Motor Vehicle Lemon Law

Current law, which is commonly known as the "lemon law", requires a manufacturer, a manufacturer's agent, or a manufacturer's authorized dealer (dealer) to replace or buy back a motor vehicle if the consumer notified the dealer within the earlier of the warranty period or one year after original delivery of the motor vehicle (notification time), and the motor vehicle underwent a reasonable number of attempts to repair. The number of repairs are considered reasonable if:

• The motor vehicle was out of service for repairs for a cumulative total of 30 or more business days; or
• The dealer tried unsuccessfully to repair the motor vehicle 4 or more times.

The bill:

• Expands the lemon law to cover motor vehicles affected by safety-based nonconformities;
• Expands the notification time to include the earlier of the first 36,000 24,000 miles or 3 2 years after original delivery of the motor vehicle;
• Clarifies that, for any claim a consumer raises against a manufacturer, the lemon law is not an affirmative defense against the consumer's claim when the statute of limitations is tolled for a period of time after the consumer has presented a claim and submitted the motor vehicle for repair but before the threshold for cure has been met;
• Lowers the number of out-of-service business days from 30 to 21 24 ; and
• Lowers the number of required attempts to repair from 4 to 3.

Current law requires the manufacturer to be notified of a defect and be given an opportunity to cure the defect in order to be subject to the reasonable repairs presumption. The bill adds a 10-day limit on the opportunity to cure the defect.

Current law allows a dealer, when buying back a motor vehicle, to deduct a reasonable allowance for use. The bill sets a formula for determining the reasonable allowance for use.

Current law exempts from the lemon law motor vehicles that have a problem that does not affect the market value of the motor vehicle. The bill adds that the problem must not affect the safety of the motor vehicle to qualify for the exemption.

The bill changes the statute of limitations from the earlier of 6 months after the expiration of a warranty or within one year after the original delivery of the motor vehicle to 42 30 months after the original delivery.

The bill requires a dealer to allow an agent of a purchaser to inspect a motor vehicle unless the dealer provides or provide a 7-day free-look period in which the purchaser may return the motor vehicle and receive a refund of all money paid to the dealer to purchase the motor vehicle. The dealer must notify purchasers of this inspection right. To make the inspection, an agent may have reasonable access to conduct the inspection, but the agent must be qualified to use or operate any equipment used to inspect the vehicle and must not interfere with normal business operations of the dealer.

The dealer is required to give certain notices that the motor vehicle was returned, including notifying the department of revenue (department). The department must put a brand on the title to notify subsequent purchasers.

Failing to comply with the bill is a ground for discipline for a manufacturer or distributor motor vehicle dealer wholesale motor vehicle auction dealer, wholesaler, buyer agent, used motor vehicle dealer licensee, motor vehicle salesperson, or business disposal licensee. To implement the bill, $19,605 is appropriated to the department of revenue from the Colorado DRIVES vehicle services account in the highway users tax fund.

(Note: Italicized words indicate new material added to the original summary; dashes through words indicate deletions from the original summary.)

(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)