New Car Lemon Law Q&A
WHAT IS THE PURPOSE OF THE NEW YORK NEW CAR LEMON LAW?
The New Car Lemon Law provides a legal remedy for buyers or lessees of new cars that turn out to be lemons. If your car does not conform to the terms of the written warranty and the manufacturer or its authorized dealer is unable to repair the car after a reasonable number of attempts during the first 18,000 miles or two years, whichever comes first, you may be entitled to a full refund or a comparable replacement car. A copy of the law may be found in the back of this booklet.
WHICH CARS ARE COVERED BY THE LEMON LAW?
The law covers both new and used cars, including demonstrators, which satisfy all of the following four conditions:
1. The car was covered by the manufacturer's new car warranty at the time of original delivery; and
2. The car was purchased, leased or transferred within the earlier of the first 18,000 miles or two years from the date of original delivery; and
3. The car either: (a) was purchased, leased or transferred in New York State, or (b) is presently registered in New York State; and
4. The car is primarily used for personal purposes.
Some examples of cars that may be covered by the new car lemon law are:
- a new or demonstrator car, purchased or leased from a New Jersey dealer and registered in New York;
- a new or demonstrator car, purchased or leased from a New York dealer and registered in New Jersey;
- a new or demonstrator car received as a gift from a friend and registered in New York State;
- a used car with less than 18,000 miles and less than 2-years old.
WHAT DOES THE PHRASE "PRIMARILY USED FOR PERSONAL PURPOSES" MEAN?
A car is primarily used for personal purposes when its principal use is for personal, family or household purposes. Such purposes include, for example, using the car for household errands or to drive to and from work. A car may be used for both personal and business purposes provided that the personal use is predominant (more than 50% of the usage).
ARE MOTOR HOMES COVERED?
Yes. Motor homes are also covered under the law, except as to defects in systems, fixtures, appliances or other parts that are residential in character. However, there are special notice requirements with respect to motor homes. The law defines a motor home manufacturer to include not only the manufacturer but also the assembler of the component parts of the motor home, including the chassis, engine and residential portion.
ARE MOTORCYCLES AND OFF-ROAD VEHICLES COVERED?
Effective September 1, 2004, motorcycles are covered vehicles. Off-road vehicles, such as snowmobiles, are not covered by the law.
ARE CARS OWNED OR LEASED BY BUSINESSES COVERED?
Yes, provided the car is primarily used for personal, family or household purposes.
WHAT SHOULD YOU DO IF YOU BECOME AWARE OF A PROBLEM WITH YOUR CAR?
You should immediately report any defect or "condition" covered by the manufacturer's warranty directly to the manufacturer or to its authorized dealer.
A "condition" is a general problem, such as a difficulty in starting, repeated stalling, or a malfunctioning transmission, that can result from a defect of one or more parts.
If you report the problem to the dealer, the law requires the dealer to forward written notice to the manufacturer within seven days. Under the law, notice to the dealer is considered notice to the manufacturer.
WHAT IS THE MANUFACTURER'S DUTY TO REPAIR?
With respect to those covered cars sold and registered in New York State, if you notify the manufacturer or its authorized dealer of such defect within the first 18,000 miles of operation or two years from the original delivery date, whichever comes first, the law places a duty upon the manufacturer to repair --free of charge and without any deductible-- any defect covered by warranty.
Once timely notice of the defect is given, the manufacturer may not charge for the repairs, even if the repairs are performed after 18,000 miles or two years. If you have been charged for such repairs or a deductible, you should contact the Attorney General's office.
WHAT ARE YOUR RIGHTS IF THE MANUFACTURER DOES NOT MEET ITS DUTY TO REPAIR?
If the problem is not repaired after a reasonable number of attempts, or the manufacturer or the dealer refuses to commence repairs within 20 days from the manufacturer's receipt of the "refusal to repair" notice from you, and if the problem substantially impairs the value of the car, the manufacturer may be required to refund the full purchase or lease price, or offer a comparable replacement car.
DOES THE LAW SPECIFY THE NUMBER OF REQUIRED REPAIR ATTEMPTS?
Yes. It is presumed that there has been a reasonable number of attempts to repair a problem if, during the first 18,000 miles of operation or two years from the original delivery date, whichever comes first, either (a) the manufacturer (or its authorized dealer) has had an opportunity to repair the same problem four or more times and the problem continued to exist at the end of the fourth repair attempt; or (b) the car was out of service by reason of repair for a cumulative total of 30 or more calendar days for one or more problems.
You or the manufacturer may rebut this presumption by demonstrating that fewer, or more, than four repair attempts, or 30 days out-of-service due to repairs, is reasonable under the circumstances.
CAN YOU STILL OBTAIN A REFUND OR A REPLACEMENT CAR IF THE DEFECT HAS BEEN REPAIRED?
You may still be entitled to relief under the law, provided all other statutory requirements are met, if a defect continued to exist at the end of the fourth repair attempt, or if the car was out-of-service for a total of at least 30 days, notwithstanding that the defect was subsequently repaired.
For example, a defective transmission continued to exist after four repair attempts but on the fifth repair attempt it was fully repaired. Nevertheless, since it was not repaired at the end of the fourth repair attempt, you have met the presumption that a reasonable number of attempts has occurred and you may be entitled to relief.
WHAT CONSTITUTES SUBSTANTIAL IMPAIRMENT OF VALUE?
It will depend on the facts in each case. In general, your complaint must be about a serious problem. For example, a defect in the engine which makes the car inoperable is clearly substantial. Some courts have found that the cumulative effect of numerous lesser defects can add up to substantial impairment of value.
ARE THERE ANY EXCEPTIONS TO THE MANUFACTURER'S DUTY TO REFUND OR REPLACE?
The manufacturer does not have a duty to make a refund or provide a replacement car if: (a) the problem does not substantially impair the value of the car to you, or (b) the problem is a result of abuse, neglect or unauthorized alteration --such as a dealer installed option-- of the car.
SHOULD YOU CONTINUE TO MAKE YOUR PAYMENTS WHILE YOU ARE PURSUING YOUR RIGHTS UNDER THE LEMON LAW?
Yes. Unless otherwise advised by your lawyer, if the car is financed or leased, you should continue to make your monthly payments. Failure to do so may result in a repossession which may lead to your being unable to return the car to qualify for a refund or replacement car under the law.
WHAT SHOULD YOU DO IF THE DEALER REFUSES TO MAKE REPAIRS?
If the dealer refuses to make repairs within seven days of receiving notice from you, you should immediately notify the manufacturer in writing, by certified mail, return receipt requested, of the car's problem and that the dealer has refused to make repairs.
A sample notice to the manufacturer may be found in this booklet.
WHAT MUST THE MANUFACTURER DO UPON RECEIPT OF YOUR NOTICE OF THE DEALER'S REFUSAL TO MAKE REPAIRS?
The manufacturer or its authorized dealer must commence repairs within 20 days from receipt of your notice of the dealer's refusal to make repairs.
HOW CAN YOU PROVE YOU OWN A LEMON?
You must be able to establish the necessary repair attempts or days out-of-service due to repairs. Therefore, it is very important to keep careful records of all complaints, copies of all work orders, repair bills, correspondence, and all telephone and email communications.
A dealer is required by Department of Motor Vehicles (DMV) regulations to provide a legible and accurate written work order each time any repair work is performed on a car, including warranty work for which no charge is made. You may contact the DMV in Albany at 518-474-8943 if you have a problem obtaining your repair orders.
WHAT SHOULD BE INCLUDED IN YOUR REFUND?
The refund should include the price of the car (cash plus trade-in allowance), including all options, plus title and registration fees and any other governmental charges, less any lawful deductions. Other expenses or charges, such as loss of use, insurance premiums and finance charges, are not included under the law.
WHAT ARE THE "LAWFUL DEDUCTIONS?"
The manufacturer may deduct an amount for mileage in excess of the first 12,000 miles. No deductions may be made for the first 12,000 miles of use. The law states that such deduction shall be calculated by taking the mileage in excess of 12,000 miles times the purchase (or lease) price, divided by 100,000.
For example, if a defective car has 15,000 miles on its odometer and cost $20,000, the deduction for use would be $600 (3,000 multiplied by $20,000 divided by 100,000). In addition, a reasonable deduction may be taken for any damage not due to normal wear.
IF THE PURCHASE WAS FINANCED, HOW IS THE REFUND DIVIDED?
The refund by the manufacturer is the same whether the car was financed or not. However, when the car is financed, instead of the entire refund going to you, the refund must be divided between you and the lender (the bank or finance company). Generally, the lender will calculate how much is still owed by you and the refund will be applied first to that amount. The balance of the refund will then go to you.
IF THE CAR WAS LEASED, HOW IS THE REFUND CALCULATED?
When the car is leased, the refund due from the manufacturer is divided between you (the lessee) and the leasing company (which owns the car and to which you make lease payments) according to a formula provided by the law. The lease price to be refunded to you is the total of your down payment (including any trade-in allowance) plus the total of monthly lease payments, minus interest charges and any other service fees.
For example, you leased a new car under a three-year lease, with a $1,500 down payment, and pay a monthly lease payment of $300. Of the $300 monthly payment, $100 is allocated as interest charges. After making twelve monthly payments, you are granted a refund under the lemon law. The refund will be $3,900 calculated as follows:
+ Monthly Payments.
- minus interest(12x100)
total refund ..............
If the monthly payment includes other service fees, such as insurance or other costs, paid for your benefit, such amounts will also be deducted from your refund. The leasing company's portion of the refund is the balance of the "lease price," as that term is defined by the law.
IF THE CAR IS LEASED, DOES A FINDING THAT THE CAR IS A LEMON TERMINATE THE LEASE?
Yes. Once a finding has been made that a car is a lemon, the lease is terminated. As a result, no early termination penalties under the lease may be collected.
IF SUCCESSFUL, CAN YOU RECOVER SALES TAX?
Yes. State and local sales taxes are refunded directly by the New York State Commissioner of Taxation and Finance who will determine the appropriate amount to be refunded under the law. You must complete and submit an "Application for Refund of State and Local Sales Tax" (Form AU-11) to the New York State Department of Taxation and Finance, Central Office Audit Bureau - Sales Tax, State Campus, Albany, N.Y. 12227. (Such form may be obtained through the manufacturer or directly from the Commissioner of Taxation and Finance.)
You have three years from the date a refund is received from the manufacturer to apply for the tax refund.
WHAT IS A "COMPARABLE REPLACEMENT VEHICLE"?
The courts have ruled that the lemon law does not entitle you to receive a brand new vehicle if you elected to receive a "comparable replacement vehicle" instead of a refund. Rather, you are entitled to receive a car of the same year and model and which has approximately the same mileage as the car being replaced.
WHAT SPECIAL NOTICE REQUIREMENTS EXIST FOR MOTOR HOME OWNERS?
The law imposes special notice requirements with respect to motor homes. Manufacturers are to be given one final chance to repair the defect before you can take advantage of the remedies offered by the lemon law.
Once the motor home has been subject to three repair attempts, or has been out of service by reason of repair for 21 days, whichever occurs first, you must report such fact to the manufacturer or its authorized dealer by certified mail, return receipt requested, before taking into account any additional repair attempts or days out-of-service and seeking arbitration or commencing a lawsuit under the lemon law.
ARE THESE SPECIAL NOTICE REQUIREMENTS ALWAYS APPLICABLE?
No. The special notice requirements are only applicable if the manufacturer or its authorized dealer has provided you with a prior written copy of these requirements. Receipt of the notice must be acknowledged by you in writing.
WHAT IF YOU FAIL TO COMPLY WITH THESE SPECIAL NOTICE REQUIREMENTS FOR MOTOR HOMES?
If you fail to comply with the special notice requirements, additional repair attempts or days out of service will not be taken into account in determining your right to relief. However, additional repair attempts or down time will be considered if they occur after you have complied with the notification requirements.
HOW CAN YOU ENFORCE YOUR RIGHTS UNDER THE LEMON LAW?
You have the choice of either participating in an arbitration program or suing the manufacturer directly in court. Any action under the lemon law must be commenced within four years of the date of original delivery.
IF YOU WIN IN COURT, CAN ATTORNEY'S FEES ALSO BE RECOVERED?
Yes. The law authorizes the court to award you reasonable attorney's fees if you are successful.
WHAT IS AN ARBITRATION PROCEEDING?
Arbitration is much less complicated, time consuming and expensive than going to court. The arbitration hearing is informal and strict rules of evidence do not apply. Arbitrators, rather than judges, listen to each side, review the evidence and render a decision.
WHAT ARBITRATION PROGRAMS ARE AVAILABLE TO YOU IN NEW YORK?
You may participate in the New York State New Car Lemon Law Arbitration Program ("New York Program"), as provided by the lemon law. The New York Program is administered by the New York State Dispute Resolution Association ("NYSDRA") under regulations issued by the Attorney General. (A copy of the regulations may be found in the back of this booklet.) Decisions under the New York Program are binding on both parties.
You may also choose to participate in the auto manufacturer's arbitration program if one has been established. Decisions under the manufacturer's program are not binding on you. Consequently, if you have gone through the manufacturer's program and are not satisfied, you may still apply for arbitration under the New York Program. However, any prior arbitration decision may be considered at any subsequent arbitration hearing or court proceeding.
The law permits the manufacturer to require that you first participate in the manufacturer's program, provided it complies with federal regulations and New York's lemon law, before suing in court for relief under the lemon law. However, you do not have to go through the manufacturer's program before seeking relief under the New York state-run program.
HOW DO YOU PARTICIPATE IN THE NEW YORK PROGRAM?
You must first complete a "Request for Arbitration" form, which may be obtained from the Attorney General's website, www.ag.ny.gov, or from any of the Attorney General's regional offices. (A list of the Attorney General's regional offices may be found at the end of this booklet). The completed form must be returned to the Attorney General's New Car Lemon Law Arbitration Unit, Office of the Attorney General, 120 Broadway, New York, New York 10271.
HOW DOES THE NEW YORK PROGRAM OPERATE?
The Attorney General's office will review the "Request for Arbitration" form to determine whether your claim is eligible under the lemon law to be heard by an arbitrator. If accepted, the form will be forwarded to the Administrator for processing. The Administrator will then ask you to pay the required filing fee. Upon receiving the filing fee, the Administrator will appoint an arbitrator and schedule a hearing to be held within 35 days.
If rejected, the form will be returned to you together with an explanation for the rejection.
A complete, step-by-step description of the New York Program follows this "Question & Answer" section in this booklet.
WHO ARE THE ARBITRATORS?
The arbitrators are volunteers who have been trained in the lemon law and in arbitration procedures by the Attorney General's office and the Administrator.
IS A CONSUMER ENTITLED TO AN ORAL HEARING?
Yes. You have an absolute right to an oral hearing. At an oral hearing, both you and the manufacturer's representative have the opportunity to present your case in person before an arbitrator.
You may also elect to have a hearing on documents only by indicating this preference on the "Request for Arbitration" form . In a "documents only" hearing, both sides must present their positions in writing. If you request a "documents only" hearing, the manufacturer may object, in which case an oral hearing will be scheduled.
CAN YOU REQUEST AN ADJOURNMENT OF A HEARING?
Yes. Either party may apply to the arbitrator through the Administrator, for a reasonable adjournment of the hearing date. Upon the finding of good cause, the arbitrator will reschedule the hearing.
MAY A STENOGRAPHIC RECORD OR TAPE RECORDING BE MADE OF THE HEARING?
Yes. Any party to the arbitration may arrange, on its own, for a stenographic record or a tape recording of the hearing at its own expense even if the other party objects. If a stenographer or tape recorder will be used, reasonable prior notice, through the Administrator, must be given to the other party.
DO YOU NEED AN ATTORNEY FOR THE ARBITRATION HEARING?
No. The New York Program is designed to be accessible to you without the need for an attorney. Both you and the manufacturer may use an attorney (some manufacturers are always represented by an attorney) or any other person to assist you if you so choose. However, the law does not provide for the recovery of attorneys fees for representation in an arbitration proceeding.
HOW SHOULD YOU PREPARE FOR THE HEARING?
You should keep a copy of your "Request for Arbitration" form to use as a guide in preparing for the hearing. The form contains much of the information needed at the hearing. In addition, you are advised to:
(a) Gather Documents. Bring to the hearing records of everything pertaining to the purchase and the problem, including a copy of the purchase contract (invoice) or lease, all correspondence, work orders, and warranty.
(b) Organize Records. Keep records in chronological order. This will serve as a guide in presenting the history of the problem.
(c) Prepare an Outline. This will help to present and remember relevant information.
(d) Prepare Questions to Ask the Manufacturer's Representative. This will assure that no important question is omitted.
(e) Arrange for Witnesses. The presence of witnesses, especially auto mechanics, or their sworn statements may be helpful to document the problem.
WHAT IF YOU DO NOT HAVE ALL THE DOCUMENTS?
Upon payment of the filing fee and prior to the hearing, you, or the manufacturer, may make a written request to the arbitrator, through the Administrator, to direct the other party to provide any necessary documents or other information. Either party may also request the arbitrator to subpoena documents or witnesses to appear at the hearing.
For example, you may request that the manufacturer furnish a copy of missing work orders and the manufacturer may request that you produce a copy of relevant tax information to determine whether you took a deduction on your taxes for business use.
A sample letter requesting documents may be found in this booklet.
MAY THE ARBITRATOR DIRECT THAT THE CAR BE MADE AVAILABLE AT THE HEARING?
Yes. The arbitrator may direct you to make the car available, if possible, at the hearing. The arbitrator has the discretion to examine or ride in the car in the presence of both parties.
HOW SHOULD YOU PRESENT YOUR CASE AT THE HEARING?
At the hearing, you should present your case in a clear, organized and concise manner. You are advised to:
(a) State the specific nature of the problem.
(b) State any conversations with the dealer's or manufacturer's representatives.
(c) Describe and document, where possible, each repair attempt.
(d) Describe and document any new developments which may have occurred since the "Request for Arbitration" form was submitted.
(e) Offer proof of each point, especially those the manufacturer may dispute.
(f) Present any witness that may provide relevant information.
(g) State the relief requested.
(h) At the end of the presentation, briefly summarize the facts discussed.
WHAT HAPPENS IF EITHER PARTY FAILS TO APPEAR AT THE HEARING?
Unless the hearing has been properly rescheduled, if either the manufacturer or you fail to appear at an oral hearing, the arbitrator will nevertheless conduct the hearing and issue a decision based upon the evidence presented and any documents contained in the file.
WHEN CAN YOU EXPECT A DECISION?
You may expect a decision, generally, within 10 days of the hearing. Sometimes, however, the arbitrator requests that additional documents or information be submitted, in which case the decision may be delayed.
CAN YOU RECOVER THE FILING FEE?
Yes. If you are successful, the arbitrator's decision in your favor must include the return of the filing fee. Also, if you settle the case any time before a decision is rendered, you should seek to recover the filing fee.
WHEN MUST A MANUFACTURER COMPLY WITH AN ARBITRATOR'S DECISION?
Within thirty days. In most cases, the manufacturer's representative will contact you within this period to arrange for the return of the car in exchange for either a refund or a replacement car.
Failure of the manufacturer to comply within this time period entitles you to recover an additional $25 for each business day of noncompliance, up to $500. If the manufacturer does not voluntarily pay any applicable penalty, you may sue to recover this penalty in Small Claims Court. However, this deadline and penalties are not applicable where you request a replacement car built to order or with options which are not comparable to the car being replaced.
WHAT HAPPENS IF THE MANUFACTURER DOES NOT COMPLY WITH THE ARBITRATOR'S AWARD?
If the manufacturer does not comply with the award, you can enforce the arbitrator's decision through the courts by bringing an action to confirm the award. This action must be commenced within one year of receipt of the decision. You should consult a private attorney if you wish to pursue this remedy. If you are successful, the Court will convert the arbitrator's award into a court judgment and may award reasonable attorney's fees. The court may also award reasonable attorneys' fees incurred to enforce the collection of the award.
HOW IS A RETURN OF THE CAR IMPLEMENTED?
The common procedure is to have all the affected parties (you, the manufacturer's representative, and, if the car is financed or leased, the lender's or the leasing company's representative), meet at an agreed time and place to execute the necessary papers to exchange the car for a refund or replacement.
You may choose to return the car to either the selling dealer or the dealer which attempted to repair the car. No further shipping charges may be imposed for the return of the car.
UNDER WHAT CIRCUMSTANCES CAN AN ARBITRATOR'S DECISION BE MODIFIED?
The grounds for modification are very limited. Generally, awards may be modified only to correct a miscalculation or a technical mistake in the award. For example, a modification may be requested where the mileage deduction was miscalculated or the filing fee was omitted from the refund.
WHEN MUST A REQUEST FOR MODIFICATION BE MADE?
Either party may seek a modification by the arbitrator of the award by written application to the Administrator within 20 days of receiving the award. The other party will be given the opportunity to object to the modification. The arbitrator must rule on all such requests within 30 days after the request is received. To modify an award after 20 days, an application to a court may be necessary.
CAN AN ARBITRATOR'S DECISION BE CHALLENGED?
Either party may commence a lawsuit to challenge an arbitrator's award within 90 days of receipt of the award. However, the grounds for such challenges are limited by law. Generally, the courts will uphold an arbitrator's award if it is supported by evidence and is grounded in reason. Reasonable attorneys fees may be awarded by the court if you are successful in challenging or defending an arbitration award.
WHAT ROLE WILL THE ATTORNEY GENERAL'S OFFICE OR THE ADMINISTRATOR PLAY IF AN AWARD IS CHALLENGED IN COURT?
Neither the Attorney General's Office nor the Administrator is authorized to represent you in such a challenge; this is the responsibility of your own attorney. The role of the Administrator ends when the arbitrator's award is sent to the parties.
CAN YOU APPLY FOR ANOTHER HEARING UNDER THE NEW YORK PROGRAM IF YOU LOST THE FIRST ONE?
It depends. A decision under the New York Program is binding on both parties. However, if new facts arise after a hearing was held, you may reapply for a new hearing based on the new facts.
DOES THE LEMON LAW LIMIT ANY OF THE OTHER LEGAL REMEDIES ALREADY AVAILABLE TO YOU?
No. The Lemon Law adds to your arsenal of existing legal remedies. These legal remedies can be explained by your attorney.
CAN YOUR RIGHTS UNDER THE LEMON LAW BE WAIVED?
No. Any contract clause which seeks to waive your rights under the Lemon Law is void.
HOW ARE YOU PROTECTED WHEN BUYING A CAR PREVIOUSLY RETURNED TO THE MANUFACTURER UNDER THE LEMON LAW?
When purchasing a car which was previously determined to be a lemon and returned to the manufacturer, you must be given a written, conspicuous disclosure statement by the dealer 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.
This disclosure must also be printed on the car's certificate of title by the New York State Department of Motor Vehicles.
WHERE CAN YOU GET HELP OR FURTHER INFORMATION REGARDING THE LEMON LAW?
You may contact any of the offices of Attorney General listed at the end of this booklet or consult a lawyer.
SAMPLE LETTER TO THE MANUFACTURER
GIVING NOTICE OF THE DEALER'S
REFUSAL TO MAKE REPAIRS
RETURN RECEIPT REQUESTED
To Whom It May Concern:
I am writing this letter pursuant to the New York New Car Lemon Law, General Business Law, section 198-a(b)(2), to notify you that your dealer [insert name] has refused to make repairs to my car within seven days of receiving notice regarding a problem with my car.
My car has the problem(s) described below which has not been repaired. As a result of this problem, the value of the car to me has been substantially impaired.
Unless repairs are commenced within 20 days from the date you receive this notice, under General Business Law, §198-a(b)(2), you will be required to accept return of the car and, at my option, either issue me a full refund of the purchase price or replace it with a comparable car.
I await your prompt reply.
SAMPLE REQUEST FOR DOCUMENTS
City, State, Zip
NYS Dispute Resolution Association
[Fill in Specific Dispute Center's Address]
Attention: Arbitrator [Name]
Re: Lemon Law Arbitration #________
Request for Documents
Pursuant to section 300.9 of the New York Lemon Law Arbitration Regulations, I am requesting that you direct the manufacturer to obtain and forward to the Case Administrator legible copies of the following documents and information no later than three days before the scheduled hearing date:
1. Each and every repair order for work performed on my car.
2. Any service bulletin issued that may relate to the problem of: [describe your problem, for example, stalling, lack of power on acceleration, etc.]
3. Any report or correspondence regarding my car's problems.
4. Any other documents or information that may relate directly to this arbitration.
Your prompt attention to this request is greatly appreciated.
Very truly yours,