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Insights on Texas Lemon Law
American buy and lease hundreds of thousands of vehicles each year, many of which leave the factory with unfixable, chronic problems. The National Highway Transportation Safety Administration (NHTSA) states 150,000 vehicles sold in the United States each year contain these defects. These vehicles, colloquially known as lemons, come from all manufacturers including Ford, Honda, Toyota, General Motors and more. Defects arise from faulty components, substandard materials, human errors during manufacturing or any combination thereof. Whatever the cause these problems cost American consumers millions of dollars each year in repair costs, lost wages and alternative transportation fees and disrupts their everyday lives.
Automotive consumers in Texas have legal avenues open to them through both state and federal laws. Each state has its own “lemon law” and Texas is no different. The Texas lemon law covers consumers who unknowingly purchase vehicles afflicted with unfixable defects. The law refers to these defects as “nonconformities,” as their presence throws the vehicle out of conformity with its written manufacturer’s warranty. The Texas lemon law specifically covers “serious defects,” defined as a problem that “substantially impairs the use or market value of the vehicle.” If the problem makes it harder for the consumer to safely use the vehicle, such as an engine or braking problem, the Texas law covers it. If the problem makes it harder for the consumer to sell the vehicle close to market value, such as an unpleasant odor or problem with the paint, the Texas lemon law covers that as well.
The law does not cover, however, any problem caused by the consumer’s abuse, neglect or unauthorized modifications to the vehicle. If the problem you’re experiencing is caused by post-purchase damage or an unauthorized after-market modification, the Texas lemon law offers no recourse. The law also does not cover minor issues such as stereo problems or minor rattling noises.
Some states differ on whether or not they cover leased vehicles. Texas extends lemon law protections to consumers who lease vehicles.
There’s more to filing a Texas lemon law claim than simply making a complaint to your vehicle’s manufacturer and hoping for the best. The law states the manufacturer must make four attempts to repair the vehicle’s problem before replacing or repurchasing the vehicle. These repair attempts must occur within a specific time: at least two attempts must happen within one year of the consumer receiving the vehicle or within the first 12,000 miles driven, with the next two occurring within one year or 12,000 miles driven after the first repair attempt.
If your vehicle’s manufacturer attempts four repairs for the same problem and can’t fix it, the vehicle passes the “four times test,” one of three tests the vehicle can pass to be considered a lemon and for the consumer to begin lemon law remediation. The Texas lemon law has two other tests as well: the 30 day test and the serious safety hazard test.
A vehicle passes the 30-day test if it has been in the shop for repair because of problems covered by the original factory warranty for 30 days or more. Specifically these 30 days must occur during the first two years or 24,000 miles of ownership without a comparable loaner vehicle offered, and there were two repair attempts during the first year or 12,000 without any success.
A vehicle passes the serious safety hazard test of the owner takes it to the manufacturer to repair a serious safety problem during the first 12 months of ownership or 12,000 miles driven, whichever comes first, an then once more during the 12 months or 12,000 miles following the first repair attempts without the problem being fixed. The Texas lemon law defines a “serious safety hazard” as any life-threatening malfunction that substantially impedes the driver’s ability to control or operate the vehicle normally, or that creates a substantial risk of fire or explosion.
The Texas lemon law does not cover used vehicles, as it specifically states it protects those who purchase their vehicles from a dealer. Most used vehicles, except in a few circumstances, are purchased long after the original manufacturer’s warranty expires.
Texas’s lemon law specifically applies to new vehicles including cars, trucks, motorcycles, vans, motor homes, all-terrain vehicles, and neighborhood electric vehicles.
The Texas lemon law states if your vehicle meets any one of these three tests, they must either replace the vehicle or repurchase it.
A repurchase, or “buyback,” is one of the faster possible resolutions for a lemon law claim. Buybacks can finish within three weeks, though this is a best-case scenario in which the manufacturer doesn’t oppose the claim or fight it in court.
Repurchase means the manufacturer repays the consumer the full purchase price of the vehicle, including the actual price, sales taxes, title, registration and other fees. This does not include interest, insurance costs or finance charges. The law also states the manufacturer must pay “reasonable incidental costs resulting from the loss of use of the motor vehicle.” The Texas lemon law defines these costs as rental car fees, towing costs, phone or mail communications made when contacting the dealership or manufacturer, personal property damage, attorney’s fees if the consumer hires an attorney after learning the manufacturer has also hired an attorney, and even room and board if the vehicle fails while on an out-of-town trip.
Prevailing consumers awarded buybacks, or who settle out of court for a specified sum, can use that money for whatever they like. Many consumers put the money toward a newer vehicle—hopefully one lacking the repeating unfixable problems of their last one. Some opt to spend their money on a less expensive used vehicle.
Manufacturers can, however, withhold “reasonable allowances for the consumer’s use of the vehicle” depending on how much the consumer drove the vehicle before the defect put the vehicle in the shop.
Consumers who choose replacement are entitled to a properly functioning vehicle from the original vehicle’s manufacturer. Specifically, the manufacturer must provide a “comparable” vehicle, meaning a vehicle of a similar make and model. Much like in the case of repurchasing, the manufacturer must reimburse the consumer for reasonable incidental costs while also withholding reasonable allowances for the consumer’s use of the original vehicle.
One thing to keep in mind when you consider pursuing a lemon law claim is the statute of limitations. Statutes of limitations create deadlines for initiating legal proceedings. Once that deadline passes, claims can’t be filed without being dismissed on statutory grounds. United States law has statutes of limitations for both civil and criminal claims, though particularly serious criminal claims have no statutes of limitations. Statute lengths can vary from state to state depending on the laws in those states.
Automotive consumers in Texas, for example, must file a state lemon law complaint no later than 42 months from the date the warranty became active. However, if the consumer drives the vehicle 20,000 in the first year after the vehicle’s delivery, the consumer will need to file the Texas state lemon law complaint before the car traveled another 4,000 miles, even if that occurs before the expiration of the 42 months mentioned above.
The federal lemon law, the Magnuson-Moss Warranty Act, covers all American consumers despite the state in which they live. Magnuson-Moss supersedes state law at the federal level and forces manufacturers to use plain, easily understood language in their written warranties. The Act requires companies make clear statements in their warranties, otherwise those ambiguities will be held against the company in court.
The Magnuson-Moss Warranty Act, signed into law in 1975, in response to countless allegations of consumer rights violations by businesses in the 20th century. For many years America’s main consumer law was caveat emptor: let the buyer beware. It was incumbent on the consumer themselves to take requisite caution when making purchase. However as the economy grew more complex and more steps separated the producer from the end consumer, newer laws were needed.
Before the Act’s creation, the Uniform Commercial Code (UCC) tried harmonizing sales and commercial transaction laws across America. States can adopt the code into their statutes either fully or partially, even though the Code itself is not law. Every U.S. state but Louisiana adopted UCC rules, who instead opted to keep their own civil law traditions.
Many Americans tired of perceived consumer rights abuses by corporations and demanded change from their elected officals, wanting government oversight for warranty law. The Magnuson-Moss Warranty Act provides consumers and their attorneys the tools they need to fight for justice.
The Magnuson-Moss Warranty Act requires manufacturers designate any warranties they offer as either “full” or “limited” and specify exactly what they cover in a single, clear, easy-to-read document. They must also make the warranty conspicuously available for consumer review, allowing consumers to shop for warranty coverage before making a purchase.
The Act also prohibits these companies from disclaiming or modifying implied warranties with their written ones. This means consumers are always entitled to the basic protections of “implied warranties of merchantability;” that a good sold must do what that good is supposed to. For example: a new car should operate and convey passengers and cargo from one place to another safely. A car that cannot do this does not conform to the implied warranty of merchantability.
If your vehicle’s manufacturer fails to make you whole after your vehicle is declared a lemon, a lemon law attorney can help you. Lemon law lawyers work directly with your vehicle’s manufacturer on your behalf, working to resolve the issue promptly in your favor.
Texas, along with many other states, require consumers seeking lemon law relief to first go through an “informal dispute settlement procedure,” better known as arbitration, before filing a breach of warranty claim with the state. Texas does not require the manufacturer help a client find or pay for an attorney during the arbitration process, even though the manufacturer will almost certainly have an attorney of their own.
Lemon law attorney Andrew Ross with Allen Stewart P.C. said arbitration rarely works out in favor of the consumer. Arbitration usually ends in a single day inside a conference room and not a courthouse, but often the “best case scenario” still ends relatively poorly for the consumer. Ross said the manufacturer often sends an engineer who is advised by a lawyer “behind the scenes.”
“It’s been my experience that those arbitrations are a waste of time,” Ross said. “Rarely does the BBB render a decision that satisfies the consumer.”
He said the best consumers can usually hope for in arbitration is a buyback, but there’s no guarantee that goes smoothly for the consumer.
“When they award a buyback, they don’t tell you what the figures are,” he said. “First you must accept the decision, and then they’ll tell you what the figures are. It’s a bad situation for the consumer.”
Hiring a lemon law attorney is the best single step you can take when seeking help with your lemon vehicle. Lemon law attorneys know the ins and outs of state and federal warranty law, and will explain to you if repurchase, replacement, or settling out of court is your best option. Your lawyer will work closely with you throughout the claims process, keeping you updated on the latest developments and requesting additional information or documentation when necessary.
The lemon law attorneys of Allen Stewart P.C. have combined decades of experience with breach of warranty claims and have never shied away from fights with automotive manufacturers. They have a proven track record of fighting big companies on behalf of their clients and getting positive outcomes for them. If your vehicle’s manufacturer doesn’t hold up their end of the warranty, the lemon law experts at Allen Stewart P.C. make sure you get the compensation you deserve. The longer you wait the less likely you are to secure a good outcome, so reach out to Allen Stewart P.C. today.