After you win a lemon law dispute, the automaker may take back your vehicle and offer you a full refund, minus a deduction based on the mileage you had before your vehicle was defective. Your vehicle is branded as a “lemon law buyback” after arbitration or litigation is completed, and this lemon title remains on the vehicle’s history report. The California Lemon Law requires that this lemon title remain on the report indefinitely to protect consumers who are in the market for a used car.
The short answer to the question of “can lemon law cars be resold” is yes, they can. Automakers can resell cars with lemon law buyback titles as long as they abide by the rules set forth in the California Lemon Law. If automakers break these rules, they are practicing “lemon laundering,” which is the crime of selling these branded vehicles through deceitful means.
1. How Can Lemon Law Buyback Cars Be Resold?
An automaker can resell any vehicle that it repurchased due to a lemon law dispute.
However, they must abide by these rules set by the California Lemon Law:
- The vehicle must be branded as a “lemon law buyback.”
- The vehicle must be repaired to conform to warranty.
- The seller must disclose the vehicle’s lemon title to any prospective buyer, as well as the nature of the defect and repairs made to address the defect.
Specifically, the Automotive Consumer Notification Act requires that the seller provide the buyer with a notice that contains the following language:
“THIS VEHICLE WAS REPURCHASED BY ITS MANUFACTURER DUE TO A DEFECT IN THE VEHICLE PURSUANT TO CONSUMER WARRANTY LAWS. THE TITLE TO THIS VEHICLE HAS BEEN PERMANENTLY BRANDED WITH THE NOTATION ‘LEMON LAW BUYBACK’.”
If the automaker repairs the vehicle, properly brands the vehicle, and discloses the title to a prospective buyer, then the sale of the lemon law buyback is legal. However, automakers sometimes attempt to skirt these requirements. An automaker may fail to disclose the lemon title or sell the vehicle in settings where it is easy to disguise the vehicle’s history.
However, there are cases when a car does experience repeated problems related to a defect, but the car is not formally branded as a lemon because the car wasn’t purchased under circumstances provide protection under the California Lemon Law.
Someone may have settled a lemon law case with an auto manufacturer out of court. As a result, the auto manufacturer may have gotten away with not branding the repurchased vehicle. The auto manufacturer may have convinced the owner to sign a settlement agreement that states that the vehicle was being repurchased out of “goodwill.” This is done out of a desire to disguise the vehicle’s history of defects.
Someone may have purchased a defective car from a private seller without being informed of the vehicle’s history. If this person discovers a defect, they cannot pursue a California lemon law claim because the vehicle was not purchased from a licensed dealership. In this case, the person might have already sought numerous repairs. They finally decide to stop getting further trouble with the car and just sell it to another private party.
In this scenario, a car that should have been branded as a lemon slips under the radar, and another person unwittingly buys a lemon car.
2. Can A Lemon Title Be Removed From A Defective Vehicle?
The California Lemon Law requires that the lemon buyback title remain on the vehicle’s history report indefinitely. However, it is possible for the auto manufacturer to transfer the vehicle to a state whose lemon law does not have the same disclosure requirements.
This practice is known as “title-washing.” Vehicles with unsavory titles may get transferred across state lines, where conflicting title requirements lead to some inconsistencies on vehicle reports. An auto manufacturer may transfer a lemon buyback branded vehicle to a state with no branding requirement, and therefore disguise the vehicle’s history.
An auto manufacturer may repurchase a lemon vehicle in a state with no notification requirement and then sell the vehicle in another state, which leads to a buyer unwittingly purchasing a lemon buyback vehicle.
3. How Does A Lemon Title Affect The Vehicle’s Warranty?
Contrary to popular misconceptions, a vehicle getting a lemon title does not void the warranty left on it. The automaker has to honor the remaining warranty on the repurchased vehicle. Sometimes, the automaker will offer an extended warranty for the defective part. If you purchased a vehicle that is branded as a “lemon law buyback,” and the vehicle still has a manufacturer warranty, you are still protected by the California Lemon Law.
You should avoid purchasing vehicles with lemon titles anyway. Their discounted prices may be an enticing lure for those who want to purchase a used vehicle for a decent price, especially if the original defect seems minor. However, you should keep in mind the following: the manufacturer was given a reasonable number of chances to fix the vehicle before the vehicle was repurchased, and was unable to do so.
To learn more about your lemon law protections, read our California Lemon Law Guide. If you think you may have a lemon law case, or you have questions about how the California Lemon Law can protect you, call our toll free number at 877-222-2222 or fill out the consultation form below.