Texans, along with many other Americans, purchase and lease thousands of defective vehicles every year. The National Highway Traffic Safety Administration (NHTSA) estimates 150,000 vehicles sold in the United States every year are “lemons:” vehicles containing repeating, unfixable defects. These vehicles come from every manufacturer including General Motors, Honda, Ford, Volkswagen and many more. Any number of circumstances can cause lemons, ranging from substandard materials and faulty components to mistakes in manufacturing and worker error. Regardless of the circumstances, however, one thing stays true: the manufacturer is to blame and not the consumer.
These problems can cause major headaches and financial hardship for vehicle owners. Lemon vehicles cost Americans millions of dollars every year not only when they pay for fixes the manufacturer should cover, but also lost wages if they can’t get to work, alternative transportation costs, towing fees, and other unexpected costs when their vehicle breaks down because of a defect.
Texans whose cars let them down have a couple avenues toward getting compensated for their lemon vehicle: the Texas Lemon Law and the federal Magnuson-Moss Warranty Act.
The Texas lemon law covers those who accidentally purchase defective vehicles. The law refers to these defects as “nonconformities,” as they throw vehicles out of conformity with their written manufacturer’s warranties. 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 Texas lemon law does not, however, cover any problem caused by the consumer’s abuse, neglect or unauthorized modifications to the vehicle. If your so-called lemon car breaks down because you ran the engine without oil or installed an after-market part yourself, you’re out of luck. The Texas lemon law also doesn’t cover minor problems with no effect on the vehicle’s safety or resale value, such as rattling sounds or stereo problems.
Texas’s breach of auto warranty laws cover a specific subset of vehicles, including the most commonly purchased vehicles used to transport people and goods (passenger cars and trucks). The law also covers motorcycles, vans, the vehicle portions of motor homes, all-terrain vehicles and neighborhood electric vehicles.
Before a Texas breach of warranty claim can be filed, the vehicle must pass one of three “tests.” Once a vehicle passes one of these tests, it can be legally considered a lemon. The first test is the “four times test;” meaning the manufacturer can attempt to repair the defect four times within a certain timespan. 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 the manufacturer cannot successfully repair the problem, the vehicle passes the “four times test” and is considered a lemon.
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, and 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.
Texas consumers who bought used vehicles do not qualify for protection under the Texas lemon law. Texas excludes used vehicles from lemon law coverage, specifying that a vehicle must still be covered by its original written factory warranty. The vast majority of used vehicles are resold long after their original warranties expire. If you don’t know about your specific situation, contact a qualified lemon law attorney for guidance.
Sometimes a state’s law offers insufficient protection in certain cases. When that occurs, attorneys will refer to the federal law governing breach of warranty cases: the Magnuson-Moss Warranty Act.
The Magnuson-Moss Warranty Act protects all American consumers in every state. The Act 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 Act, signed into law in 1975, in response to allegations of consumer rights violations by businesses in the 20th century. Throughout the 19th and early 20th centuries 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.
The Uniform Commercial Code (UCC) originally 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.
This didn’t go far enough in stemming manufacturers’ abuse of consumers, and as such consumers demanded change from their elected officials. They wanted government oversight for warranty law and legal support when they take manufacturers to court. The Magnuson-Moss Warranty Act provides consumers and their attorneys the tools and support they need.
The Magnuson-Moss Warranty Act makes 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.
Ideally, if your vehicle ends up a lemon the manufacturer will work with you to remedy the problem and, if needed, replace or repurchase the vehicle. When the manufacturer won’t do this without a fight, lemon law attorneys can step in and make sure you get the compensation to which you are legally entitled. Unfortunately before that can happen, Texas law requires consumers 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.
Andrew Ross, lemon law attorney with Allen Stewart P.C. said arbitration rarely works out in the consumer’s favor.
“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. 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.”
“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.”
Consumers usually have one of two options after proving in court they have a lemon vehicle: repurchase or replacement. A repurchase, or “buyback,” wraps up in about three weeks in a best-case scenario.
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.
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. They calculate this based on mileage: the more miles you consumer drove before reporting a defect, the more money they can legally withhold. This is why it is important to report potential defects as soon as possible.
The other option, replacement, is exactly what it sounds like: the manufacturer replaces the defective vehicle with one that functions correctly. 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.
Texas consumers must abide by the statute of limitations if they want their breach of warranty claim to resolve in their favor. Statutes of limitations are legal deadlines for filing legal procedures in both civil and criminal cases. All but the most heinous crimes have statutes of limitations past which claims cannot be filed without being dismissed on statutory grounds. Statute lengths can vary from state to state.
Automotive consumers in Texas 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 experienced lemon law attorneys of Allen Stewart P.C. have a long history of defending consumers’ rights against big business. They will work with you on your lemon law claim from start to finish and make sure you get the best possible compensation. They know the ins and outs of of state and federal lemon law and will keep you apprised of the process throughout the life of your claim.
Hiring a lemon law attorney is the most important step in the lemon law claims process. Contact Allen Stewart today to get back on road as soon as you can.