New York 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 (see next question) 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. 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 "demos," which satisfy 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, or (b) is presently registered in New York; and
4. The car is primarily used for personal purposes. Some examples of cars that are covered by the new car lemon law are:

• a new car purchased or leased from a New Jersey dealer and registered in New York;
• a year-old, demonstrator car with less than 18,000 miles purchased from a New York dealer and registered in New Jersey;
• a used car with less than 18,000 miles and less than 2-years old, purchased from a Connecticut dealer and registered in New York;
• a used car with less than 18,000 miles and less than 2-years old, received as a gift from a friend and registered in New York.

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 use provided that the personal use is predominant (more than 50% of the usage).

Are Motor Homes Covered?

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, motor home complaints are subject to special notification requirements.

Are Motorcycles And Off-Road Vehicles Covered?

Motorcycles and off-road vehicles are not covered by the law.

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 Is The Manufacturer's Duty To Repair?

With respect to those covered cars sold and registered in New York, the law imposes a duty upon the manufacturer to repair, free of charge and without any deductible, any defect covered by warranty, if the consumer notifies 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. Once timely notice of the defect is given, the manufacturer may not charge for the repairs, regardless of when the repairs are performed. Any consumer who has been charged for such repairs or a deductible during such period should contact the Attorney General's office.

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.

What Are A Consumer's 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 the consumer, and if the problem substantially impairs the value of the car to the consumer, the manufacturer, at the consumer's option, must either refund the full purchase or lease price, or offer a comparable replacement car.

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 Special Notification Requirements Exist For Motor Home Owners?

The law imposes special notification requirements for motor homes which are designed to afford motor home manufacturers one final chance to repair the defect before consumers can take advantage of the remedies offered by the lemon law. If the motor home was subject to three repair attempts or was out of service by reason of repair for 21 days, whichever occurs first, the consumer must report such fact to the manufacturer or its authorized dealer by certified mail, return receipt requested, before seeking arbitration or commencing a lawsuit under the lemon law.

Must A Motor Home Manufacturer Give Consumers Prior Written Notice Of These Special Requirements?

The special notification requirements are only applicable if the manufacturer or its authorized dealer has provided the consumer with a written copy of these requirements. Receipt of the notice must be acknowledged by the consumer in writing.

What If A Consumer Fails To Comply With These Special Requirements For Motor Homes?

Where a consumer fails to comply with the special notification requirements, additional repair attempts or days out of service will not be taken into account in determining the consumer's right to relief. However, additional repair attempts or down time will be considered if they occur after the consumer has complied with the notification requirements.

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.

How Can A Consumer's Rights Under The Lemon Law Be Enforced?

A consumer has the choice of either participating in an arbitration program or suing the manufacturer directly in court. If a manufacturer has established an arbitration procedure which complies with federal regulations and the state's lemon law, the manufacturer may refuse to provide a refund until the consumer first participates in such procedure or in the state-run arbitration program. Any action under the lemon law must be commenced within four years of the date of original delivery.

If The Consumer Wins In Court, Can Attorney's Fees Also Be Recovered?

The law authorizes the court to award reasonable attorney's fees to a successful consumer.

What Is An Arbitration Proceeding?

An arbitration proceeding 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 Consumers In New York?

Consumers may participate in the New York State Lemon Law Arbitration Program ("New York Program"), established 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. Consumers may also choose to participate in arbitration programs established by auto manufacturers. Decisions under manufacturer programs are not binding on consumers. Consequently, consumers who have gone through the manufacturer's program and are not satisfied 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 manufacturers to require that consumers first participate in the manufacturer's program, if it complies with federal regulations and the state's lemon law, before suing in court for relief under the lemon law.

How Does A Consumer Participate In The New York Program?

A consumer must first complete a "Request for Arbitration" form, which may be obtained 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 form to determine whether the consumer's 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 the consumer 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 the consumer 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?

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.

May A Stenographic Record Or Tape Recording Be Made Of The Hearing?

Any party to the arbitration may arrange, on its own, for a stenographic record or a tape recording of the hearing at their 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.

Does The Consumer Need An Attorney For The Arbitration Hearing?

The New York Program is designed to be accessible to consumers without the need for an attorney. However, both the consumer and the manufacturer may use an attorney or any other person to assist them if they so choose.

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.

What Happens If Either Party Fails To Appear At The Hearing?

Unless the hearing has been properly rescheduled, if either the manufacturer or the consumer fails 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 A Consumer Expect A Decision?

A consumer 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 A Consumer Recover The Filing Fee?

If the consumer is successful, the arbitrator's decision in favor of the consumer must include the return of 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 the consumer 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 the consumer to recover an additional $25 for each business day of noncompliance, up to $500. If the manufacturer does not voluntarily pay any applicable penalty, the consumer may sue to recover this penalty in Small Claims Court. However, this deadline and penalties are not applicable where a consumer requests a car built to order or with options which are not comparable to the car being replaced.

How Is A Return Of The Car Implemented?

The common procedure is to have all the affected parties --the consumer, 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. The consumer 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 on the consumer for the return of the car.

What Happens If The Manufacturer Does Not Comply With The Arbitrator's Award?

If the manufacturer does not comply with the award, a consumer 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. Consumers should consult a private attorney if they wish to pursue this remedy. If the consumer is successful, the Court will convert the arbitrator's award into a court judgment and may award attorney's fees. The court may also award reasonable attorneys' fees incurred to enforce the collection of the award.

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 the consumer or the manufacturer 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 to a consumer who is successful in challenging or defending an arbitration award.

What Role Will The Attorney General's Office Or The Administrator Play If A Manufacturer Challenges An Award In Court?

Neither the Attorney General's Office nor the Administrator is authorized to represent an individual consumer in such a challenge; this is the responsibility of the consumer's own attorney. The Administrator's role is finished when the arbitrator's award is sent to the parties.

Can Consumers Apply For Another Hearing Under The New York Program If They Lost The First One?

A decision under the New York Program is binding on both parties. However, if new facts arise after a hearing was held, the consumer may reapply for a new hearing based on the new facts. For example, if a consumer originally applied to the New York Program based on four unsuccessful repair attempts (Jan. 5, Jan. 25, Feb. 10, Feb. 25) and lost the arbitration, he or she may reapply if there were four additional repair attempts not previously considered (after Feb.25) even if the repair attempts were for the same problem.

Does The Lemon Law Limit Any Of The Other Legal Remedies Already Available To Consumers?

The Lemon Law adds to the consumer's arsenal of existing legal remedies. These legal remedies can be explained by the consumer's attorney.

Can A Consumer's Rights Be Waived Under The Lemon Law?

Any contract clause which seeks to waive a consumer's rights under the Lemon Law is void.

How Is A Used Car Buyer Protected When Purchasing A Car Previously To The Manufacturer Under The Lemon Law?

A used car buyer 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.

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