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Iowa Lemon Law Statutes
Chapter 322G.1-15
322G.1 Legislative intent.
The general assembly recognizes that a motor vehicle is a major
consumer acquisition and that a defective motor vehicle undoubtedly
creates a hardship for the consumer. The general assembly further
recognizes that a duly franchised motor vehicle dealer is an
authorized service agent of the manufacturer. It is the intent
of the general assembly that a good faith motor vehicle warranty
complaint by a consumer be resolved by the manufacturer within
a specified period of time. It is further the intent of the general
assembly to provide the statutory procedures whereby a consumer
may receive a replacement motor vehicle, or a full refund, for
a motor vehicle which cannot be brought into conformity with
the warranty provided for in this chapter. However, this chapter
does not limit the rights or remedies which are otherwise available
to a consumer under any other law.
322G.2 Definitions.
As used in this chapter, unless the context otherwise requires:
- "Collateral charges" means those additional charges
to a consumer wholly incurred as a result of the acquisition
of the motor vehicle. For the purposes of this chapter, collateral
charges include, but are not limited to, charges for manufacturer-installed
or agent-installed items, earned finance charges, use taxes,
and title charges.
- "Condition" means a general problem that may be
attributable to a defect in more than one part.
- "Consumer" means the purchaser or lessee, other
than for purposes of lease or resale, of a new or previously
untitled motor vehicle, or any other person entitled by the terms
of the warranty to enforce the obligations of the warranty during
the duration of the lemon law rights period.
- "Days" means calendar days.
- "Department" means the attorney general.
- "Incidental charges" means those reasonable costs
incurred by the consumer, including, but not limited to, towing
charges and the costs of obtaining alternative transportation,
which are the direct result of the nonconformity or nonconformities
which are the subject of the claim. Incidental charges do not
include loss of use, loss of income, or personal injury claims.
- "Lease price" means the aggregate of the following:
- Lessor's actual purchase costs.
- Collateral charges, if applicable.
- Any fee paid to another to obtain the lease.
- Any insurance or other costs expended by the lessor for the
benefit of the lessee.
- An amount equal to state and local use taxes, not otherwise
included as collateral charges, paid by the lessor when the vehicle
was initially purchased.
- An amount equal to five percent of the lessor's actual purchase
cost.
- "Lemon law rights period" means the term of the
manufacturer's written warranty, the period ending two years
after the date of the original delivery of a motor vehicle to
a consumer, or the first twenty-four thousand miles of operation
attributable to a consumer, whichever expires first.
- "Lessee" means any consumer who leases a motor vehicle
for one year or more pursuant to a written lease agreement which
provides that the lessee is responsible for repairs to the motor
vehicle.
- "Lessee cost" means the aggregate of the deposit
and rental payments previously paid to the lessor for the leased
vehicle.
- "Lessor" means a person who holds the title to
a motor vehicle leased to a lessee under a written lease agreement
or who holds the lessor's rights under the agreement.
- "Manufacturer" means a person engaged in the business
of constructing or assembling new motor vehicles or installing
on previously assembled vehicle chassis special bodies or equipment
which, when installed, form an integral part of the new motor
vehicle, or a person engaged in the business of importing new
motor vehicles into the United States for the purpose of selling
or distributing the new motor vehicles to new motor vehicle dealers.
- "Motor vehicle" means a self-propelled vehicle
purchased or leased in this state, except as provided in section
322G.15, and primarily designed for the transportation of persons
or property over public streets and highways, but does not include
mopeds, motorcycles, motor homes, or vehicles over ten thousand
pounds gross vehicle weight rating.
- "Nonconformity" means a defect, malfunction, or
condition in a motor vehicle such that the vehicle fails to conform
to the warranty, but does not include a defect, malfunction,
or condition that results from an accident, abuse, neglect, modification,
or alteration of the motor vehicle by persons other than the
manufacturer or its authorized service agent.
- "Person" means person as defined in section 714.16.
- "Program" means an informal dispute settlement
procedure established by a manufacturer which mediates and arbitrates
motor vehicle warranty disputes arising in this state.
- "Purchase price" means the cash price paid for
the motor vehicle appearing in the sales agreement or contract,
including any net allowance given for a trade-in vehicle.
- "Reasonable offset for use" means the number of
miles attributable to a consumer up to the date of the third
attempt to repair the same nonconformity which is the subject
of the claim, or the first attempt to repair a nonconformity
that is likely to cause death or serious bodily injury, or the
twentieth cumulative day when the vehicle is out of service by
reason of repair of one or more nonconformities, whichever occurs
first, multiplied by the purchase price of the vehicle, or in
the event of a leased vehicle, the lessor's actual lease price
plus an amount equal to two percent of the purchase price, and
divided by one hundred twenty thousand.
- "Replacement motor vehicle" means a motor vehicle
which is identical or reasonably equivalent to the motor vehicle
to be replaced, and as the motor vehicle to be replaced would
have existed without the nonconformity at the time of original
acquisition.
- "Substantially impair" means to render the motor
vehicle unfit, unreliable, or unsafe for warranted or ordinary
use, or to significantly diminish the value of the motor vehicle.
- "Warranty" means any written warranty issued by
the manufacturer; or any affirmation of fact or promise made
by the manufacturer, excluding statements made by the dealer,
in connection with the sale or lease of a motor vehicle to a
consumer, which relates to the nature of the material or workmanship
and affirms or promises that the material or workmanship is free
of defects or will meet a specified level of performance.
322G.3 Duties of manufacturer.
- At the time of the consumer's purchase or lease of the vehicle,
the manufacturer shall provide to the consumer a written statement
that explains the consumer's rights and obligations under this
chapter. The written statement shall be prepared by the attorney
general and shall contain a telephone number that the consumer
can use to obtain information from the attorney general regarding
the rights and obligations provided under this chapter.
- At the time of the consumer's purchase or lease of the vehicle,
the manufacturer shall provide to the consumer the address and
phone number for the zone, district, or regional office of the
manufacturer for this state where a claim may be filed by the
consumer. This information shall be provided to the consumer
in a clear and conspicuous manner. Within thirty days of the
introduction of a new model year for each make and model of motor
vehicle sold in this state, the manufacturer shall notify the
attorney general of such introduction. The manufacturer shall
also inform the attorney general that a copy of the owner's manual
and applicable written warranties shall be provided upon request
and provide information as to where the request should be made.
The manufacturer shall inform the attorney general where such
a request should be directed and shall provide the copy of the
owner's manual and applicable written warranties within five
business days of a request by the attorney general.
- A manufacturer or the authorized service agent of the manufacturer
shall make repairs as necessary to conform the vehicle to the
warranty if a motor vehicle does not conform to the warranty
and the consumer reports the nonconformity to the manufacturer
or authorized service agent during the lemon law rights period.
Such repairs shall be made irrespective of whether they can be
made prior to the expiration of the lemon law rights period.
- A manufacturer or the authorized service agent of the manufacturer,
shall provide to the consumer, each time the motor vehicle is
returned after being examined or repaired under the warranty,
a fully itemized, legible statement or repair order indicating
any diagnosis made, and all work performed on the motor vehicle
including, but not limited to, a general description of the problem
reported by the consumer or an identification of the defect or
condition, parts and labor, the date and the odometer reading
when the motor vehicle was submitted for examination or repair,
and the date when the repair or examination was completed.
- Upon request from the consumer, the manufacturer, or the
authorized service agent of the manufacturer, shall provide a
copy of either
or both of the following:
- Any report or printout of any diagnostic computer operation
compiled by the manufacturer or authorized service agent regarding
an inspection or diagnosis of the motor vehicle.
- A copy of any technical service bulletin issued by the manufacturer
regarding the year and model of the motor vehicle as it pertains
to any material, feature, component, or the performance of the
motor vehicle.
322G.4 Nonconformity of motor vehicles.
- After three attempts have been made to repair the same nonconformity
that substantially impairs the motor vehicle, or after one attempt
to repair a nonconformity that is likely to cause death or serious
bodily injury, the consumer may give written notification, which
shall be by certified or registered mail or by overnight service,
to the manufacturer of the need to repair the nonconformity in
order to allow the manufacturer a final attempt to cure the nonconformity.
The manufacturer shall, within ten days after receipt of such
notification, notify and provide the consumer with the opportunity
to have the vehicle repaired at a reasonably accessible repair
facility and after delivery of the vehicle to the designated
repair facility by the consumer, the manufacturer shall, within
ten days, conform the motor vehicle to the warranty. If the manufacturer
fails to notify and provide the consumer with the opportunity
to have the vehicle repaired at a reasonably accessible repair
facility or perform the repairs within the time periods prescribed
in this subsection, the requirement that the manufacturer be
given a final attempt to cure the nonconformity does not apply.
After twenty or more cumulative days when the motor vehicle has
been out of service by reason of repair of one or more nonconformities,
the consumer may give written notification to the manufacturer
which shall be by certified or registered mail or by overnight
service. Commencing upon the date such notification is received,
the manufacturer has ten cumulative days when the vehicle has
been out of service by reason of repair of one or more nonconformities
to conform the motor vehicle to the warranty.
- If the manufacturer, or its authorized service agent, has
not conformed the motor vehicle to the warranty by repairing
or correcting one or more nonconformities that substantially
impair the motor vehicle after a reasonable number of attempts,
the manufacturer shall, within forty days of receipt of payment
by the manufacturer of a reasonable offset for use by the consumer,
replace the motor vehicle with a replacement motor vehicle acceptable
to the consumer, or repurchase the motor vehicle from the consumer
or lessor and refund to the consumer or lessor the full purchase
or lease price, less a reasonable offset for use. The replacement
or refund shall include payment of all collateral and reasonably
incurred incidental charges. The consumer has an unconditional
right to choose a refund rather than a replacement. If the consumer
elects to receive a refund, and the refund exceeds the amount
of the payment for a reasonable offset for use, the requirement
that the consumer pay the reasonable offset for use in advance
does not apply, and the manufacturer shall deduct that amount
from the refund due to the consumer. If the consumer elects a
replacement motor vehicle, the manufacturer shall provide the
consumer a substitute motor vehicle to use until such time as
the replacement vehicle is delivered to the consumer. At the
time of the refund or replacement, the consumer, lienholder,
or lessor shall furnish to the manufacturer clear title to and
possession of the original motor vehicle.
Refunds shall be made to the consumer and lienholder of record,
if any, as their interests appear. If applicable, refunds shall
be made to the lessor and lessee as follows: the lessee shall
receive the lessee's cost less a reasonable offset for use, and
the lessor shall receive the lease price less the aggregate deposit
and rental payments previously paid to the lessor for the leased
vehicle. If it is determined that the lessee is entitled to a
refund pursuant to this chapter, the consumer's lease agreement
with the lessor is terminated upon payment of the refund and
no penalty for early termination shall be assessed. The department
of revenue and finance shall refund to the manufacturer any use
tax which the manufacturer refunded to the consumer, lessee,
or lessor under this section, if the manufacturer provides to
the department of revenue and finance a written request for a
refund and evidence that the use tax was paid when the vehicle
was purchased and that the manufacturer refunded the use tax
to the consumer, lessee, or lessor.
- It is presumed that a reasonable number of attempts have
been undertaken to conform a motor vehicle to the warranty if,
during
the lemon law rights period, any of the following occur:
- The same nonconformity that substantially impairs the motor
vehicle has been subject to examination or repair at least three
times by the manufacturer or its authorized service agent, plus
a final attempt by the manufacturer to repair the motor vehicle
if undertaken as provided for in subsection 1, and such nonconformity
continues to exist.
- A nonconformity that is likely to cause death or serious bodily
injury has been subject to examination or repair at least one
time by the manufacturer or its authorized service agent, plus
a final attempt by the manufacturer to repair the motor vehicle
if undertaken as provided for in subsection 1, and such nonconformity
continues to exist.
- The motor vehicle has been out of service by reason of repair
by the manufacturer, or its authorized service agent, of one
or more nonconformities that substantially impair the motor vehicle
for a cumulative total of thirty or more days, exclusive of down
time for routine maintenance prescribed by the owner's manual.
The thirty-day period may be extended by any period of time during
which repair services are not available to the consumer because
of war, invasion, strike, fire, flood, or natural disaster.
The terms of this subsection shall be extended for a period of
up to two years after the date of the original delivery of a
motor vehicle to a consumer, or the first twenty-four thousand
miles of operation attributable to a consumer, whichever occurs
first, if a nonconformity has been reported but has not been
cured by the manufacturer, or its authorized service agent, before
the expiration of the lemon law rights period.
- A manufacturer, or its authorized service agent, shall
not
refuse to examine or repair any nonconformity for the purpose
of avoiding liability under this chapter.
322G.5 Affirmative defenses.
Any of the following is an affirmative defense to a claim under
this chapter:
- The alleged nonconformity or nonconformities do not substantially
impair the motor vehicle.
- A nonconformity is the result of an accident, abuse, neglect,
or unauthorized modification or alteration of the motor vehicle
by a person other than the manufacturer or its authorized service
agent.
- The claim by the consumer was not filed in good faith.
- Any other defense allowed by law which may be raised against
the claim.
322G.6 Informal dispute settlement procedures---operations
and certification.
- At the time of the consumer's purchase or lease of the vehicle,
a manufacturer who has established a program certified pursuant
to this section shall, at a minimum, clearly and conspicuously
disclose to the consumer in written materials accompanying the
vehicle how and where to file a claim with the program.
- A certified program shall be funded and competently staffed
at a level sufficient to ensure fair and expeditious resolution
of all disputes, and shall not charge consumers any fee for use
of the program. The manufacturer shall take all steps necessary
to ensure that a certified program and its staff and decision
makers are sufficiently insulated from the manufacturer so that
the performance of the staff and the decisions of the decision
makers are not influenced by the manufacturer. Such steps, at
a minimum, shall ensure that the manufacturer does not make decisions
on whether a consumer's dispute proceeds to the decision maker.
Staff and decision makers of a certified program shall be trained
in the provisions of this chapter and rules adopted under this
chapter.
- A certified program shall allow an oral presentation by
a party, or by a party's employee, agent, or representative.
Within five days following the consumer's notification to
the certified program of the dispute, the program shall inform
each party of their right to make an oral presentation. Meetings
of a certified program to hear and decide disputes shall
be open to observers, including either party to the dispute,
on reasonable and nondiscriminatory terms.
- A certified program shall render a decision no later than
sixty days from the day of the consumer's notification of
the dispute, provided that a significant number of decisions
are rendered within forty days. For the purposes of this
section, notification is deemed to have occurred when a certified
program has received the consumer's name and address; the
current date and the date of the original delivery of the
motor vehicle to a consumer; the year, make, model, and identification
number of the motor vehicle; and a description of the nonconformity.
If the consumer has not previously notified the manufacturer
of the nonconformity, the sixty-day period is extended for
an additional seven days.
- A certified program shall, in rendering decisions, take
into account the provisions of this chapter and all legal and
equitable factors germane to a fair and just decision. The
decision shall disclose to the consumer and the manufacturer
the reasons for the decision, and the manufacturer's required
actions, if applicable. If the decision is in favor of the
consumer, the consumer shall have up to twenty-five days from
the date of receipt of the certified program's decision to
indicate acceptance of the decision. The decision shall prescribe
a reasonable period of time, not to exceed thirty days from
the date the consumer notifies the manufacturer of acceptance
of the decision, within which the manufacturer must fulfill
the terms of the decision. If the manufacturer has had a reasonable
number of attempts to conform a motor vehicle to the warranty
as set forth in section 322G.4, subsection 3, including a final
attempt by the manufacturer to repair the motor vehicle, if
undertaken as provided for in section 322G.4, subsection 1,
and the consumer is entitled to a replacement vehicle or a
refund under section 322G.4, subsection 2, the decision shall
be limited to relief as allowed under section 322G.4, subsection
2. In an action brought by a consumer under this chapter, the
decision of a certified program is admissible in evidence.
- A certified program shall establish written procedures which
explain operation of the certified program. Copies of the written
procedures shall be made available to any person upon request
and shall be sent to the consumer upon notification of the
dispute.
- A certified program shall retain all records for each dispute
for at least four years after the final disposition of the
dispute. A certified program shall have an independent audit
conducted annually to determine whether the manufacturer and
its performance and the program and its implementation are
in compliance with this chapter. All records for each dispute
shall be available for the audit. Such audit, upon completion,
shall be forwarded to the attorney general.
- Any manufacturer licensed to sell motor vehicles in this
state may apply to the attorney general for certification of
its program. A manufacturer seeking certification of its program
in this state shall submit to the attorney general an application
for certification on a form prescribed by the attorney general.
- A program certified in this state or a program established
by a manufacturer applying for certification in this state
shall submit to the attorney general a copy of each settlement
approved by the program or decision made by the decision maker
within thirty days after the settlement is reached or the decision
is rendered. The decision or settlement shall contain information
prescribed by the attorney general.
- The attorney general shall review the operations of any
certified program at least once annually. The attorney general
shall prepare annual and periodic reports evaluating the operation
of certified programs serving consumers in this state or programs
established by motor vehicle manufacturers applying for certification
in this state. The reports shall indicate whether certification
should be granted, renewed, denied, or revoked.
- If a manufacturer has established a program which the attorney
general has certified as substantially complying with the provisions
of and the rules adopted under this chapter, and has informed
the consumer how and where to file a claim with the program
pursuant to subsection 1, the provisions of section 322G.4,
subsection 2, do not apply to any consumer who has not first
resorted to the program.
322G.7 Informal dispute settlement procedure---certification
uniformity.
To facilitate uniform application, interpretation, and enforcement
of this section and section 322G.6, and in implementing rules
adopted pursuant to section 322G.14, the attorney general may
cooperate with agencies that perform similar functions in any
other states that enact these or similar sections. The cooperation
authorized by this subsection may include any of the following:
- Establishing a central depository for copies of all applications
and accompanying materials submitted by manufacturers for certification,
and all reports prepared, notices issued, and determinations
made by the attorney general under section 322G.6.
- Sharing and exchanging information, documents, and records
pertaining to program operations.
- Sharing personnel to perform joint reviews, surveys, and
investigations of program operations.
- Preparing joint reports evaluating program operations.
- Granting joint certifications and certification renewals.
- Issuing joint denials or revocations of certification.
- Holding a joint administrative hearing.
- Formulating, in accordance with chapter 17A, the administrative
procedure Act, rules or proposed rules on matters such as guidelines,
forms, statements of policy, interpretative opinions, and any
other information necessary to implement section 322G.6.
322G.8 Consumer remedies.
- If a consumer resorts to a manufacturer's certified program
and a decision is not rendered within the time periods allowed
in this chapter, or a manufacturer has no certified program
and the consumer has notified the manufacturer pursuant to
section 322G.4, subsection 1, the consumer may file an action
in district court under this chapter within one year from the
expiration of the lemon law rights period or an extension of
the period pursuant to section 322G.4, subsection 3.
- If a consumer resorts to a manufacturer's certified program
and is not satisfied with the performance of the manufacturer
as ordered in the decision, or the manufacturer does not perform
as directed by the decision within the time period specified
in the decision, the consumer may file an action in district
court under this chapter within six months after the date prescribed
in the decision by which the manufacturer must fulfill the
terms of the decision. If the consumer declines to accept the
decision of the manufacturer's certified program, the consumer
may appeal the decision pursuant to subsection 4. For purposes
of this subsection, "not satisfied with the performance
of the decision" means, following the consumer's acceptance
of the decision, the consumer indicates that the manufacturer
failed to comply with the terms of the decision within the
time specified in the decision or failed to cure the nonconformity
within the time specified in the decision if further repairs
were ordered.
- In an action under either subsection 1 or 2, the court shall
award a consumer who prevails the amount of any pecuniary loss,
including relief the consumer is entitled to under section
322G.4, subsection 2, reasonable attorney's fees, and costs.
In addition, if the court affirms the decision of the certified
program, the court may award any additional amounts allowed
under subsection 7.
- A certified program's decision is final unless appealed
by either party. A petition to the district court to appeal
a decision must be made within fifty days after receipt of
the decision or within twenty-five days from the date the consumer
indicates acceptance of the decision to the manufacturer, whichever
occurs first. Within seven days after the petition has been
filed, the appealing party must send, by certified, registered,
or express mail, a copy of the petition to the attorney general.
If the attorney general receives no notice of the petition
within sixty days after the manufacturer's receipt of a decision
in favor of the consumer, and the consumer has indicated acceptance
of the decision within the twenty-five days of receipt of the
decision, but the manufacturer has neither complied with, nor
petitioned to appeal the decision, the attorney general may
apply to the court to impose a fine up to one thousand dollars
per day against the manufacturer until the amount stands at
twice the purchase price of the motor vehicle, unless the manufacturer
provides clear and convincing evidence that the delay or failure
was beyond its control or was acceptable to the consumer as
evidenced by a written statement signed by the consumer. If
the manufacturer fails to provide such evidence or fails to
pay the fine, the attorney general shall initiate proceedings
against the manufacturer for failure to pay the fine. The proceeds
from the fine imposed shall be placed in the attorney general's
motor vehicle fraud and odometer law enforcement fund for implementation
and enforcement of this chapter.
- If the manufacturer fails to comply with a decision which
has been timely accepted by the consumer or fails to file a
timely petition for appeal, the court shall affirm the board's
decision upon application by the consumer.
- An appeal of a decision by a certified program to the court
by a consumer or a manufacturer shall be tried de novo, and
may be based upon stipulated facts. In a written petition to
appeal a decision by the board, the appealing party must state
the action requested and the grounds relied upon for appeal.
- If a decision of the certified program in favor of the consumer
is affirmed or upheld by the court, recovery by the consumer
shall include the pecuniary value of the award, including relief
the consumer is entitled to under section 322G.4, subsection
2, attorney's fees incurred in obtaining confirmation of the
award, and all costs and continuing damages in an amount of
twenty-five dollars per day for all days beyond the twenty-five-day
period following the manufacturer's receipt of the consumer's
acceptance of the certified program's decision. If a court
determines that a manufacturer filed a petition for appeal
to be tried de novo in bad faith or brought such an appeal
solely for the purpose of harassment, the court shall double,
and may triple, the amount of the total award, after consideration
of all circumstances.
- Appellate review of a court decision in favor of the consumer
may be conditioned upon payment by the manufacturer of the
consumer's attorney's fees and giving security for costs and
expenses resulting from the review period.
- This chapter does not prohibit a consumer from pursuing
other rights or remedies under any other law.
322G.9 Compliance and disciplinary action.
The attorney general may enforce and ensure compliance with
the provisions of this chapter and rules adopted pursuant to
section 322G.14, may issue subpoenas requiring the attendance
of witnesses and the production of evidence, and may petition
any court having jurisdiction to compel compliance with the
subpoenas. The attorney general may levy and collect an administrative
fine in an amount not to exceed one thousand dollars for each
violation against any manufacturer found to be in violation
of this chapter or rules adopted pursuant to section 322G.14.
A manufacturer may request a hearing pursuant to chapter 17A,
the administrative procedure Act, if the manufacturer contests
the fine levied against it. The proceeds from any fine levied
and collected pursuant to this section shall be placed in the
attorney general's motor vehicle fraud and odometer law enforcement
fund for implementation and enforcement of this chapter.
322G.10 Unfair or deceptive trade practice.
A violation by a manufacturer of this chapter is an unfair
or deceptive trade practice in violation of section 714.16,
subsection 2, paragraph "a".
322G.11 Dealer liability.
This chapter, except for the requirements of section 322G.12,
does not impose any liability on a franchised motor vehicle
dealer or create a cause of action by a consumer against a
dealer. A dealer shall not be made a party defendant in any
action involving or relating to this chapter, except as provided
in this section. The manufacturer shall not charge back or
require reimbursement by the dealer for any costs, including
but not limited to any refunds or vehicle replacements, incurred
by the manufacturer pursuant to this chapter, in the absence
of a finding by a court that the related repairs had been carried
out by the dealer in a manner substantially inconsistent with
the manufacturer's published instructions. A manufacturer who
is found by a court to have improperly charged back a dealer
because of a violation of this section is liable to the injured
dealer for full reimbursement plus reasonable costs and any
attorney's fees.
Sec. 3, Section 322G12, Code 1999, is amended to read as
follows:
322G.12 Resale of returned vehicles.
A manufacturer who accepts the return of a motor vehicle pursuant
to a settlement, determination, or decision under this chapter
shall notify the state department of transportation, report
the vehicle identification number of that motor vehicle within
ten days after the acceptance, and obtain a new certificate
of title for the vehicle in the manufacturer's name pursuant
to section 321.46. In obtaining a new certificate of title,
the manufacturer shall title the vehicle in the county of the
transferor's residence and shall be exempt from the registration
fee requirement of section 321.46. For purposes of chapter
423, a manufacturer's acceptance of the return of a motor vehicle,
as described in this section, shall not be considered "use",
as defined in section 423.1. The new certificate of title,
and all subsequent registration receipts and certificates of
title issued for the motor vehicle shall contain a designation
indicating that the motor vehicle was returned pursuant to
this chapter. The state department of transportation shall
determine the manner in which the designation is to be indicated
on registration receipts and certificates of title and may
determine that a "REBUILT" or "SALVAGE" designation
supercedes the designation required by this paragraph and include
the "REBUILT" or "SALVAGE" designation
on the registration receipt and certificate of title in lieu
of the designation required by this paragraph.
PARAGRAPH DIVIDED. A person shall not knowingly lease,
sell, either at wholesale or retail; or transfer a title to
a motor vehicle returned by reason of a settlement, determination,
or decision pursuant to this chapter or a similar law of another
state unless the nature of the nonconformity is clearly and
conspicuously disclosed to the prospective transferee, lessee,
or buyer. The attorney general shall prescribe by rule the
form, content, and procedure pertaining to such a disclosure
statement, recognizing the need of manufacturers to implement
a uniform disclosure form. The manufacturer shall make a reasonable
effort to ensure that such disclosure is made to the first
subsequent retail buyer or lessee. For purposes of this section, "settlement" includes
an agreement entered into between the manufacturer and the
consumer that occurs after the thirtieth day following the
manufacturer's receipt of the consumer's written notification
pursuant to section 322G.4.
Sec. 4. EFFECTIVE DATE. This Act takes effect January 1,
2001.
322G.13 Certain agreements void.
Any agreement entered into by a consumer that waives, limits,
or disclaims the rights set forth in this chapter is void as
contrary to public policy.
322G.14 Rulemaking authority.
- The attorney general shall adopt rules as necessary to implement
this chapter.
- In prescribing rules and forms under this chapter, the attorney
general may cooperate with agencies that perform similar functions
in other states with a view to effectuating the policy of this
chapter to achieve maximum uniformity in the form and content
of certification, regulation, and procedural evaluation of
manufacturer-established programs, required record keeping,
required reporting wherever practicable, and required notices
to consumers.
322G.15 Applicability.
This chapter applies to motor vehicles originally purchased
or leased in this state by consumers on or after July 1, 1991.
Except for section 322G.3, subsections 1 and 2, and section
322G.6, subsection 1, this chapter applies to motor vehicles
originally purchased or leased in other states, if the consumer
is a resident of this state at the time the consumer's rights
are asserted under this chapter. Section 322G.14, which concerns
rulemaking, shall take effect May 9, 1991. |
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The
Magnuson-Moss Warranty Act
The Magnuson-Moss Warranty Act is a Federal Law that protects the buyer of any product which costs more than $25 and comes with an express written warranty.
This law applies to any product that you buy that does not perform as it should.
Your car is a major investment, rationalized by the peace of mind that flows from its expected dependability and safety. Accordingly, you are entitled
to expect an automobile properly constructed and regulated to provide reasonably safe, trouble-free, and dependable transportation – regardless
of the exact make and model you bought. Unfortunately, sometimes these principles do not hold true and defects arise in automobiles. Although one defect
is not actionable, repeated defects are as there exists a generally accepted rule that unsuccessful repair efforts render the warrantor liable. Simply
put, there comes a time when “enough is enough” – when after having to take your car into the shop for repairs an inordinate number
of times and experiencing all of the attendant inconvenience, you are entitled to say, ‘That’s all,’ and revoke, notwithstanding the
seller’s repeated good faith efforts to fix the car. The rationale behind these basic principles is clear: once your faith in the vehicle is shaken,
the vehicle loses its real value to you and becomes an instrument whose integrity is impaired and whose operation is fraught with apprehension. The question
thus becomes when is “enough”?
As you know, enough is never enough from your warrantor’s point of view and you should simply continue to have your defective vehicle repaired – time
and time again. However, you are not required to allow a warrantor to tinker with your vehicle indefinitely in the hope that it may eventually be fixed.
Rather, you are entitled to expect your vehicle to be repaired within a reasonable opportunity. To this end, both the federal Moss Warranty Act, and
the various state “lemon laws,” require repairs to your vehicle be performed within a reasonable opportunity.
Under the Magnuson-Moss Warranty
Act, a warrantor should perform adequate repairs in at least two, and possibly three, attempts to correct a particular defect. Further, the Magnuson-Moss
Warranty Act’s reasonableness requirement applies to your vehicle as a whole rather than to each individual defect
that arises. Although most of the Lemon Laws vary from state to state, each individual law usually require a warrantor to cure a specific defect within
four to five attempts or the automobile as a whole within thirty days. If the warrantor fails to meet this obligation, most of the lemon laws provide
for a full refund or new replacement vehicle. Further, this reasonable number of attempts/reasonable opportunity standard, whether it be that of the
Magnuson-Moss Warranty Act or that of the Lemon Laws, is akin to strict liability – once this threshold has been met, the continued existence of
a defect is irrelevant and you are still entitled to relief.
One of the most important parts of the Magnuson-Moss Warranty Act is its fee shifting
provision. This provision provides that you may recover the attorney fees incurred in the prosecution of your case if you are successful – independent
of how much you actually win. That rational behind this fee shifting provision is to twofold: (1) to ensure you will be able to vindicate your rights
without having to expend large sums on attorney's fees and (2) because automobile manufacturers are able to write off all expenses of defense as a
legitimate business expense, whereas you, the average consumer, obviously does not have that kind of economic staying power. Most of the Lemon Laws contain
similar fee shifting provisions.
You may also derive additional warranty rights from the Uniform Commercial Code; however, the Code does not allow you
in most states to recover your attorney fees and is also not as consumer friendly as the Magnuson-Moss Warranty Act or the various state lemon laws.
The narrative information on Magnuson-Moss, UCC and lemon laws on these pages is provided by Marshall Meyers, attorney.
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Uniform
Commercial Code Summary
The Uniform Commercial Code or UCC has been enacted in all 50 states and some of the territories of the United States. It is the primary source of law
in all contracts dealing with the sale of products. The TARR refers to Tender, Acceptance, Rejection, Revocation and applies to different aspects of
the consumer's "relationship" with the purchased goods.
TENDER -
The tender provisions of the Uniform Commercial Code contained in Section2-601 provide that the buyer is entitled to reject any goods that fail in
any respect to conform to the contract. Unfortunately, new cars are often technically complex and their innermost workings are beyond the understanding
of the average new car buyer. The buyer, therefore, does not know whether the goods are then conforming.
ACCEPTANCE -
The new car buyer accepts the goods believing and expecting that the manufacturer will repair any problem he has with the goods under the warranty.
REJECTION
-
The new car buyer may discover a problem with the vehicle within the first few miles of his purchase. This would allow the new car buyer to reject
the goods. If the new car buyer discovers a defect in the car within a reasonable time to inspect the vehicle, he may reject the vehicle. This period
is not defined. On the one hand, the buyer must be given a reasonable time to inspect and that reasonable time to inspect will be held as an acceptance
of the vehicle. The Courts will decide this reasonable time to inspect based on the knowledge and experience of the buyer, the difficulty in discovering
the defect, and the opportunity to discover the defect.
The following is an example of a case of rejection: Mr. Zabriskie purchase a new 1966 Chevrolet Biscayne. After picking up the car on Friday evening,
while en route to his home 2.5 miles away, and within 7/10ths of a mile from the dealership, the car stalled and stalled again within 15 feet. Thereafter,
the car would only drive in low gear. The buyer rejected the vehicle and stopped payment on his check. The dealer contended that the buyer could not
reject the car because he had driven it around the block and that was his reasonable opportunity to inspect. The New Jersey Court said;
To the layman,
the complicated mechanisms of today's automobile are a complete mystery. To have the automobile inspected by someone with sufficient expertise to disassemble
the vehicle in order the discover latent defects before the contract is signed, is assuredly impossible and highly impractical. Consequently, the first
few miles of driving become even more significant to the excited new car buyer. This is the buyer's first reasonable opportunity to enjoy his new vehicle
to see if it conforms to what it was represented to be and whether he is getting what he bargained for. How long the buyer may drive the new car under
the guise of inspection of new goods is not an issue in the present case because 7/10th of a mile is clearly within the ambit of a reasonable opportunity
to inspect. Zabriskie Chevrolet, Inc. v. Smith, 240 A. 2d 195(1968)
It is suggested that Courts will tend to excuse use by consumers if possible.
REVOCATION -
What happens when the consumer has used the new car for a lengthy period of time? This is the typical lemon car case. The UCC provides that a buyer
may revoke his acceptance of goods whose non-conformity substantially impairs the value of the goods to him when he has accepted the goods without
discovery of a non-conformity because it was difficult to discover or if he was assured that non-conformities would be repaired. Of course, the average
new car buyer does not learn of the nonconformity until hundreds of thousands of miles later. And because quality is job one, and manufacturers are
competing on the basis of their warranties, the consumer always is assured that any noncomformities he does discover will be remedied.
What is a noncomformity substantially impairing the value of the vehicle?
- A noncomformity may include a number of relatively minor defects whose cumulative total adds up to a substantial impairment. This is the "Shake
Faith" Doctrine first stated in the Zabrisikie case. "For a majority of people the purchase of a new car is a major investment, rationalized
by the peace of mind that flows from its dependability and safety. Once their faith is shaken, the vehicle loses not only its real value in their eyes,
but becomes an instrument whose integrity is substantially impaired and whose operation is fraught with apprehension".
- A substantial noncomformity may include a failure or refusal to repair the goods under the warranty. In Durfee V. Rod Baxter Imports, the Minnesota
Court held that the Saab owner that was plagued by a series of of annoying minor defects and stalling, which were never repaired after a number of attempts,
could revoke, "if repairs are not successfully undertaken within a reasonable time", the consumer may elect to revoke.
- Substantial Non Conformity and Lemon Laws often define what may be considered a substantial impairment. These definitions have been successfully used
to flesh out the substantial impairment in the UCC.
Additional narrative information on Magnusson-Moss, UCC and lemon laws on these pages is provided by T. Michael Flinn, attorney.
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