Introduced by Representative Milkey of Brattleboro
Subject: Commerce and trade; used cars; lemon law
Statement of purpose: This bill proposes to establish an arbitration system for consumers to seek redress for the sale of defective used motor vehicles.
AN ACT RELATING TO A USED CAR LEMON LAW
It is hereby enacted by the General Assembly of the State of Vermont:
Sec. 1. 9 V.S.A. chapter 116 is added to read:
Chapter 116. used motor vehicle arbitration
§ 4182. DEFINITIONS
For the purposes of this chapter:
(1) “Business day” means Monday to Friday, except for state or federal holidays.
(2) “Commissioner” shall mean the commissioner of motor vehicles.
(3) “Consumer” means a buyer of a motor vehicle; any person to whom a motor vehicle is transferred during the period of any express or statutory warranty applicable to the motor vehicle; and any other person legally entitled to enforce a warranty.
(4) “Dealer” means any person who on at least three occasions in the previous 12 months has sold more than three used motor vehicles or served as a broker or agent for another, including the officers, agents, and employees of the person or any combination or association of dealers, but excluding a bank or other financial institution, the state of Vermont, or any of its political subdivisions.
(5) “Motor vehicle” or “vehicle” means any motor vehicle as defined in 23 V.S.A. § 4(21).
(6) “Private seller” means any person who is not a dealer and who offers to sell or sells a used motor vehicle to a consumer.
(7) “Purchase price” means the total of all payments made for the purchase of a vehicle, including any finance charges, registration fees, payments made for credit life, accident, health, and damage insurance, and collision and related comprehensive insurance coverage and service contracts and the value of a trade-in.
(8) “Repurchase price” means the purchase price, minus:
(A) a cash award the dealer made and the consumer accepted to resolve a dispute;
(B) any refunds or rebates to which the consumer is entitled; and
(C) any incidental damages not previously reimbursed, including the reasonable costs of towing from the point of a breakdown up to 30 miles to obtain required repairs or to return the vehicle, and the reasonable costs of obtaining alternative transportation during the applicable warranty period after the second day following each breakdown, not to exceed $15.00, and vehicle rental charges for each day in which the cost of the alternative transportation is reimbursable.
(9) “Used motor vehicle” or “used vehicle” means any vehicle driven more than the limited use necessary in moving or road testing a new vehicle prior to delivery to a consumer, including a demonstrator vehicle. It shall exclude auto homes, vehicles built primarily for off-road use, motorcycles, or any vehicle used primarily for business purposes.
§ 4183. USED MOTOR VEHICLE WARRANTY
(a) An express written warranty, covering the full cost of both parts and labor necessary to repair any defect that impairs a used vehicle’s safety or use, shall accompany any dealer’s sale of a used vehicle sold for at least $700.00 to a consumer. However, the consumer may be required to pay no more than $100.00 toward the repair of any covered defect, series of defects, or combination of defects during the warranty period. Defects that affect only appearance shall not be deemed to impair safety or use for the purposes of this section.
(b) Defects or malfunctions which involve parts or components covered under an express warranty issued by the dealer of the used motor vehicle shall be excluded from this section if the following conditions have been met:
(1) The manufacturer’s warranty has been assigned or transferred to the buyer;
(2) The warranty is enforceable according to its terms;
(3) The warranty is not inconsistent with this section; and
(4) The seller has assured the repair authorized by such manufacturer’s express warranty was made.
(c) The terms of the seller’s warranty shall be tolled for any period of time the used motor vehicle is out of service by reason of repair under the manufacturer’s warranty.
§ 4184. DURATION OF WARRANTY PERIOD
Warranties for used motor vehicles shall be for the following time durations:
(1) For a used motor vehicle which, at the time of sale, has been operated less than 40,000 miles, 90 days, or 3,750 miles, whichever occurs first;
(2) For a used motor vehicle which, at the time of sale, has been operated 40,000 miles or more, but less than 80,000, 60 days, or 2,500 miles, whichever occurs first;
(3) For a used motor vehicle which, at the time of sale, has been operated 80,000 miles or more, but less than 125,000 thousand miles, 30 days, or 1,250 miles, whichever first occur;
(4) If the used motor vehicle’s true mileage is not known, the duration of the warranty period shall be based on the vehicle’s age which shall be determined by subtracting the model year from the year in which the warranty holder purchased the vehicle. The warranty duration period, when based on the age of the vehicle, shall be as follows:
(A) For a used motor vehicle three years old or less the warranty period shall be the same as provided in subdivision (1) of this section.
(B) For a used motor vehicle more than three, but less than six years old, the warranty period shall be the same as provided in subdivision (2) of this section.
(C) For a used motor vehicle at least six years old, the warranty period shall be the same as provided in subdivision (3) of this section.
§ 4185. DEALER REPAIRS; TOLLING OF WARRANTY PERIOD
(a) The warranty periods established by this chapter shall be tolled during any period in which the used motor vehicle is out of service as a result of any repair attempt pursuant to any warranty created by this section. The applicable warranty period shall be extended 30 days from the date of completion of any repair required by this section as to the defect repaired if the warranty would otherwise have expired during the repair period.
(b) A dealer may repair a used motor vehicle either by performing the repair or by arranging and making payment for prompt repair by another individual.
(c) A consumer shall return a vehicle for repair by presenting it to the dealer and informing the dealer of the defect no later than five business days after the expiration of the applicable warranty period. The return period shall be tolled when the consumer informs the dealer that a used motor vehicle is inoperable and the dealer refuses to pay the charge to tow the vehicle or for another reasonable cause. The dealer shall immediately accept return of a vehicle when it is presented. The used motor vehicle shall be deemed out of service commencing the day it is presented, notwithstanding any dealer’s failure to accept its return on a specific day. During the applicable warranty period and the authorized return period, the dealer shall pay the reasonable costs of towing from the point of breakdown up to 30 miles to obtain required repairs or to return the vehicle to the dealer.
(d) Upon return of the used motor vehicle to the consumer after repair, the dealer shall provide the consumer with a warranty repair receipt describing the defect complained of, the work performed in an attempt to correct the defect, the identity of the repairer if it is not the dealer, and the parts replaced in performing the work.
§ 4186. RETURN OF VEHICLE TO DEALER
(a) If the dealer fails to repair the same defect within three attempts, or if the used motor vehicle is out of service for more than a cumulative total of ten business days after the consumer has returned it to the dealer for repair, then the dealer shall accept return of the vehicle from the consumer and refund the full repurchase price, less a reasonable allowance for use. A reasonable allowance for use shall be $0.15 for each mile the used motor vehicle has been operated between its sale and the dealer’s repurchase.
(b) A consumer shall have the option of retaining the use of any vehicle returned under the provisions of this section until the consumer has been tendered a full refund. The use of any vehicle retained by a consumer after its return to a manufacturer under the provisions of this section shall in instances in which a refund is tendered be reflected in the reasonable allowance for use.
(c) A used motor vehicle shall not be considered out of service for purposes of a ten-business-day period for any day in which a part necessary to repair a defect complained of is not in the dealer’s possession, provided the dealer has ordered the part by reasonable means on the same day on which the dealer knew or should have known the part was necessary. However, a part’s unavailability shall not toll the ten-business-day period for more than 21 days. The applicable warranty period shall be extended by the number of days a part is unavailable.
§ 4187. SUBMISSION OF CONSUMER REPURCHASING REQUEST TO
(a) A dealer shall submit, within six months from the date of delivery of a used motor vehicle to a consumer, to a professional arbitrator or arbitration firm to be appointed by the commissioner of motor vehicles, a consumer’s request for arbitration relating to the dealer’s repurchase of the motor vehicle.
(b) The arbitration shall result, within 45 days of the arbitrator’s or arbitration firm’s receipt of the consumer’s written request for arbitration, in a written finding determining if the motor vehicle meets the repurchasing requirements established in this chapter.
(c) If the arbitration finding determines the motor vehicle met the standards for motor vehicles required to be repurchased and the dealer failed to refund the repurchase price to the consumer, then the dealer within 21 days from the issuance of the finding shall refund the repurchase price to the consumer, including the incidental and other costs set forth in the definition of repurchase price.
§ 4188. APPEAL OF ARBITRATION FINDING
(a) The dealer may appeal the arbitration finding to superior court pursuant to Rule 75 of the Vermont Rules of Civil Procedure. In addition to the standard filing fee, the dealer shall post a bond equal to the amount of any arbitration award plus $500.00 for anticipated attorney’s fees.
(b) The liability of the surety of any bond filed pursuant to this section shall be limited to the indemnification of the consumer in the action. The bond shall not limit or impair any right of recovery otherwise available, nor shall the amount of the bond be relevant in determining the amount of recovery to which the consumer shall be entitled.
(c) The superior court shall vacate the award only if:
(1) The award was procured by corruption, fraud, or other undue means.
(2) There was evident partiality by an arbitrator, corruption in any of the arbitrators, or misconduct prejudicing the rights of any party.
(3) The arbitrators exceeded their powers.
(d) In addition to any other recovery, any prevailing consumer shall be awarded reasonable attorney’s fees and costs.
§ 4189. PENALTY
(a) If a dealer fails to appeal and does not refund the consumer pursuant to an arbitration decision, the dealer shall be punished by a fine of $50.00 per day until delivery of the refund. The fine shall not exceed $500.00 for each violation. The fine shall begin to accumulate on the first day after the conclusion of the last day to appeal. If 81 days have elapsed from the issuance of a finding in favor of the consumer, and no appeal has been taken and no award delivered, and no fine paid, the attorney general shall initiate an action in superior court against the dealer for failure to pay the fine.
(b) The attorney general may also bring an action on behalf of the state to restrain further violation of this section, to enforce any provision, and for any other relief as may be appropriate.
§ 4190. DEALER REPURCHASE
(a) At any time within the applicable warranty period and after a consumer has complained of a defect, the dealer shall have the option of repurchasing a used motor vehicle and refunding the full repurchase price, less a reasonable allowance for use. A reasonable allowance for use shall be $0.15 for each mile the used motor vehicle had been operated between its sale and the dealer’s repurchase.
(b) If the dealer is required or elects to repurchase a vehicle, the consumer and dealer shall cooperate with each other to execute all necessary documents in order to clear the title of any encumbrances on the repurchased vehicle.
§ 4191. AFFIRMATIVE DEFENSES
It shall be an affirmative defense to any claim under this chapter that an alleged defect:
(1) Does not impair the vehicle’s use or safety.
(2) Is the result of owner negligence, abuse, or damage caused by accident, vandalism, or an attempt to repair the vehicle by a person other than the dealer the dealer’s designee, or the manufacturer’s representative.
(3) Is the result of any attempt by the consumer to modify the vehicle.
(4) Was covered or warranted under an express warranty the manufacturer issued which was in effect during the warranty period established by this chapter, so long as the conditions in the warranty meet the requirements of this chapter.
§ 4192. EXISTENCE OF EXPRESSED OR IMPLIED WARRANTIES AND
This chapter shall not limit the enforceability of any implied or expressed warranties created by law or any other rights or remedies available to consumers under applicable law.
§ 4193. MANUFACTURER’S EXPRESSED WARRANTY; DEALER
If a consumer purchases from a dealer a used motor vehicle which is subject to a manufacturer’s expressed warranty, the consumer shall make a reasonable effort to obtain repairs or relief under that warranty before seeking enforcement of rights under this chapter. If the consumer is unable to enforce rights under the manufacturer’s expressed warranty, and the dealer repairs the used vehicle or repurchases the used vehicle, under the provisions of this section, the dealer shall be subrogated to the rights of the consumer against the manufacturer under the provisions of the manufacturer’s expressed warranty. The manufacturer shall indemnify the dealer, including reasonable attorney’s fees which the dealer incurs complying with the provisions of this chapter, if the dealer notifies the manufacturer in writing that the consumer has exercised rights under the manufacturer’s expressed warranty and the manufacturer fails to resolve the matter within seven business days.
§ 4194. NOTICE TO CONSUMERS
Clear and conspicuous notice of the warranties created by this chapter and its associated rights and of the implied warranty of merchantability, shall be given to the consumer in writing at the time the consumer purchases a used motor vehicle from the dealer. Failure to provide the notice shall toll the warranty periods under this section until notice is given.
The Vermont General Assembly
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