vehicle,
the leasing must recover from the manufacturer, not the lessor.
The lessor also may recover from the manufacturer. Remedies available
to the lessor are described at G.S. § 20-351.3(b)(2).
The statute defines a "reasonable allowance for use"
as that amount directly attributable to use by the consumer prior
to his first report of the defect to the manufacturer, its agent,
or its authorized dealer, and during any subsequent period when
the vehicle is not out of service because of repair. "Reasonable
allowance is presumed to be the cash price of the vehicle multiplied
by a fraction having as its denominator 100,000 miles and its numerator
the number of miles on the vehicle attributed to the consumer."
For example, if the cash price of the vehicle was $20,000 and the
purchaser or leasing consumer had driven the car 10,000 miles before
getting a refund, the owner would be entitled to the full refund,
less $20,000 (10,000/100,000), or $2,000.
What Steps Should I Take?
1. When you buy your car, read your warranty and owner's manual
carefully. Follow all maintenance guidelines.
2. When you notice a defect, take the vehicle to an authorized
dealer for repairs as soon as possible. Prepare and leave a detailed
list describing each defect each time you take the vehicle in for
repair. Keep a copy for yourself.
3. Get repair orders for all warranty work. Ask for detailed repair
orders and keep them.
4. Be sure the repair orders show how many days the vehicle was
in the shop.
5. Keep a personal record of the number of days the vehicle is
in the shop, dates, and mileage.
6. Keep a record of all related expenses, such as towing charges
and rental car fees, and save all receipts.
7. After the third repair for the same defect or if the vehicle
has been out of service for 15 business days, notify the manufacturer
and the finance company in writing (if you have not done so already)
and send the notification by certified mail, return receipt requested.
Ask the manufacturer to have the car fixed. Send a copy to the dealer.
You will probably find the address of the manufacturer in your warranty
or owner's manual or you can get it from the dealer.
8. Keep copies of all correspondence.
9. Do not return the car or stop making payments. Talk to an attorney
if you are at this point.
What About Arbitration?
Many auto manufacturers have established dispute resolution programs
for customers with warranty problems. Some require you to use these
programs before you go to court. Some do not. Read your warranty
to see if the manufacturer has established a "dispute resolution"
program and if you must use it before going to court. Ford and Chrysler
operate their own programs. As of October 1, 1992, the following
manufacturers participate in an arbitration program run by the Better
Business Bureau: Acura, Audi, General Motors (all divisions), Honda,
Infiniti, Isuzu, Nissan, Saab/Scania, Saturn, Sterling, and Volkswagen.
If your warranty requires you to use the dispute resolution program,
follow the instructions in the warranty to start the procedure.
If your warranty does not require dispute resolution, decide if
you want to try it.
Seeing a Lawyer
If arbitration fails, or if you did not have to use arbitration
and did not want to, you should consider seeing a private attorney.
Many people are reluctant to do this, but we encourage it. Some
manufacturers, unfortunately, do not take consumer complaints too
seriously until they hear from an attorney. Your attorney can advise
you best what to do with the car and whether to stop making payments.
The lemon law provides that you can recover triple damages and
attorney's fees if the manufacturer is found to have unreasonably
refused to resolve your complaint.
You are, of course, welcome to contact the Consumer Protection
Section of the Attorney General's Office. The Attorney General's
Office can provide you or your attorney with useful information,
or we can try to mediate your complaint. However, it cannot act
as private counsel to particular individuals. The Attorney General
is interested in receiving information from individuals regarding
how manufacturers handle these matters because the Attorney General
can sue to enforce the lemon law when the public interest requires
it.
For more information see:
North Carolina Department of Justice
Consumer Protection Section
P.O. Box 629
Raleigh, NC 27602-0629
Telephone: (919) 716-6000
Fax: (919) 716-6050
E-mail: ncago@ncdoj.com
For filing a complaint with the North Carolina Department of Justice,
see the complaint
form.
For other information concerning consumer protection in North Carolina,
check out this DOJ
page.
The North Carolina Lemon Law website is dedicated to bringing our
readers both information specific to the state of North Carolina
and more general information across all 50 states so that you can
make informed judgments concerning your rights and methods of achieving
retribution. The North Carolina Lemon Law website is a consumer
advocacy site that helps bring relevant information to the citizens
of North Carolina for the purpose of educating our visitors on consumer
law and consumer action.
We believe that the rights of the consumer are typically overlooked
in the favor of big business. It the belief of the North Carolina
Lemon Law website that a grassroots effort is necessary in order
to bring awareness of the plight of the consumer and change laws
to protect the consumer. The Federal Lemon Law, also called the
Magnuson-Moss Warranty Act, was put in effect in 1975 to protect
consumers and issue responsibilities to manufacturers in regards
to faulty products. This was a first step.
Since then, all 50 states have adopted some form of lemon law specific
to the automobile industry. More information may be found at the
Federal Trade Commission website in a section called "Facts
for Businesses." It is the belief of the North Carolina Lemon
Law website that the current laws governing the length of time one's
car can be out-of-commission are too lenient towards the manufacturers
and that consumer advocacy is in order. Write your state congresspersons
to let them know that you would like shorter time frames for the
North Carolina Lemon Law to kick in regarding your vehicle.
Disclaimer: The information on this website has been complied
by the North Carolina Lemon Law website from public sources. Use
of information from this website does not constitute an attorney-client
relationship. Please contact an attorney in your state or your Attorney
General to ensure that all your rights are protected.
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