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Do Dealers Have to Disclose a Lemon Before Re-selling?

  Norman Taylor & Associates
  August 13, 2021

Can A Dealership Sell You a Former Lemon?

Yes, under California law, vehicles that were re-purchased by the dealer as lemons can be re-sold to consumers. These vehicles are typically referred to as Lemon Law buybacks or warranty returns, and there are rules regarding how the dealer goes about re-selling them. Below we review the requirements dealers must adhere to in order to re-sell a vehicle marked as a lemon and provide guidance on what to do if you suspect a dealer deceived you.

To learn more about the basics of Lemon Law Buybacks, review our blog here.

Lemon Law Buyback Dealer Responsibilities

When a consumer buys a vehicle, and it turns out to be a lemon, they are protected under California’s Lemon Laws. In these cases, the manufacturer/dealer is required to buy the vehicle back from the consumer. After they have purchased the car back, they may choose to fix the problem and re-sell it. In some cases, and depending on the problem with the vehicle, they may also opt to sell it as is without making repairs.

The first important requirement before a manufacturer can re-sell a Lemon Law buyback vehicle is to have the title transferred back to the manufacturer, and the title must be marked as a Lemon Law Buyback. If you are purchasing a new vehicle, simply looking at the title will tell you right away whether the car is a former lemon.

Secondly, dealers are required by law to disclose to a buyer that the vehicle in question is a former lemon, and a decal must be placed on the vehicle denoting it as a Lemon Law Buyback. Though they are not required to fix the vehicle and can sell it “as is,” they must tell consumers that the car is a Lemon Law Buyback.

Additionally, when purchasing a Lemon Law Buyback vehicle, the dealer is required to provide a written disclaimer to the consumer, and the consumer must sign the disclaimer, acknowledging that the vehicle’s lemon status has been disclosed. Part of this disclosure process includes notifying the buyer of the specific vehicle defects and the repair history.

Does the Lemon Law apply to Vehicles Sold “As Is”?

We are often asked what happens when someone buys a vehicle “as is,” and it turns out to be a lemon. Unfortunately, if a vehicle is sold “as is,” it is generally not under warranty and is therefore not covered by California’s Lemon Laws. If you are concerned about the condition or safety of an “as is” vehicle, you should not purchase it. Instead, buy a car that is still under the manufacturer’s new car warranty. New, used, and leased vehicles that are under the manufacturer’s original warranty are typically covered by California’s Lemon Laws.

What to Do If I Believe I Was Deceived by a Dealer and Sold a Lemon

If you believe that you were deceived by a dealer and were sold a Lemon Law Buyback vehicle without this being disclosed to you, you should reach out to the attorneys at Norman Taylor & Associates right away. Failure to disclose that a vehicle is a Lemon Law Buyback or misrepresentation of the vehicle is considered fraud, and you may have grounds to file a civil suit.

How to Avoid Buying a Lemon

While Lemon Law Buyback vehicles tend to be heavily discounted, not all consumers are willing to risk it, even when the manufacturer has repaired the problem. But, how do you avoid buying a lemon? First and foremost, confirm that the vehicle you are looking at is not a Lemon Law Buyback. Similarly, avoid cars that are being sold in “as is” condition.

Other ways to avoid buying a lemon include:

  • Always inspect the vehicle thoroughly before purchasing
  • Always test drive the car and explore its various features to ensure they are in working order
  • Have your new vehicle inspected by a mechanic you trust, especially if you are purchasing a pre-owned vehicle
  • Check the vehicle’s VIN for any recalls using the NHTSA online recall tool
  • Research the make, model, and manufacturer before purchasing, and get a sense of their recall and lemon rates

It’s important to remember that even the most diligent consumer may end up with a lemon vehicle. When this happens, you do have rights. Contact our law firm to discuss your options and to determine if you have grounds for a Lemon Law claim or a breach of warranty suit.

To learn more about how to avoid buying a lemon, review our blog here.

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