The Texas Lemon Law protects auto owners. In the case of a significant defect that endangers the driver and impacts vehicle value, which crops up within the first 24 months or 24,000 miles AND can’t be fixed with four or more visits to a reputable mechanic, the Texas Lemon Law ensures your complaint will be evaluated.
In the event the case is found in the auto owner’s favor, the vehicle can be replaced or repurchased by the manufacturer or dealer.
The question then becomes, what happens to those vehicles? Well, as long as they are properly identified, they can be resold.
Why would someone buy a vehicle that is marked a lemon and identified as a buyback?
There are a few reasons. If the buyer is a mechanic and recognizes the flaw in question and feels they can fix it – they may be getting a vehicle that will be worth a lot once repaired for a cheap price.
Likewise, if the vehicle can be used to sell for parts, it may be worth the investment if the parts sold individually are worth more than the vehicle as a whole at that point.
Experienced mechanics and those who understand the potential the vehicle has or does not have are the best ones to consider a risky undertaking like purchasing a vehicle that was bought back by a dealer or manufacturer as a lemon.
For most average vehicle owners, it is best to avoid anything that is sold “as is” and since a lemon law vehicle will likely be sold that way, steer clear in almost all instances.
Sidenote: If you happen to be the auto owner and are on this page to find advice for the lemon law buyback process, here are four potential things the manufacturer may throw at you while they are working out how much to pay for your lemon.
The first is negative equity. The manufacturer will most likely take a position (not always but commonly) that they are not required to pay you back the money you owed prior to obtaining the lemon vehicle.
As a potential outcome, this is less than ideal. You traded in a vehicle that you owed $3,000 on, for example, and now that your new vehicle (priced at $15,000) is a lemon, the manufacturer may tell you they will pay you the $15,000, that $3,000 may be hanging over you and the manufacturer will say they aren’t responsible for it.
Speak to your attorney about this potential issue, as you don’t want to be stuck with that amount and trying to find a new vehicle since yours was an unreliable lemon.
Another possible phrase manufacturers use is “aggressive mileage offsets.” This means that the manufacturer is allowed to consider the miles driven when they are factoring the amount to repay you for a lemon law-covered vehicle. Taxes and registration, related costs for the purchase of the vehicle – these all factor in. However, so do the miles on the odometer and the difference between those and the number on the copy of the vehicle’s title held by the institution that financed your vehicle.
It is important to be represented by a savvy lemon law attorney, who can make sure the manufacturer uses the accepted formula to determine the mileage that can be factored in. This is an area that auto owners may not be aware of on their own.
A third area to be aware of is manufacturer arbitration; i.e., specially chosen arbitrators who have a partnership with the manufacturer handling the process for you. As an auto owner, make sure to secure your own counsel and be prepared to turn down offers like this. Manufacturers may call this cheaper and faster but it is most likely to be to your detriment.
Even using a state-sponsored panel for arbitration is not ideal, as it may mean they will rule in the favor of the manufacturer. It helps to go through the Lemon Law department of the Texas Department of Motor Vehicles to ensure your rights are prioritized equally to those of the manufacturer.
A final note on this process is to be aware of unlawful release forms. The manufacturer may attempt to get the auto owner to sign a release form stating they accepted some sort of settlement. If this is not overseen by the Texas DMV’s Lemon Law department, this is something to avoid.
If you have a vehicle and think you may be saddled with a lemon, now is the time to see if you can get reimbursement for your purchase.
If you purchased the vehicle new from a dealer with a warranty in effect (or if you purchased a used vehicle that still has original warranties in effect), then you may be in luck.
If you purchased a car, truck, SUV, electric vehicle, RV, towable recreational vehicle or motorcycle, then you may be able to get reimbursement.
There is a fee to file a lemon law complaint through the Texas DMV website. Knowing that, it is best to be prepared and know whether you have a good chance of winning a lemon law claim before filing said complaint.
— The vehicle has a significant defect that puts the driver in danger
— The defect cannot be resolved, despite four or more visits to a mechanic (documentation is key here. Also, it is important that it clearly shows the vehicle has been taken in for the SAME issue each time)
— The vehicle sits idle for 30 days or more since it was purchased (these don’t have to be sequential). You as the auto owner cannot have a loaner vehicle for these days, or they don’t count.
*all of these criteria must occur within the first 24 months or 24,000 miles of purchase – whichever occurs FIRST.
If these criteria fit your situation, then it is time to make sure you have made the manufacturer aware of the situation. Do this in a way that can be proved (certified mail is ideal).
Once you are at this point, The lemon law complaint can be filed. Mediation will be the first step, where the two sides will meet to try to find a resolution. If that is not successful, then a hearing in front of an examiner, appointed by the Texas DMV, will be scheduled. Again, both sides get to tell their side to the examiner. Then, that individual has 60 days to provide a written decision. Either side can opt to appeal that decision once it is handed out.
That examiner, if they find in favor of the auto owner, will decide whether the vehicle will be repaired (the financial responsibility falls on the manufacturer), replaced with a vehicle of similar value or repurchased by the manufacturer.
The auto owner does not get to have a say in this process. Likewise, they do not get to say what they should be repaid. Any aftermarket additions are not considered in any of the options for the vehicle value. The mileage driven and the payments made, however, do factor in. The auto owner receives the amount considered fair or a vehicle of that value – or the original vehicle is repaired satisfactorily.