Current through Reg. 49, No. 12; March 22, 2024
(a)
Unless otherwise indicated, this section applies to decisions that relate to
lemon law complaints. Decisions shall give effect to the presumptions provided
in Occupations Code, §
2301.605,
where applicable.
(1) If it is found that the
manufacturer, distributor, or converter is not able to conform the motor
vehicle to an applicable express warranty by repairing or correcting a defect
in the complainant's motor vehicle, creating a serious safety hazard or
substantially impairing the use or market value of the motor vehicle after a
reasonable number of attempts, and that the affirmative defenses provided under
Occupations Code, §
2301.606
are not applicable, the final order authority shall issue a final order to the
manufacturer, distributor, or converter to:
(A) replace the motor vehicle with a
comparable motor vehicle, less a reasonable allowance for the owner's use of
the vehicle; or
(B) accept the
return of the motor vehicle from the owner and refund the full purchase price
of the motor vehicle to the owner, less a reasonable allowance for the owner's
use of the motor vehicle.
(2) In any decision in favor of the
complainant, the final order authority will, to the extent possible,
accommodate the complainant's request with respect to replacement or repurchase
of the motor vehicle.
(b) This subsection applies only to the
repurchase of motor vehicles.
(1) When a
refund of the purchase price of a motor vehicle is ordered, the purchase price
shall be the total purchase price of the motor vehicle, excluding the amount of
any interest, finance charge, or insurance premiums. The award to the motor
vehicle owner shall include reimbursement of the amount of the lemon law
complaint filing fee paid by, or on behalf of, the motor vehicle owner. The
refund shall be made payable to the motor vehicle owner and to any lienholder,
respective to their ownership interest.
(2) There is a rebuttable presumption that a
motor vehicle has a useful life of 120,000 miles. Except in cases where the
preponderance of the evidence shows that the motor vehicle has a longer or
shorter expected useful life than 120,000 miles, the reasonable allowance for
the owner's use of the motor vehicle shall be that amount obtained by adding
subparagraphs (A) and (B) of this paragraph.
(A) The product obtained by multiplying the
purchase price, as defined in paragraph (1) of this subsection, of the motor
vehicle by a fraction having as its denominator 120,000 and having as its
numerator the number of miles that the motor vehicle traveled from the time of
delivery to the owner to the first report of the defect or condition forming
the basis of the repurchase order; and
(B) 50% of the product obtained by
multiplying the purchase price by a fraction having as its denominator 120,000
and having as its numerator the number of miles that the motor vehicle traveled
after the first report of the defect or condition forming the basis of the
repurchase order. The number of miles during the period covered in this
paragraph shall be determined from the date of the first report of the defect
or condition forming the basis of the repurchase order through the date of the
hearing.
(3) There is a
rebuttable presumption that the useful life of a towable recreational vehicle
is 3,650 days or 10 years. Except in cases where a preponderance of the
evidence shows that the vehicle has a longer or shorter expected useful life
than 3,650 days or 10 years, the reasonable allowance for the owner's use of
the towable recreational vehicle shall be that amount obtained by adding
subparagraphs (A) and (B) of this paragraph.
(A) The product obtained by multiplying the
purchase price, as defined in paragraph (1) of this subsection, of the towable
recreational vehicle by a fraction having as its denominator 3,650 days or 10
years, except the denominator shall be 1,825 days or five years, if the towable
recreational vehicle is occupied on a full time basis, and having as its
numerator the number of days from the time of delivery to the owner to the
first report of the defect or condition forming the basis of the repurchase
order.
(B) 50% of the product
obtained by multiplying the purchase price by a fraction having as its
denominator 3,650 days or 10 years, except the denominator shall be 1,825 days
or five years, if the towable recreational vehicle is occupied on a full time
basis, and having as its numerator the number of days of ownership after the
first report of the defect or condition forming the basis of the repurchase
order. The number of days during the period covered in this paragraph shall be
determined from the date of the first report of the defect or condition forming
the basis of the repurchase order through the date of the hearing.
(C) Any day or part of a day that the vehicle
is out of service for repair will be deducted from the numerator in determining
the reasonable allowance for use of a towable recreational vehicle in this
paragraph.
(c) This subsection applies only to leased
motor vehicle relief.
(1) Except in cases
involving unusual and extenuating circumstances supported by a preponderance of
the evidence, when a refund of the purchase price of a leased motor vehicle is
ordered, the purchase price shall be allocated and paid to the lessee and the
vehicle lessor, respectively, in accordance with subparagraphs (A) and (B) of
this paragraph.
(A) The lessee shall receive
the total of:
(i) all lease payments
previously paid by the lessee to the vehicle lessor under the terms of the
lease; and
(ii) all sums previously
paid by the lessee to the vehicle lessor in connection with entering into the
lease agreement, including, but not limited to any capitalized cost reduction,
down payment, trade-in, or similar cost, plus sales tax, license, registration
fees, and other documentary fees, if applicable.
(B) The vehicle lessor shall receive the
total of:
(i) the actual price paid by the
vehicle lessor for the motor vehicle, including tax, title, license, and
documentary fees, if paid by the vehicle lessor and evidenced in a bill of
sale, bank draft demand, tax collector's receipt, or similar instrument;
and
(ii) an additional 5.0% of the
purchase price plus any amount or fee paid by vehicle lessor to secure the
lease or interest in the lease.
(C) A credit reflecting all of the payments
made by the lessee shall be deducted from the actual purchase price that the
manufacturer, converter, or distributor is required to pay the vehicle lessor,
as specified in subparagraph (B)(i) and (ii) of this paragraph.
(2) When the final order authority
orders a manufacturer, converter, or distributor to refund the purchase price
in a leased vehicle transaction, the motor vehicle shall be returned to the
manufacturer, converter, or distributor with clear title upon payment of the
sums indicated in paragraph (1)(A) and (B) of this subsection. The vehicle
lessor shall transfer title of the motor vehicle to the manufacturer,
converter, or distributor, as necessary to effectuate the lessee's rights. The
lease shall be terminated without penalty to the lessee.
(3) Refunds shall be made to the lessee,
vehicle lessor, and to any lienholder, respective to their ownership interest.
The refund to the lessee under paragraph (1)(A) of this subsection shall be
reduced by a reasonable allowance for the lessee's use of the motor vehicle. A
reasonable allowance for use shall be computed in accordance with subsection
(b)(2) or (3) of this section, using the amount in paragraph (1)(B)(i) of this
subsection as the applicable purchase price.
(d) This subsection applies only to
replacement of motor vehicles.
(1) Upon
issuance of an order from the final order authority to a manufacturer,
converter, or distributor to replace a motor vehicle, the manufacturer,
converter, or distributor shall:
(A) promptly
authorize the exchange of the complainant's motor vehicle with the
complainant's choice of any comparable motor vehicle; and
(B) instruct the dealer to contract the sale
of the selected comparable motor vehicle with the complainant under the
following terms.
(i) The sales price of the
comparable motor vehicle shall be the vehicle's Manufacturer's Suggested Retail
Price (MSRP);
(ii) The trade-in
value of the complainant's motor vehicle shall be the MSRP at the time of the
original transaction, less a reasonable allowance for the complainant's use of
the complainant's motor vehicle.
(iii) The use allowance for replacement
relief shall be calculated in accordance with subsection (b)(2) and (3) of this
section.
(2)
Upon any replacement of a complainant's motor vehicle, the complainant shall be
responsible for payment or financing of the usage allowance of the
complainant's vehicle, any outstanding liens on the complainant's vehicle, and
applicable taxes and fees associated with the new sale, excluding documentary
fees.
(A) If the comparable motor vehicle has
a higher MSRP than the complainant's vehicle, the complainant shall be
responsible at the time of sale to pay or finance the difference in the two
vehicles' MSRPs to the manufacturer, converter or distributor.
(B) If the comparable motor vehicle has a
lower MSRP than the complainant's vehicle, the complainant will be credited the
difference in the MSRP between the two motor vehicles. The difference credited
shall not exceed the amount of the calculated usage allowance for the
complainant's vehicle.
(3) The complainant is responsible for
obtaining financing, if necessary, to complete the transaction.
(4) The replacement transaction, as described
in paragraphs (2) and (3) of this subsection, shall be completed as specified
in the final order. If the replacement transaction cannot be completed within
the ordered time period, the manufacturer shall repurchase the complainant's
motor vehicle in accordance with the repurchase provisions of this section. If
repurchase relief occurs, a party may request calculation of the repurchase
price by the final order authority.
(e) If the final order authority finds that a
complainant's motor vehicle does not qualify for replacement or repurchase, an
order may be entered in any proceeding, where appropriate, requiring repair
work to be performed or other action taken to obtain compliance with the
manufacturer's, converter's, or distributor's warranty obligations.
(f) If the motor vehicle is substantially
damaged or if there is an adverse change in the motor vehicle's condition
beyond ordinary wear and tear, from the date of the hearing to the date of
repurchase, and the parties are unable to agree on an amount allowed for such
damage or condition, either party may request reconsideration by the final
order authority of the repurchase price contained in the final order.
(g) In any award in favor of a complainant,
the final order authority may require the dealer involved to reimburse the
complainant, manufacturer, converter, or distributor for the cost of any items
or options added to the motor vehicle if one or more of those items or options
contributed to the defect that is the basis for the order, repurchase, or
replacement. This subsection shall not be interpreted to require a
manufacturer, converter, or distributor to repurchase a motor vehicle due to a
defect or condition that was solely caused by a dealer add-on item or
option.