Turning lemons into lemonade

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A “lemon” is a new vehicle that cannot be repaired after numerous attempts. The Arizona Lemon Law requires the manufacturer of a lemon to replace or repurchase the vehicle. To take advantage of the Lemon Law, a new vehicle owner first must report the problem to the manufacturer and give the manufacturer a reasonable opportunity to repair the vehicle. The process to turn a lemon into lemonade is discussed below.

Reporting the Defect

Each new vehicle comes with express warranties. The man­ufacturer, for instance, will warrant that the drive train will function properly for a stated period of time. The Lemon Law ties into these express warranties. If a new vehicle does not conform to an express warranty, the owner must report the nonconformity to the manufacturer, its agent or its authorized dealer or issuer of a warranemon lawty. The report must be made during the term of the express warranty or within two years or 24,000 miles following the date of original delivery, whichever is earlier. The manufacturer is required to make those repairs that are necessary to conform the vehicle to the express war­ranties, even if the repairs are made after the expiration of the warranty term or two-year period or 24,000-mile limit.

Repair Attempts

If the manufacturer is unable to conform the vehicle to the express warranty by repairing or correcting a defect or condi­tion which substantially impairs the use and value of the vehicle after a reasonable number of attempts, the manufacturer must either repurchase or replace the vehicle with a new vehicle. It is presumed that a reasonable number of attempts have been made if the same defect or condition has been subject to repair four or more times by the manufacturer during the shorter of the express warranty term or the period of two years or 24,000 miles following the date of original delivery, whichever is earlier, or the vehicle is out of service by reason of repair for a total of 30 or more days during that time period. The presumption does not apply, however, against a manufacturer unless it has received prior written notification of the defect from the owner and it has had an opportunity to fix the problem.

Replacement or Repurchase

If the manufacturer repurchases the vehicle, it will refund to the owner the full purchase price, including all collateral charges (sales tax and license fees), less a reasonable allowance for the owner’s use of the vehicle. The manufacturer must make refunds to the owner and any lienholder, as their inter­ests appear. A reasonable allowance for use does not include any period when the vehicle was out of service for repairs.

If the manufacturer replaces the vehicle with a new vehicle of lesser value, it must refund to the owner the difference between the original amount of sales tax and the amount of sales tax attributed to the replacement vehicle. If the manufacturer replaces the vehicle with a new vehicle of greater value, additional sales tax will be payable.

A manufacturer will not be required to replace or repur­chase a vehicle in cases where the nonconformity does not substantially impair the use and market value of the vehicle, or the nonconformity is the result of abuse, neglect or unau­thorized modifications or alterations of the vehicle.

Lawsuit Against Manufacturer

If the manufacturer has established or participates in an informal settlement procedure, the owner must participate in such a procedure before the provisions relating to refunds or replacement will apply. The owner of a lemon must file a lawsuit within six months following the earlier of expiration of the express warranty term or two years or 24,000 miles follow­ing the date of original delivery, whichever is earlier. If the owner wins the case, the court will award him reasonable costs and attorney’s fees.

A manufacturer who has replaced or repurchased a vehicle because it is a lemon must, before offering the vehicle for resale, attach to the vehicle written notification that it has been replaced or repurchased.

In that manufacturers have agents and authorized dealers through whom they conduct business, any reference in this to the manufacturer generally includes its agents and its authorized dealers.

The above article is an excerpt from Arizona Laws 101: A Handbook for Non-Lawyers, 2nd Edition (Fenestra Books, 2012), by Donald A. Loose, republished with the author’s permission. 

Disclaimer: Laws change constantly. Specific legal advice should be obtained regarding any legal matter. The information contained on this website does not constitute legal advice and no attorney-client relationship is created. 

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Don Loose Author
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Donald A. Loose is an Arizona attorney, and the author of Arizona Laws 101: A Handbook for Non-Lawyers, and Estate Planning in Arizona: What You Need to Know.  Mr. Loose is a regular guest on radio shows featuring local newsmaker interviews. He may be contacted at don@looselawgroup.com.