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Lemon Law Information

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LEMON LAW Next to a home, the purchase or lease of an automobile can be an individuals largest expense. However, new and used cars may be riddled with defects and problems which substantially impair the ...

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LEMON LAW

Next to a home, the purchase or lease of an automobile can be an individuals largest expense. However, new and used cars may be riddled with defects and problems which substantially impair the ability to use the vehicle. When faced with the purchase or lease of a "lemon", a consumer (not a business) has the option of utilizing the New York State Attorney Generals Lemon Law Arbitration Program. The Program is inexpensive, quick and a lawyer is not necessary. However, in order to qualify for participation, there are strict rules and regulations that must be followed:

New Car: If the authorized dealer is unable to repair the car after a reasonable number of attempts (4) during the first 18,000 miles or two years, whichever comes first, and the defect still exists and substantially impairs the ability to use the vehicle, a consumer may file for arbitration and attempt to receive a full refund or a comparable replacement car.

Used Car: Under the law, a used car is a vehicle which satisfies all the following conditions:
(1) it was purchased, leased or transferred after the earlier of
(a) 18,000 miles of operation or
(b) two years from the date of original delivery; and
(2) it was purchased or leased from a New York dealer; and
(3) it had a purchase price or lease value of at least $1,500; and
(4) it had been driven less than 100,000 miles at the time of purchase or lease; and
(5) it is primarily used for personal purposes.

This page consists of an outline of the process involved in the new and used car lemon law arbitration.

The Process

The New York Program's dispute resolution process can be summarized in ten steps as follows:
1 - Consumer's Completion of Request-for-Arbitration Form
2 - Attorney General's Review
3 - Request for Filing Fee by Administrator
4 - Filing Date; Appointment of Arbitrator; Schedule of Hearing 5 - Notice of Claim Sent to Dealer; Dealer's Response; Consumer's Reply
6 - Pre-Hearing Discovery
7 - Hearing
8 - Decision
9 - Administrator's Review of Decision Form
10 - Modification and Appeal

Step 1. Consumer's Completion of Request-For-Arbitration Form
A consumer can seek recovery under the New York Program by obtaining a Request-for-Arbitration form from one of the 13 regional offices of the Attorney General. The consumer completes and returns this form, together with copies of all relevant supporting documents (including the bill of sale, repair work orders and any correspondence relating to the claim) to the Attorney General's Used Car Lemon Law Unit located at 120 Broadway, New York, NY 10271.

Step 2. Attorney General's Review
The form and documents are reviewed promptly by the Attorney General's Lemon Law Unit. The review is for screening purposes only -- to determine whether the claim may be heard by an arbitrator. To be eligible for acceptance into the New York Program the car must have been purchased from a dealer in New York State and the defect or condition must continue to exist at the time of filing.
Based on this review, the Request-for-Arbitration form is either accepted or rejected. If rejected, the form is returned to the consumer with a letter indicating the reason(s) for the rejection. In many instances, a consumer is able to correct the cause for rejection and successfully resubmit the form. If the form is accepted, the consumer is advised in writing that the matter is being forwarded to Administrator for further processing.

Step 3. Request for Filing Fee by Administrator
Upon receipt of the form, the Administrator writes to the consumer to request the payment of the filing fee. If, after 30 days, the Administrator has not received the filing fee from the consumer, it sends a second notice. If the fee is still not received within another 30 days, the Request-for-Arbitration form is returned and the consumer is advised that the case has been closed.

Step 4. Filing Date; Appointment of Arbitrator; Schedule of Hearing
The date Administrator receives the filing fee from the consumer is considered the case "filing date". This date marks the official beginning of the arbitration process. The Administrator appoints an arbitrator and schedules a hearing for a specific date no later than 35 days from the "filing date". Oral hearings are scheduled to accommodate the needs of the consumer, both geographically and as to time-of-day.

Step 5. Notice of Claim Sent to Dealer; Dealer Responds; Consumer's Reply
Within five days of the filing date, Administrator sends a copy of the consumer's Request-for-Arbitration form, together with all attachments, to the dealer. If the car was financed or leased, the finance company or bank to which the consumer makes his/her payments or the leasing company is also notified of the consumer's claim and of the scheduled hearing date and is requested to submit relevant financial information prior to the hearing date. The dealer is given 15 days from the filing date to respond to the consumer's claim. If the consumer has requested a hearing on documents only, the dealer may object and an oral hearing will be scheduled. Administrator mails any response received to the consumer, who may reply before day 25. Administrator mails a copy of the consumer's reply, if any, to the dealer.

Step 6. Pre-Hearing Discovery
Prior to the hearing, either party may request the arbitrator to direct the production of specified documents (such as repair orders) or information, or request that a witness be subpoenaed. Under the regulations, an arbitrator may draw a negative inference concerning any issue for which documents or witnesses were requested but not provided.

Step 7. The Hearing
At the hearing, the consumer presents evidence and then the dealer presents its evidence. Each party, as well as the arbitrator, may question the other party or any witness. The arbitrator administers an oath or affirmation to each individual who testifies. Formal rules of evidence do not apply and the parties are afforded a full and equal opportunity to present their case. Typically, a hearing lasts between one and two hours.
The arbitrator has the discretion to examine and/or ride in the consumer's car, and both parties are afforded the opportunity to be present and accompany the arbitrator on any examination or ride.

Step 8. The Decision
Regardless of the type of hearing -- oral or on documents only -- the arbitrator must render a decision within 5 days following the hearing date (unless additional time was allowed for the submission of requested documents) which is to be no more than 40 days from the filing date.
Each decision must be signed and certified by the arbitrator, contain a summary of both the issues in dispute and the evidence presented by each side, include the arbitrator's findings and indicate whether or not the arbitrator, based on the stated findings, found that the consumer qualifies for relief under the lemon law. If the arbitrator finds that the consumer is entitled to relief, the arbitrator must award a refund.
The decision must contain a calculation of the award, where applicable, in accordance with the law. A refund of the prescribed filing fee must also be included as part of every award in favor of the consumer. The dealer must comply with the award within 30 days.

Step 9. Administrator's Review of Decision Form
Once rendered, the decision is sent to the Administrator which reviews it for technical completeness and accuracy and to eliminate arithmetic or typographical errors. The Administrator must obtain the approval of the arbitrator for any corrections. Once finalized, the Administrator mails a copy of the decision to each of the parties and the Attorney General's Office within 45 days of the filing date. The date of mailing becomes the official date of issuance from which the 30-day period for compliance begins.

Step 10. Modification and Appeal
Where a party believes a mistake was made, he or she may seek a modification within 20 days of the receipt of the award. Such a request for modification must be acted upon by the arbitrator within 30 days. The grounds for modification are limited by law.
The decision is binding on both parties but may be subject to judicial review. Either party may commence a court proceeding to vacate or modify an award within 90 days of its receipt.

New Car Lemon Law

WHAT IS THE PURPOSE OF THE NEW YORK NEW CAR LEMON LAW?
The New Car Lemon Law (General Business Law 198-a) provides a legal remedy for consumers who are buyers or lessees of new cars and certain used cars that turn out to be lemons. If the 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, the consumer can choose a full refund or a comparable replacement car.

WHICH CARS ARE COVERED BY THE LEMON LAW?
The law covers new and used cars, including "demos," which satisfy the following four conditions:
. The car was covered by the manufacturer's new car warranty at the time of original delivery; and
. 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
. The car either: (a) was purchased, leased or transferred in New York, or (b) is presently registered in New York; and
. The car is primarily used for personal purposes. (personal use is predominant (more than 50% of the usage)).

ARE ALL LEASED CARS COVERED?
The law covers only those leased cars where the lessee is responsible for repairs of the car.
ARE CARS OWNED OR LEASED BY BUSINESSES COVERED?
Yes, provided the car is primarily used for personal, family or household purposes.

WHAT SHOULD CONSUMERS DO IF THEY BECOME AWARE OF A PROBLEM WITH THEIR CAR?
The consumer should immediately report any defect or "condition" either 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 the consumer reports 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. Unless otherwise advised by their lawyer, consumers should continue to make their monthly payments if the car is financed or leased. Failure to do so may result in a repossession which may adversely affect a consumer's lemon law rights.

WHAT SHOULD A CONSUMER DO IF THE DEALER REFUSES TO MAKE REPAIRS?
If the dealer refuses to make repairs within seven days of receiving notice from the consumer, the consumer 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 book.
WHAT MUST THE MANUFACTURER DO UPON RECEIPT OF THE CONSUMER'S NOTICE OF THE DEALER'S REFUSAL TO MAKE REPAIRS?
The manufacturer or its authorized dealer must commence repairs within 20 days from receipt of the consumer's notice of the dealer's refusal to make repairs.

DOES THE LAW SPECIFY THE NUMBER OF REQUIRED REPAIR ATTEMPTS?
It is presumed that there have 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: (1) the same problem has been subject to repair four or more times and the problem continues to exist; or (2) the car is out of service by reason of repair of one or more problems for a cumulative total of 30 or more calendar days and the problem continues to exist.

WHAT CONSTITUTES A SUBSTANTIAL IMPAIRMENT OF VALUE?
It will depend on the facts in each case. In general, the consumer's 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: (1) the problem does not substantially impair the value of the car to the consumer, or (2) the problem is a result of abuse, neglect or unauthorized alteration of the car.
HOW CAN CONSUMERS PROVE THEY OWN A LEMON?
The consumer must be able to document repeated repair attempts. Therefore, it is very important to keep careful records of all complaints and copies of all work orders, repair bills and correspondence. 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. Consumers may contact the DMV in Albany at 518-474-8943 if they have a problem obtaining their repair orders.
WHAT SHOULD BE INCLUDED IN THE CONSUMER'S 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.
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 $10,000, the deduction for use would be $300 (3,000 multiplied by $10,000 divided by 100,000). In addition, a reasonable deduction may be taken for any damage not due to normal wear.
IS THE REFUND AMOUNT DIFFERENT IF THE PURCHASE WAS FINANCED?
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 the consumer, the refund must be divided between the consumer and the lender (the bank or finance company). Generally, the lender will calculate how much is still owed by the consumer and apply the refund to that amount. The balance of the refund will then go to the consumer.
IF THE CAR WAS LEASED, HOW IS THE REFUND CALCULATED?
When the car is leased, the refund due from the manufacturer is divided between the consumer/lessee and the leasing company (the company to which the consumer makes lease payments) according to a formula provided by the law. The lease price to be refunded to the consumer/lessee is the total of the lessee's down payment (including any trade-in allowance) plus the total of monthly lease payments, minus interest charges and any other service fees. For example, suppose that a consumer leases a new car under a three-year lease, makes a $1,500 down payment, and pays a monthly lease payment of $300. Of the $300 monthly payment, $75 is allocated as interest charges. After making twelve monthly payments, the lessee is granted a refund under the lemon law. The refund will be $4,200 calculated as follows: Deposit . . . $1,500 + Monthly Payments. $3,600 (12x300) $5,100 - minus interest(12x75) 900 total refund: $4,200 If the monthly payment includes other service fees, such as insurance or other costs, paid for the benefit of the lessee, such amounts will be deducted from the lessee's 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 DETERMINATION THAT THE CAR IS A LEMON TERMINATE THE LEASE?
Once a determination has been made under the lemon law that a car is a lemon, the lease is terminated. As a result, no early termination penalties under the lease may be collected.
DOES A SUCCESSFUL CONSUMER RECOVER SALES TAX?
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. Consumers 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.) A consumer has three years from the date a refund is received from the manufacturer to apply for the tax refund.
WHAT IS A "COMPARABLE REPLACEMENT VEHICLE"?
Appellate courts have ruled that the lemon law does not entitle a consumer who elects to receive a "comparable replacement vehicle" instead of a refund, to receive a new vehicle. Rather, the consumer is entitled to receive a car of the same year and model and which has approximately the same mileage as the car being replaced.

IS A CONSUMER ENTITLED TO AN ORAL HEARING?
Consumers have an absolute right to an oral hearing. At an oral hearing, both the consumer and the manufacturer's representative have the opportunity to present their case in person before an arbitrator.
MAY A CONSUMER CHOOSE A HEARING ON DOCUMENTS ONLY?
A consumer may 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 a consumer requests a "documents only" hearing, the manufacturer may object, in which case an oral hearing will be scheduled.

HOW SHOULD CONSUMERS PREPARE FOR THE HEARING?
Consumers should keep a copy of their "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, consumers 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), 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 CONSUMERS DO NOT HAVE ALL THE DOCUMENTS?
Upon payment of the filing fee and prior to the hearing, consumers may make a written request to the arbitrator, through the Administrator, to direct the manufacturer to provide any necessary documents or other information. Consumers may also request the arbitrator to subpoena documents or witnesses to appear at the hearing. A sample letter requesting documents may be found in this booklet.
HOW SHOULD CONSUMERS PRESENT THEIR CASE AT THE HEARING?
At the hearing, consumers should present their case in a clear, organized and concise manner. Consumers 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 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.

USED CAR LEMON LAW

WHAT IS THE PURPOSE OF THE USED CAR LEMON LAW?
The Used Car Lemon Law (General Business Law, section 198-b) provides a legal remedy for consumers who are buyers or lessees of used cars that turn out to be lemons. The law requires dealers to give consumers a written warranty. Under this warranty, dealers must repair, free of charge, any defects in covered parts. If the dealer is unable to repair the car after a reasonable number of attempts, the consumer is entitled to a full refund. No used car covered by this law can be sold by a dealer "as is." (A copy of the law may be found at the back of this book.)
WHICH USED CARS ARE COVERED BY THE LEMON LAW?
Under the law, a used car is a vehicle which satisfies all the following conditions:
(1) it was purchased, leased or transferred after the earlier of
(a) 18,000 miles of operation or
(b) two years from the date of original delivery; and
(2) it was purchased or leased from a New York dealer; and
(3) it had a purchase price or lease value of at least $1,500; and
(4) it had been driven less than 100,000 miles at the time of purchase or lease; and
(5) it is primarily used for personal purposes.

WHO ELSE IS PROTECTED BY THE USED CAR LEMON LAW?
Any person to whom a used car was transferred by the purchaser during the used car lemon law warranty period is covered.
ARE PRIVATE SALES COVERED?
Used car buyers who purchase their cars from private individuals (rather than from a dealer) are not protected by the Used Car Lemon Law. If the purchase price was $3,000 or less, they may wish to pursue their claims in Small Claims Court.
ARE CARS OWNED OR LEASED BY BUSINESSES COVERED?
Yes, provided the car is primarily used for personal, family or household purposes.
WHICH USED CAR DEALERS ARE INCLUDED?
Under the Used Car Lemon Law, a dealer is any person or business which sells or leases a used car after selling or leasing three or more used cars in the previous twelve month period. Banks or other financial institutions, except in the case of a lease, are not included. Others excluded are: a business selling a used car to its own employee; a regulated public utility which sells at public auction cars used in the ordinary course of its operations; a lessor selling a leased car to the lessee, a member of the lessee's family or the lessee's employee; and the state and local government or any of their agencies.
ARE CARS PURCHASED AT AUTO AUCTIONS COVERED?
If you buy a used car at a retail auto auction, the auction company must be a used car dealer registered with the Department of Motor Vehicles and it must provide you with your lemon law rights.
WHAT DOES THE LAW REQUIRE THE DEALER TO DO?
A dealer who sells or leases a used car to a consumer is required to give a written warranty, the terms of which are specified in the law. The warranty may be referred to at times as a "statutory warranty" because it is mandated by statute and must be honored by the dealer. The statutory warranty must specify that while it is in effect the dealer or his agent will repair, free of charge, any part covered by the warranty. The dealer may elect to reimburse the consumer for the reasonable cost of repairing any covered part.
WHEN MUST THE STATUTORY WARRANTY BE GIVEN?
The dealer must give the consumer a copy of the statutory warranty at or before the time the consumer signs the sales contract or lease.
HOW IS THE WARRANTY GIVEN?
The warranty may be included in the sales contract or lease or on a separate sheet of paper. If it is part of the sales contract or lease, it must be separated from the other contract provisions and headed by a conspicuous title.
WHAT IF THE DEALER DOES NOT GIVE THE STATUTORY WARRANTY?
If a dealer fails to give a consumer the written statutory warranty, the dealer is nevertheless considered to have given the warranty and the consumer is entitled to all the protections under the law.
HOW LONG IS THE WARRANTY PROTECTION?
Miles at time of Purchase Duration of Warranty or
Lease (the earlier of:)
18,001 to 36,000 miles 90 days or 4,000 miles
36,001 to 79,999 miles 60 days or 3,000 miles
80,000 to 100,000 miles 30 days or 1,000 miles

WHAT PARTS ARE COVERED?
Covered parts must include at least:
Engine --All lubricated parts, water pump, fuel pump, manifolds, engine block, cylinder head, rotary engine housings and flywheel.
Transmission -- The transmission case, internal parts, and the torque converter.
Drive Axle -- Front and rear axle housings and internal parts, axle shafts, propeller shafts and universal joints.
Brakes -- Master cylinder, vacuum assist booster, wheel cylinders, hydraulic lines and fittings and disc brake calipers.
Steering -- The steering gear housing and all internal parts, power steering pump, valve body, piston and rack.
Radiator, Alternator, Generator, Starter, Ignition System (excluding battery).
CAN A DEALER LIMIT COVERAGE OF THE STATUTORY WARRANTY?
The law permits a dealer to add language to the statutory warranty to exclude coverage for the following:
(a) For a failure of a covered part caused by a lack of customary maintenance.
(b) For a failure of a covered part caused by collision, abuse, negligence, theft, vandalism, fire or other casualty and damage from the environment (windstorm, lightning, road hazards, etc.).
(c) If the odometer has been stopped or altered such that the car's actual mileage cannot be readily determined, or if any covered part has been altered such that a covered part was thereby caused to fail.
(d) For maintenance services for the parts used in connection with such services such as seals, gaskets, oil and grease unless required in connection with the repair of a covered part.
(e) For a motor tune-up.
(f) For a failure resulting from racing or other competition.
(g) For a failure caused by towing a trailer or another vehicle unless the used car is equipped for this as recommended by the manufacturer.
(h) If the used car is used to carry passengers for hire.
(i) If the used car is rented to someone else.
(j) For repair of valves and/or rings to correct low compression and/or oil consumption which are considered normal wear.
(k) To the extent otherwise permitted by law, for property damage arising or allegedly arising out of the failure of a covered part.
(l) To the extent otherwise permitted by law, for loss of the use of the used car, loss of time, inconvenience, commercial loss or consequential damages.

WHAT SHOULD CONSUMERS DO IF THEY BECOME AWARE OF A PROBLEM WITH THEIR USED CAR?
The consumer should immediately report any malfunction or defect of a covered part to the dealer and request the necessary repairs. If the consumer has notified the dealer of a problem within the warranty period, the dealer must make the repair even if the warranty has subsequently expired. Unless otherwise advised by their lawyer, consumers should continue to make their monthly payments if the car is financed or leased. Failure to do so may result in a repossession which may adversely affect a consumer's lemon law rights.
WHAT HAPPENS TO THE WARRANTY WHILE THE CAR IS BEING REPAIRED?
The warranty is extended for each day that the car is in the shop for repairs.
WHAT ARE A CONSUMER'S RIGHTS IF THE DEALER DOES NOT REPAIR THE CAR?
If the dealer fails to repair the problem after a reasonable period of time, and if the problem substantially impairs the value of the used car to the consumer, the dealer must accept the return of the car and make a refund.

Available forms:

New York's Lemon Laws
New Car Used Car Vehicle Leasing Arbitration Form (201KB PDF) New York's Lemon Law Online Forms
Autos - New 42.5KB PDF Used 36.8KB PDF Lease HTML

Excerpted portions from the New York State Attorney Generals "Guide to New York State Lemon Law" 2000
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This page is provided by Lawrence Kushnick, of Kushnick & Associates, P.C., 445 Broad Hollow Rd., Melville, NY 11747, 631-752-7100. This page is not intended to provide legal advise put simply to alert users of the rights and remedies under the Lemon Law.