Rights and responsibilities under Alaska’s Lemon Law. Find what it takes for a car to be considered a lemon and what you can do if you have one.
Modern motor vehicles are complex and expensive. Most Alaskans require a motor vehicle to conduct their day to day business. Unfortunately, as many Alaskans have found, some new cars fail to meet their expectations when it comes to dependability. Some of these vehicles have so many defects that they’re what are referred to as “lemons.”
When this happens, the consumer is faced with a problem that is not easily resolved. The Legislature, recognizing the dilemma faced by many new car buyers, enacted a law which has commonly become known as the “Lemon Law”.
WHAT ARE THE BENEFITS OF THE LAW?
- The Lemon Law (AS 45.45.300) provides protection to buyers to new motor vehicles. If a new vehicle turns out to be defective and has not been properly repaired after a reasonable number of attempts, the law requires a refund or replacement vehicle.
- Only a small percentage of new vehicles will be declared lemons. However, all new vehicle buyers will benefit from this law. The manufacturer and the dealer now have a stronger economic incentive to deliver the vehicle free from defects, and if problems develop, to correct them quickly and accurately.
- The law encourages the vehicle manufacturers to establish third party arbitration programs. These programs must meet specific standards and must have the approval of the Attorney General. Any decisions ordered by the arbitrations are binding on the manufacturer but not on the consumer.
- This law spells out clearly the owners, dealers and manufacturers responsibilities. It does not limit other rights and remedies that may be available to the owner of a motor vehicle under other provisions of law.
WHAT ARE THE MANUFACTURERS RESPONSIBILITIES?
- If an owner of a new motor vehicle reports a defect or problem, the manufacturer normally, through its dealer or repairing agent, makes the necessary repairs.
- If the manufacturer, dealer, or repairing agent has been unable to repair the defect or problem after a reasonable number of attempts, the manufacturer shall, at the owners option, replace the vehicle or give a refund.
- When a manufacturer refunds or replaces a motor vehicle, it is also required to refund any reasonable charges the owner may have paid in shipping the defective motor vehicle back and forth to the nearest authorized facility for repairs.
- A manufacturer shall ship its dealer or repairing agent parts necessary for warranty repairs by the fastest means available (generally air freight) with no additional charge for freight or handling.
HOW DOES THE LEMON LAW DEFINE A REASONABLE NUMBER OF ATTEMPTS?
- First, for a single defect or condition that defies repairs, the Lemon Law says:
“(1) The same nonconformity has been subject to repair three or more times by the manufacturer, distributor, dealer or repairing agent during the term of the express warranty or the one-year period after delivery of the motor vehicle to the original owner, whichever period terminates first, but the nonconformity continues to exist;”
- Second, for a motor vehicle that has been out of service for an unreasonable period of time due to a single or multiple defects, the Lemon Law says:
“(2) The vehicle is out of service for repair for a total of 30 or more business days during the express warranty term or the one-year period referred to in (1) of this section, whichever period terminates first;”.
WHAT ARE THE HITCHES?
- The defect or problem must substantially impair the use or the market value of the vehicle.
- The defect or problem must not be the result of alteration, abuse or neglect by the owner or a person other than the dealer or repairing agent.
- Any period of time that repairs are not performed for reasons that are beyond the control of the manufacturer, dealer or repairing agent is excluded from the 30-day period. This refers to situations such as labor disputes or natural disasters.
- The owner must provide written notice via certified mail to the manufacturer and its dealer or repairing agent. Within 30 days after receiving the notice, the manufacturer may make another final attempt to repair the vehicle.
- If you choose a refund over a replacement, the refund will not include any accrued finance charges. The manufacturer may also deduct an allowance for your use of the vehicle and for excess depreciation due to damage, neglect or abuse.
- If the manufacturer has an approved informal dispute settlement procedure you will be required to arbitrate your dispute before going to court under the lemon law. If the program is not approved by the Attorney General it is your option to arbitrate or to proceed directly to court.
SOME THINGS TO DO
- You never know when you buy a new car whether it will turn out to be a lemon. As a new car buyer you should check out the dealerships service facility as closely as you check out the new vehicle. Is the area clean, organized, and well lit; do the equipment and tools appear modern and well maintained? A dealer who is proud of the service facility will be happy to demonstrate this. Also, ask if the dealer gives appointments for warranty repairs and what is the normal delay in obtaining an appointment.
- Prior to the sale, read and understand the warranty. The dealer is required by a Federal trade Commission rule to make all warranties available prior to the sale.
- Be wary of purchasing a service contract (extended warranty), especially contracts which are not backed by the vehicles manufacturer. Read and understand what is covered and more importantly what is not covered. In most cases the service contracts can be purchased up to the date the manufacturers new car warranty expires. Remember, there is little or no benefit from a service contract during a vehicles first year.
- Prior to taking delivery of your new car, inspect it. If any problems are noted, refuse delivery until they are corrected. Be wary of promises that “Well take care of those problems at the first service.”
- You should be very concerned if a dealer attempts to deliver a new vehicle with obvious defects.
- Read, understand and follow maintenance requirements contained in the owners manual. Your driving habits may be considered by the manufacturer as a severe operating condition and may require more frequent maintenance.
- If problems develop, contact your dealer as soon as possible to request an appointment for repairs. On the appointment day, arrive 15 minutes early and be ready for up to a one-hour delay. Few Alaska dealers offer loaner or courtesy car service. Therefore, you should arrange to be picked up or plan on a cab ride.
- Give the service advisor a dated note completely describing all of the conditions about which you are complaining. Do not attempt to diagnose the cause of the conditions, simply describe them.
- Consider consulting with an attorney. If you do not have an attorney, contact the Alaska Bar Associations Lawyer Referral Service in Anchorage. The telephone number is 272-0352 (outside of Anchorage call toll-free (800) 770-9999). Some labor union contracts allow for legal services. If you have this coverage, contact your union representative for assistance.
- Under the Lemon Law, if you wish to claim a refund or replacement you must give written notice by certified mail to the manufacturer and its dealer or repairing agent. You must send this notice within sixty days after the express warranty ends, or within sixty days after the one-year period ends (measured as one year from the date the motor vehicle was delivered to the original owner), whichever occurs first.
- The notice must contain the following information:
(1) That the vehicle has a nonconformity;
reasonable description of the nonconformity;
(3) that the manufacturer, distributor, dealer, or repairing agent has made a reasonable number of attempts to conform the vehicle;
(4) that the owner demands a refund or replacement vehicle to be delivered on the 60th day after the mailing of the written notice;
(5) a description of the vehicle (year, make, and model);
(6) the vehicle identification number. This number is located on the tag behind the drivers side of
your windshield, or it can be found on the vehicle registration as “serial number”; and
(7) your name, address and, if possible, a daytime phone number.
Alaska Lemon Law Statutes
45.45.300 Repairs required.
If a new motor vehicle does not conform to an express warranty that is applicable to it and the owner of the vehicle reports the defect or condition to the manufacturer of the vehicle or to the manufacturer’s or distributor’s dealer during the term of the warranty, the manufacturer, distributor, dealer, or a repairing agent shall make the necessary repairs to conform the vehicle to the express warranty.
45.45.305 Replacement or refund.
If during the term of the express warranty or within one year from the date of delivery of the motor vehicle to the original owner, whichever period terminates first, the manufacturer, distributor, dealer, or repairing agent is unable to conform the motor vehicle to an applicable express warranty after a reasonable number of attempts, the manufacturer or distributor shall accept the return of the nonconforming motor vehicle, and, at the owner’s option, shall replace the nonconforming vehicle with a new, comparable vehicle or shall refund the full purchase price to the owner less a reasonable allowance for the use of the motor vehicle from the time it was delivered to the original owner. A refund under this section shall be made to a lien holder of record, if any, and the owner, as their interests may appear.
45.45.310 Notice by owner.
In order to claim a refund or replacement under AS 45.45.305 , the owner shall give written notice by certified mail to the manufacturer and its dealer or repairing agent at any time before 60 days have elapsed after the expiration of the express warranty or the one-year period after the date of delivery of the motor vehicle to the original owner, whichever period terminates first,
(1) stating that the vehicle has a nonconformity;
(2) providing a reasonable description of the nonconformity;
(3) stating that the manufacturer, distributor, dealer, or repairing agent has made a reasonable number of attempts to conform the vehicle; and
(4) stating that the owner demands a refund or replacement vehicle to be delivered on the 60th day after the mailing of the written notice.
Within 30 days after receiving the notice required by this section the manufacturer may make a final attempt to conform the vehicle before a refund or replacement is made under AS 45.45.305.
An owner may not receive a refund or replacement under AS 45.45.300 – 45.45.360 if the manufacturer or distributor shows that the nonconformity complained of
(1) does not substantially impair either the use or the market value of the motor vehicle; or
(2) is the result of
(A) alteration of the motor vehicle by the owner or a person other than a dealer or repairing agent that is not authorized by the manufacturer or distributor; or
(B) abuse or neglect by the owner or a person other than the dealer or repairing agent.
A presumption that a reasonable number of attempts have been made to conform a motor vehicle under an applicable express warranty is established if:
(1) the same nonconformity has been subject to repair three or more times by the manufacturer, distributor, dealer, or repairing agent during the term of the express warranty or the one-year period after delivery of the motor vehicle to the original owner, whichever period terminates first, but the nonconformity continues to exist; or
(2) the vehicle is out of service for repair for a total of 30 or more business days during the express warranty term or the one-year period referred to in (1) of this section, whichever period terminates first; any period of time that repairs are not performed for reasons that are beyond the control of the manufacturer, distributor, dealer, or repairing agent is excluded from the 30-day time period referred to in this paragraph.
45.45.325 Parts availability.
A manufacturer whose vehicles are sold in the state through an authorized dealer shall provide its dealer or repairing agent with any part necessary to make a repair of a nonconformity covered under an express warranty, as soon as possible, without additional charge for freight or handling, if the part is not in the dealer’s or agent’s inventory when the nonconforming vehicle is brought to the dealer or repairing agent for repair.
45.45.330 Failure to replace or refund.
A manufacturer or distributor who fails to refund the full purchase price of a motor vehicle or replace the motor vehicle when there is a requirement to do so under AS 45.45.300 – 45.45.360 is presumed to have committed an unfair trade practice under AS 45.50.471 .
45.45.335 Resale without disclosure prohibited.
A motor vehicle returned under AS 45.45.305 may not be resold by the manufacturer or distributor in the state unless full disclosure of the reason for the return is made to the prospective buyer before the resale is concluded.
45.45.340 Other rights and remedies.
The provisions of AS 45.45.300 – 45.45.360 do not limit other rights and remedies that may be available to the owner of a motor vehicle under other provisions of law. This section does not create a new cause of action against a dealer or repairing agent who sells or attempts to repair a motor vehicle found to be nonconforming under AS 45.45.300 – 45.45.360.
45.45.345 Repair facilities.
A manufacturer or distributor or motor vehicles who authorizes the sale of the manufacturer’s or distributor’s motor vehicles in the state shall maintain authorized dealership facilities within the state that are able to perform the service and make the repairs required by the manufacturer’s express warranty and by AS 45.45.300 – 45.45.360.
45.45.350 Reimbursement of shipping costs.
A manufacturer or distributor who accepts the return of a nonconforming motor vehicle under AS 45.45.305 shall reimburse the owner for any reasonable cost incurred in shipping the vehicle to and from the nearest authorized facility for warranty service and repair of a nonconformity that causes the return of the vehicle.
45.45.355 Arbitration or mediation.
If a manufacturer or distributor has established an informal dispute settlement procedure that substantially complies with the requirements of 16 C.F.R. 703, as that section may be amended, or if the manufacturer or distributor, after receipt of notice required by AS 45.45.310, offers in writing to participate in an arbitration or mediation process with the owner and the arbitration or mediation decision is binding on the manufacturer or distributor but not on the owner, and if the informal dispute settlement or arbitration or mediation process is approved by the attorney general, the provisions of AS 45.45.305 concerning refund or replacement or AS 45.45.350 concerning shipping costs do not apply to an owner who has not first resorted to the informal dispute settlement procedure or arbitration or mediation process.
In AS 45.45.300 – 45.45.360,
(1) “dealer” means a person who has obtained a franchise from, or is authorized by, a motor vehicle manufacturer to engage in the retail sale and warranty repair of the manufacturer’s new motor vehicles in the state;
(2) “distributor” means a person who is authorized by a manufacturer to engage in the wholesale distribution of the manufacturer’s new motor vehicles in the state;
(3) “express warranty” or “warranty” means an express written warranty provided by the manufacturer of a new motor vehicle;
(4) “full purchase price” means the total price paid for a motor vehicle by the original owner, including costs added to the retail price, such as original registration fees, transportation fees, dealer preparation, and dealer installed options;
(5) “manufacturer” means a person who by labor transforms raw materials and component parts into motor vehicles for wholesale or retail sale;
(6) “motor vehicle” or “vehicle” means a land vehicle having four or more wheels, that is self-propelled by a motor, is normally used for personal, family, or household purposes, and is required to be registered under AS 28.10; but does not include a tractor, farm vehicle, or a vehicle designed primarily for off-road use;
(7) “nonconformity” means a defect or condition in a motor vehicle caused by a manufacturer, distributor, dealer, or repairing agent that substantially impairs the use or market value of a vehicle;
(8) “owner” means a purchaser, other than for resale, of a new motor vehicle, and a person to whom ownership of the motor vehicle is transferred in conformity with AS 28;
(9) “reasonable allowance” means an amount attributable to an owner’s use of a motor vehicle; a “reasonable allowance” may not exceed an amount equal to the depreciation in value of the vehicle for the period during which the vehicle is available for use by the owner, calculated by a straight line depreciation method over seven years, plus an amount equal to the depreciation in value of the vehicle that is caused by
(A) any neglect or abuse by the owner; or
(B) body damage not caused by a nonconformity;
(10) “repairing agent” means a person who has been specifically authorized by a motor vehicle manufacturer or distributor to perform warranty repairs in the state on one or more of the manufacturer’s or distributor’s motor vehicles;
(11) “substantially impairs the market value” means a nonconformity that substantially decreases the dollar value of a vehicle to the owner when compared to the dollar value of a similar vehicle that does not have the nonconformity;
(12) “substantially impairs the use” means a nonconformity that prevents a motor vehicle from being operated or makes the vehicle unsafe to operate