CA Lemon Law Repurchase Formula

Crunching Lemon Law NumbersIf you are lucky enough to convince the manufacturer to buy back (or repurchase) your vehicle pursuant to the California Lemon Law, there is a very specific formula that the manufacturer must follow when it computes the amount of money that they must return to you.

According to the Song-Beverly Consumer Warranty Act, the manufacturer must refund the following to you:

  • Down payment
  • Monthly payments
  • License and registration fees (although these are usually prorated into the monthly payments)
  • Sales tax (also usually prorated into the monthly payments)
  • Rental receipts
  • Incidental costs (eg. towing costs, taxi costs, or other collateral costs incurred)

You should note that loss of wages and emotional frustration are not items that you can recoup under the lemon law.

The manufacturer is allowed to deduct a mileage offset.  Here is the formula:

Cash price of vehicle   (X)   # of miles when first presented it for repair

120,000 miles

For example, if the cash price of your vehicle (from the sales contract) is $30,000, and you first presented the vehicle to an authorized dealership for repair of the main defect at 10,000 miles, then the mileage deduction would be: $2,500

$30,000   X   10,000 miles     =   $2,500

120,000 miles

Be very careful to make sure that the manufacturer uses the right mileage for the offset.  If they are repurchasing the vehicle because of an engine problem, they must use the mileage of the first time you presented the vehicle to one of their authorized dealerships for repair (for the engine defect).

Although manufacturer reps don’t usually do this, we have seen a few times where they have tried to trick us by using a much higher mileage when applying the formula.

The manufacturer is also obligated to pay off the remainder of any loan you may have on the vehicle.  They will pay off the loan directly to your lending institution.

If you paid cash for the vehicle up front and you didn’t get a loan, then the manufacturer will refund the total amount you paid (minus the mileage offset).

Also, if you hired an attorney, the manufacturer is obligated to pay your attorney’s reasonable fees and costs as well.  It goes without saying that your attorney’s fees and costs would be substantially higher if you filed a lawsuit than during the claims stage.



Repair Orders – Keys to Lemon Law Success

Lemon Law Success - Keeping Good RecordsOne of the most important things a car owner can do to increase the odds of having a successful lemon law claim is to keep good records.  Sounds obvious enough, but the truth is that less than fifty percent of people keep their repair orders.  And out of that fifty percent who do keep them, they are usually stuffed in the glove box and incomplete, meaning they are missing one or two.  And maintenance records like oil changes and regular service visits?  Forget about it.  Most of us can’t be bothered to keep silly things like that.

Well, that’s all well and good until your car breaks down.  And then breaks down again.  And again.  And when you’ve finally had it up to here with the dealership and the games they play, and you’re ready to file a lemon law claim, the first thing we ask after a brief discussion of the vehicle defect, is “Do you have copies of all your repair orders?”  And boy do we love it when our clients say, “Yes!  I’ve got all my documents.”

Keeping Good Records = Success!

The reason keeping good records of your repairs and maintenance visits is so important boils down to the nature of a lemon law claim.  As the car owner, we must prove that you gave the manufacturer a “reasonable opportunity to repair a substantial defect.”  There are three parts to that loaded phrase.

First, we have the burden of proof, meaning that it is not the manufacturer’s job to produce the repair orders.  It’s our job.  Sure we always try to get copies from the dealerships, but half of them comply with our requests (which sometimes require a letter threatening litigation), and half of them don’t.

Second, we have to prove that it is a substantial defect.  The easiest way to do that is to show the repairs listed on the repair orders.  If the transmission was replaced or the engine blew, the repair order speaks for itself.

Third, you have to give the manufacturer a reasonable opportunity to fix the defect.  The courts have decided that three to four repair visits are required (unless the defect is likely to cause death or serious bodily injury, in which case two or even one visit might suffice).  And the best way to prove how many times you presented your vehicle for repairs, is to simply show them the repair orders.

Lastly, even if you prove that your vehicle has a substantial defect and you gave the manufacturer a reasonable time to fix the defect, the manufacturer will often claim that the defect was your fault.  Why?  They’ll blame it on your lack of maintenance receipts.  They’ll say that the engine blew because you failed to get regular oil changes.  And even if they are not correct, if you don’t have proof that you serviced your vehicle regularly, you will most likely lose what could have been a strong lemon law claim.

Don’t Delay, Start Keeping Records Now!

Of course, hindsight is 20/20.  But from now on, make sure you get a work order every time you drop off your vehicle.  Make sure the work order accurately states each and every one of your complaints.  And then be sure to also get a repair invoice when you pick up the car, and make sure it accurately reflects what the dealership did (or didn’t do!) to address each concern.

Be sure to take your vehicle in for all its maintenance visits like oil changes and tire rotations.  You always want to have any repairs performed by a manufacturer-authorized dealership, but for things like oil changes and other maintenance visits, it’s okay to do those at a Jiffy Lube or Sears, but just make sure you get receipts and you keep them with the repair orders.

Keeping good records is a good habit and will put you in the best position to get money back for your vehicle if it turns out to be a dreaded “Lemon!”

The Best Vehicles to Buy – Avoiding a Lemon

Avoiding a Lemon

While speaking with one of my clients today, she popped the big question: “Since you specialize in lemon law claims, what car would you suggest for my next vehicle, and what cars would you avoid?”

This is probably the most common question that I get.  And it’s a good one.  It was also a bit ironic since her lemon law claim involved a Honda, and I drive a Honda.

The Complex Automobile

The truth is that modern vehicles are very complex machines.  Much more complex than the cars that were built ten, five and even two years ago.  On the roads today we’ve got standard cars, hybrids, bio-diesel vehicles, electronic cars, and the cars of the future are already a reality and being planned and built as we speak.

These vehicles are extremely complex, and most of them have a super-computer at the helm that manages the hundreds of thousands of tasks that your car undertakes just to drive from your garage to the supermarket.

And yes, sometimes these vehicles break down.  Sometimes they break down because of a defect that occurred while manufacturing your particular vehicle, and sometimes they break down because of a design defect.

The important question is whether or not the manufacturer, through its authorized dealerships, can determine what the defect is, and how to resolve it within a reasonable number of repair attempts.  If they can’t fix the problem, then you may find yourself in the dreaded lemon law club.

No One’s Perfect – The Lemon Law Reality

The fact is that all manufacturers produce a lemon every now and then.  It comes with the territory.  And despite all the horror stories you may hear about lemon vehicles, they make up a very small percentage of the cars that are produced and end up on the road.

That said, some manufacturers tend to build vehicles that exhibit more defects and, consequently, more lemons than others.  And although most of our lemon law cases are from “The Big Three” – Ford, GM and Chrysler – that most likely is the result of the fact that those manufacturers have the most cars on the road.  The good news about The Big Three is that they tend to be pretty fair in evaluating lemon law claims, and they usually try to resolve these matters without having to resort to litigation.  However, that is not always the case, and sometimes these claims do end up in the courts.

Now, you may think that the foreign manufacturers are a much better option.  However, I can tell you without a doubt that this is not always the case.  In fact, some of the luxury brands like Mercedes and BMW can produce some pretty defective vehicles.  This is most likely due to the fact that these vehicles tend to be more refined and complex than others.  From my experience, BMW can be hit or miss in how they deal with lemon law claims, and Mercedes is not very easy to deal with unless you have a “slam dunk” claim.

Overall, it would be a mistake to rush to judgment about any of the manufacturers, as each case is different.  And to complicate things further, what one manufacturer may consider a lemon, another may not.  And even two representatives at the same manufacturer may reach two different conclusions.

Helpful Car Search Tips

Here are some tips that may prove to be helpful in your car search:

  • Do some Internet research on the car that you are thinking of getting.  Get on some of the message boards and check out other car owners’ complaints.  If you see a pattern of transmission complaints, for example, then you’ll know to stay away from that particular vehicle.
  • Ask other drivers on the road.  Most people are happy to talk about their vehicle.  And even more happy to complain about it!
  • Contact the National Highway Traffic Safety Administration and see if there are any major safety recalls.  They can be reached at (888) 327-4236 and
  • Try to avoid getting a car that is a new model.  There are usually lots of kinks that need to be worked out.  No need to be a guinea pig!
  • Always get a vehicle that has a good warranty.  And make sure to get the Extended Service Contract.  It’s good insurance to have in case your car ends up having problems.
  • If you are purchasing a used vehicle, make sure you get a Certified Pre-Owned Warranty.  Never purchase a vehicle “As Is.”  And always check out the CarFax report.

If you follow these tips first, then my advice is simple.  Pick a car you love, drive safe and have fun!  Because there’s really no way to know for sure if it will be a lemon or not.