Montana Lemon Law – New Motor Vehicle warranty Act

Montana’s New Motor Vehicle Warranty Act helps consumers who have bought a new vehicle that qualifies as a “lemon.” When repeated attempts at repair have been unsuccessful, the law may require the manufacturer to replace or repair the defective vehicle.

Montana Lemon Law covers:

  • Vehicles purchased, titled or leased in Montana, provided they are less than two years old and have 18,000 miles or less on the odometer. This includes motorcycles.
  • Substantial defects that impair the use, market value or safety of the vehicle.

Montana Lemon Law does not cover:

  • Vehicles purchased for business use
  • Trucks over 10,000 lbs. GVW
  • Non-motorized and off-road vehicles
  • The “residential” portion of motor homes
  • Defects resulting from accident, abuse, neglect, modification or alteration by anyone other than the manufacturer or authorized dealer

Warranty Period

The warranty period ends two years after the date of the vehicle’s original delivery to the consumer, or the first 18,000 miles of operation, whichever occurs first. This period can be extended for up to a year if a defect is reported, in writing, to the dealer or manufacturer during the warranty period but has not been cured by the expiration of the period.

Required Documentation

Keep all records of warranty repairs and all written communications with dealers and manufacturers. Work orders provide the best proof as to when a problem was first reported.

To prove that a vehicle is a lemon, be prepared to produce:

  • All purchase (or lease) documents
  • All maintenance records
  • All repair orders
  • Receipt for maintenance supplies
  • Certified letter of notification to the manufacturer (copy)
  • Any and all other documents relating to the defect

The Lemon Law Process

  1. Notify the manufacturer. If the problem is a substantial defect or condition that recurs or still exists after the third repair attempt, notify the manufacturer by certified mail, return receipt requested, of the need to repair the defect or condition on the fourth attempt. This notification procedure is not required under the Lemon Law, but does serve as notice to the manufacturer of your intentions.
  2. If the manufacturer fails to correct any substantial defect or condition following your written notification, the manufacturer must either refund the full purchase price – plus any reasonable expenses directly incurred because of the vehicle’s condition – or provide an identical or reasonably similar replacement vehicle. If the vehicle is bought back, the manufacturer can deduct an amount for the use of the vehicle calculated based on the odometer reading at the time of repurchase.
  3. If you think you are entitled to a refund or replacement and the manufacturer is unwilling to provide either remedy, you must first submit your dispute to a state-certified dispute settlement program approved by the Montana Department of Justice. Contact the Office of Consumer Protection for further assistance.

Office of Consumer Protection

2225 11th Avenue

P.O. Box 200151

Helena, MT 59620-0151

Phone: (406) 444-4500 or (800) 481-6896

Fax: (406) 444-9680

E-mail: [email protected]

Montana’s Lemon Law Statutes

Title 61, Chapter 4, Part 5, New Motor Vehicle Warranties — Remedies.

61-4-501. Definitions.

For purposes of this part, the following definitions apply:

(1) “Collateral charge” means all governmental charges, including but not limited to sales tax, property tax, license and registration fees, and fees in lieu of tax.

(2) “Consumer” means the purchaser or lessee, other than for purposes of resale or lease, of a passenger motor vehicle used for personal, family, or household purposes that has not been brought into nonconformity as the result of abuse, neglect, or unauthorized modifications or alterations. The term includes any person to whom the passenger motor vehicle is transferred for the same purposes during the duration of an express warranty applicable to the passenger motor vehicle and any other person entitled by the terms of the warranty to enforce the obligations of the warranty.

(3) “Incidental damage” means incidental and consequential damage as defined in 30-2-715.

(4) “Manufacturer” has the meaning applied to that word in 61-4-201.

(5) (a) “Motor vehicle” means a vehicle, including the nonresidential portion of a motor home, propelled by its own power, designed primarily to transport persons or property upon the public highways, and sold or registered in this state.

(b) The term does not include:

(i) a truck with 15,000 pounds or more gross vehicle weight rating; or

(ii) components, systems, fixtures, appliances, furnishings, accessories, and features that are designed, used, and maintained primarily for residential purposes.

(6) Reasonable allowance for use” is an amount directly attributable to use of the motor vehicle by the consumer and any previous consumers prior to the first written notice of the nonconformity to the manufacturer or its agent and during any subsequent period when the motor vehicle is not out of service because of nonconformity. The reasonable allowance for use must be computed by multiplying the total contract price of the motor vehicle by a fraction having as its denominator 100,000 and having as its numerator the number of miles that the motor vehicle traveled prior to the manufacturer’s acceptance of its return.

(7) “Warranty period” means the period ending 2 years after the date of the original delivery to the consumer of a new motor vehicle or during the first 18,000 miles of operation, whichever is earlier.

61-4-502. Notice — warranty enforceable after warranty period — when.

(1) If a consumer notifies in writing the manufacturer or its agent during the warranty period that a new motor vehicle does not conform to all applicable express warranties, the repairs necessary to conform the new motor vehicle to the express warranties shall be made by or at the expense of the warrantor, regardless of the expiration of the warranty period after notification of nonconformity is given by the consumer.

(2) The warranty period of an express warranty is extended to equal the time that repair services are not available because of war or invasion or because of strike or fire, flood, or other natural disaster. The presumption provided herein may not apply against a manufacturer who has not received prior written notification from or on behalf of the consumer and has not had an opportunity to cure the alleged defect.

(3) The manufacturer must clearly and conspicuously disclose to the consumer in the warranty or owner’s manual that written notification of a nonconformity is required before a consumer may be eligible for a refund or replacement of the vehicle. The manufacturer must include with the warranty or owner’s manual the name and address where the written notification must be sent.

61-4-503. Replacement for nonconformity to warranty.

(1) If after a reasonable number of attempts the manufacturer or its agent or authorized dealer is unable, during the warranty period, to conform the new motor vehicle to any applicable express warranty by repairing or correcting any defect or condition that substantially impairs the use and market value or safety of the motor vehicle to the consumer, the manufacturer shall replace it with a new motor vehicle of the same model and style and of equal value, unless for reasons of lack of availability replacement is impossible, in which case the manufacturer shall replace it with a motor vehicle of comparable market value.

(2) As an alternative to replacement, the manufacturer may accept return of the new motor vehicle from the consumer upon refund to the consumer of the full purchase price, plus reasonable collateral charges and incidental damages, less a reasonable allowance for the consumer’s use of the motor vehicle. The refund must be paid to the consumer and to a lienholder, if any, in proportion to their interests.

61-4-504. Reasonable number of attempts — presumption.

A reasonable number of attempts to conform a new motor vehicle to the applicable express warranties is presumed to have been made for purposes of 61-4-503(1) if:

(1) the same nonconformity has been subject to repair four or more times by the manufacturer or its agent or authorized dealer during the warranty period but the nonconformity continues to exist; or

(2) the motor vehicle is out of service because of nonconformity for a cumulative total of 30 or more business days during the warranty period after notification of the manufacturer, agent, or dealer.

61-4-505. Dealer exemption — liability to manufacturer.

(1) This part does not impose any liability on a dealer or create a cause of action by a consumer against a dealer under 61-4-503.

(2) A dealer is not liable to a manufacturer for any refunds or motor vehicle replacements in the absence of evidence indicating that repairs made by the dealer were carried out in a manner inconsistent with the manufacturer’s instructions.

61-4-506. Provisions nonexclusive — applicability of U.C.C. — defenses.

(1) The provisions of this part do not limit the rights or remedies available to a consumer under any other law.

(2) All express warranties arising from the sale of a new motor vehicle are subject to the provisions of Title 30, chapter 2, part 3.

(3) It is an affirmative defense to a claim brought under this part that an alleged nonconformity does not substantially impair the use, market value, or safety of the motor vehicle or that the nonconformity is the result of abuse, neglect, or unauthorized modification or alteration of a motor vehicle by the consumer.

61-4-507. Exhaustion of remedies under federal law.

The provisions of 61-4-503 are not applicable against a manufacturer who has established an informal dispute settlement procedure certified by the department to be in substantial compliance with the provisions of Title 16, Code of Federal Regulations, part 703, unless the consumer has first resorted to that procedure without satisfaction.

61-4-508 through 61-4-510 reserved.

61-4-511. Manufacturer’s dispute settlement procedure — certification — prohibited contents

(1) A manufacturer who has established an informal dispute settlement procedure under the provisions of Title 16, Code of Federal Regulations, part 703, shall submit a copy of the procedure to the department. The department shall issue a certificate of approval to a manufacturer whose procedure complies in all respects with the federal regulations and subsection (2) and shall maintain a record of the manufacturer’s procedures certified. The department may issue subpoenas requiring the attendance of witnesses and the production of records, documents, or other evidence necessary to the department in an investigation related to the certification of a manufacturer’s informal dispute settlement procedure.

(2) A manufacturer’s informal dispute settlement procedure must afford the consumer or the consumer’s representative an opportunity to appear and present evidence in Montana at a location reasonably convenient to the consumer and, further, may not include any practices that:

(a) delay a decision in any dispute beyond 60 days after the date on which the consumer initially resorts to the dispute settlement procedure;

(b) delay performance of remedies awarded in a settlement beyond 10 days after a decision, except that a manufacturer may have 30 days following the date of decision to replace a motor vehicle or make refund to the consumer as provided in 61-4-503;

(c) require the consumer to make the motor vehicle available for inspection by a manufacturer’s representative more than once;

(d) fail to consider in decisions any remedies provided by this part; or

(e) require the consumer to take any action or assume any obligation not specifically authorized under the federal regulations referred to in subsection (1).

61-4-512. Annual audit — revocation or suspension of certification

(1) manufacturer establishing an informal dispute resolution procedure shall file with the department a copy of the annual audit required under Title 16, Code of Federal Regulations, part 703, along with any additional information that the department may require, including the number of refunds and replacements made by the manufacturer during the period audited.

(2) The department may, after notice and hearing as provided in Title 2, chapter 4, suspend or revoke the certification of a manufacturer’s informal dispute resolution procedure upon a finding that the procedure is being used to create hardship to consumers. The department may consider the revocation or suspension in licensing manufacturers under Title 61, chapter 4, part 2.

61-4-513 through 61-4-514 reserved.

61-4-515. Arbitration procedure.

(1) The department shall provide an independent forum and arbitration procedure for the settlement of disputes between consumers and manufacturers of motor vehicles that do not conform to all applicable warranties under the provisions of this part. The procedure must conform to Title 27, chapter 5. All arbitration must take place in Montana at a place reasonably convenient to the consumer.

(2) Except as provided in 61-4-520, a consumer owning a motor vehicle that fails to conform to all applicable warranties may bring a grievance before an arbitrator only if the manufacturer of the motor vehicle has not established an informal dispute settlement procedure that has been certified by the department under 61-4-511.

61-4-516. Selection of arbitrator.

An arbitrator for a grievance under this part must be chosen by the department. The department shall maintain a list of persons willing to serve as an arbitrator.

61-4-517. Implementation of arbitration.

(1) A consumer may initiate a request for arbitration by filing a notice with the department. The consumer shall file, on a form prescribed by the department, any information considered relevant to the resolution of the dispute and shall return the form, along with a $100 filing fee, within 5 days after receiving the form. The form must offer the consumer the choice of presenting any subsequent testimony orally or in writing, but not both.

(2) The department shall determine whether the complaint alleges the violation of any applicable warranty under this part. If the department determines that a complaint does not allege a warranty violation, it shall refund the filing fee.

(3) Upon acceptance of a complaint, the department shall notify the manufacturer of the filing of a request for arbitration and shall obtain from the manufacturer, on a form prescribed by the department, any information considered relevant to the resolution of the dispute. The manufacturer shall return the form within 15 days of receipt, with a filing fee of $750.

(4) Fees collected under this section must be deposited in a special revenue account for the use of the department in administering this part.

(5) The manufacturer’s fee provided in subsection (3) is due only if the department’s arbitration procedures are used.

61-4-518. Arbitration — role of department of justice — expert.

(1) The department shall investigate, gather, and organize all information necessary for a fair and timely decision in each dispute. The department may, on behalf of the arbitrator, issue subpoenas to compel the attendance of witnesses and the production of documents, papers, and records relevant to the dispute.

(2) If requested by the arbitrator, the department may forward a copy of all written testimony and documentary evidence to an independent technical expert certified by the national institute of automotive excellence. The expert may review the material and be available to advise and consult with the arbitrator. The expert, at the arbitrator’s request, may be present whenever oral testimony is presented.

61-4-519. Action by arbitrator — decision.

(1) The arbitrator shall, as expeditiously as possible but not later than 60 days after the department has accepted a complaint, render a fair decision based on the information gathered and disclose the arbitrator’s findings and reasoning to the parties.

(2) The decision must provide appropriate remedies, including but not limited to:

(a) repair of the vehicle;

(b) replacement of the vehicle with an identical vehicle or a comparable vehicle acceptable to the consumer;

(c) refund as provided in 61-4-503(2);

(d) any other remedies available under the applicable warranties or 15 U.S.C. 2301 through 2312, as in effect on October 1, 1983; or

(e) reimbursement of expenses and costs to the prevailing party.

(3) The decision must specify a date for performance and completion of all awarded remedies. The department shall contact the prevailing party within 10 working days after the date for performance to determine whether performance has occurred. The parties shall act in good faith in abiding by any decision. In addition, if the decision is not accepted, the parties shall follow the provisions of Title 27, chapter 5. If the court determines that the appellant has acted without good cause in bringing an appeal of an award, the court, in its discretion, may grant to the respondent costs and reasonable attorney fees.

61-4-521 through 61-4-524 reserved.

61-4-520. Nonconforming procedure. Arbitration de novo

A consumer injured by the operation of any procedure that does not conform with procedures established by a manufacturer pursuant to 61-4-511 and the provisions of Title 16, Code of Federal Regulations, part 703, may appeal any decision rendered as the result of the procedure by requesting arbitration de novo of the dispute by a department arbitrator. Filing procedures and fees for appeals must be the same as those required in 61-4-515 through 61-4-517. The findings of the manufacturer’s informal dispute settlement procedure are admissible in evidence at the department’s arbitration hearing and in any civil action arising out of any warranty obligation or matter related to the dispute.

61-4-525. Notice on resale of replaced vehicle.

A motor vehicle that is returned to the manufacturer and that requires replacement or refund may not be sold in the state without a clear and conspicuous written disclosure of the fact that the motor vehicle was returned. The department may prescribe by rule the form and content of the disclosure statement and a procedure by which the disclosure may be removed upon a determination that the motor vehicle is no longer defective.

61-4-526. Records of disputes.

The department shall maintain records of each dispute as it determines appropriate, including an index of disputes by brand name and model. The department shall, at intervals of no more than 6 months, compile and maintain statistics indicating the record of compliance with arbitration decisions and the number of refunds or replacements awarded. The statistical summary must be considered by the department in determining the issuance of any manufacturer license required under Title 61, chapter 4, part 2.

61-4-527 through 61-4-530 reserved.

61-4-531. Nondelegable.

The liabilities and obligations contained in this part may not be delegated or assigned to or assumed by any other person or entity.

61-4-532. Rulemaking.

The department may adopt rules to implement the provisions of this part.

61-4-533. Penalty.

A violation of any provision of this part is an unfair or deceptive trade practice under Title 30, chapter 14, part 2, and the penalties provided in 30-14-224(1) apply.

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