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How Do Lemon Law Buybacks Work?

  Norman Taylor & Associates
  June 3, 2021

What Is a Lemon Law Buyback?

Vehicles designated as lemon law buybacks are vehicles that have been reacquired from the consumer by the dealer or manufacturer due to a warranty defect. Lemon law buyback vehicles are also sometimes called “warranty returns.” After buying a car back, the title must be transferred back to the manufacturer, and they must request that the car’s title and registration be marked as a “Lemon Law Buyback.”

When repurchasing a vehicle, the manufacturer will reimburse the consumer for money spent for the lease or purchase of the vehicle, including any down payments or monthly payments that have been made. If you financed the car, this reimbursement would also include the balance of your loan. You may even be entitled to a refund of your registration fees, towing costs, and rental car expenses.

However, there may be a usage fee or mileage offset fee assessed, and this may be deducted from the refund the consumer receives. The mileage offset is associated with the time the consumer used the car before any problems occurred. This fee is assessed based on the car’s mileage when the problem first occurred. For example, if your car had transmission problems, and you first took it in to be repaired at 11,000 miles, the mileage offset will be calculated based on those first 11,000 miles.

What Makes a Car a Lemon?

When a vehicle has a chronic repair issue or defect covered by the car’s warranty, and after a reasonable number of repair attempts by the manufacturer, the problem is not resolved, your car may be classified as a lemon. Under California’s Lemon Law, manufacturers are required to either replace the vehicle or refund the consumer. New, leased, and even used cars may be protected under California’s Lemon Law.

Am I Eligible for a Lemon Law Buyback?

According to California law, manufacturers are required to initiate an appropriate replacement or buyback offer to consumers who are dealing with a lemon. This offer should come after they have gone through a reasonable number of unsuccessful repair attempts. If they fail to do so, you may have grounds to file a civil suit and seek damages. If you believe that you have a lemon, you should consult with an attorney to discuss your options.

To learn more about lemon law eligibility requirements and what to do if the Lemon Law does not cover your vehicle, review our blog post here.

Do I Need an Attorney?

Lemon law cases can be complicated, and it is always recommended that you work with an experienced lawyer. Your attorney can ensure that you know your rights and legal options when pursuing a lemon law case, and they can represent you in negotiations with the manufacturer and in court. Working with a skilled lawyer like ours at Norman Taylor & Associates can also help you increase your chances of a favorable outcome to your case.

What Happens When a Lemon Law Buyback Is Re-Sold?

Often, after reacquiring a vehicle, the manufacturer will attempt re-sell the vehicle. However, when a manufacturer reacquires a lemon, there are several things they must do before they can re-sell the vehicle. In addition to the title requirements mentioned earlier, the manufacturer must also attach a decal to the vehicle that states that it is a lemon law buyback. The decal must be placed in one of three locations: the left door frame, the frame of the main entry into the vehicle (such as the front door frame on an RV), or, if it has no doors (such as with a motorcycle), on the left side of the vehicle.

When a warranty return vehicle is re-sold, the manufacturer must also notify the new purchaser of several things associated with the buyback, including that the vehicle is designated as a “Lemon Law Buyback.” They must also provide a report of the nature of the defect or nonconformity reported by the original buyer and what repairs were made to correct the problem. Additionally, the vehicle must also come with a 12-month/12,000-mile warranty specifically for the defect or problem the car was returned for.

To learn more about requirements associated with re-selling a lemon law buyback vehicle, review the California Department of Consumer Affairs page on the topic here.

Should I Avoid Lemon Law Buyback Vehicles?

Many people wonder if it is worth buying a car that is designated as a Lemon Law Buyback. These cars are sold as used cars and have significantly reduced prices despite their relatively low mileage. This can make them attractive to potential buyers. However, there are some things you should be aware of before purchasing a Lemon Law Buyback.

When purchasing a Lemon Law Buyback vehicle, it’s important to remember that the original problem may or may not be entirely resolved. Though manufacturers are legally required to disclose that the car is a Lemon Law Buyback, they are not legally required to fix the problem before re-selling the vehicle.

While many manufacturers repair these cars before re-selling them, you must be aware that the problem could resurface. This is especially problematic with major defects that affect the safety of the car. Before purchasing, you should always research the car’s history and look into the original problem and what was done to fix it.

It is also worth noting that Lemon Law Buyback vehicles have limited resale value, and if you decide to sell the car at a later date, you may struggle to find a buyer. Many people are apprehensive about purchasing a lemon, and even if the problem is truly resolved, they may shy away from buying.

In short, if you are considering buying a Lemon Law Buyback vehicle, you must do your research. Though the car may seem like a good deal, the future risks may not be worth it.

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The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.