Hawaii Lemon Law (HI)

The legislature recognizes that a motor vehicle is a major consumer purchase and that a defective motor vehicle creates a hardship for the consumer. The legislature further recognizes that a duly franchised motor vehicle dealer is an authorized service agent of the manufacturer. It is the intent of the legislature that a good faith motor vehicle warranty complaint by a consumer be resolved by the manufacturer within a specified period of time. It is further the intent of the legislature to provide statutory procedures whereby a consumer may receive a replacement motor vehicle, or a full refund, for a motor vehicle which is not brought into conformity with the applicable express warranties, as provided in this chapter. Finally, it is the intent of the legislature to ensure that consumers are made aware of their rights under this chapter and are not refused the information, documents, or service necessary to exercise their rights. Nothing in this chapter shall in any way limit or expand the rights or remedies which are otherwise available to a consumer under any other law. [L 1992, c 314, pt of §1]

When used in this section unless the context otherwise requires:

Business day means any day during which the service departments of authorized dealers of the manufacturer of the motor vehicle are normally open for business.

Collateral charges means those additional charges to a consumer wholly incurred as a result of the acquisition of the motor vehicle. For the purposes of this chapter, collateral charges include but are not limited to finance and interest charges, manufacturer-installed or agent-installed items, general excise tax, license and registration fees, title charges, and similar government charges.

Consumer means the purchaser, other than for purposes of resale, or the lessee of a motor vehicle, any person to whom the motor vehicle is transferred during the duration of the express warranty applicable to the motor vehicle, and any other person entitled to enforce the obligations of the express warranty.

Express warranty means any written warranty issued by the manufacturer, or any affirmation of fact or promise made by the manufacturer, excluding statements made by the dealer, in connection with the sale or lease of a motor vehicle to a consumer, which relates to the nature of the material or workmanship and affirms or promises that the motor vehicle shall conform to the affirmation, promise, or description or that the material or workmanship is free of defects or will meet a specified level of performance.

Incidental charges means those reasonable costs incurred by the consumer, including, but not limited to, towing charges and the costs of obtaining alternative transportation which are directly caused by the nonconformity or nonconformities which are the subject of the claim, but shall not include loss of use, loss of income, or personal injury claims.

Lemon law rights period means the term of the manufacturer's express warranty, the period ending two years after the date of the original delivery of a motor vehicle to a consumer, or the first 24,000 miles of operation, whichever occurs first.

Lessee means any consumer who leases a motor vehicle for one year or more pursuant to a written lease agreement which provides that the lessee is responsible for repairs to such motor vehicle, or any consumer who leases a motor vehicle pursuant to a lease-purchase agreement.

Motor vehicle means a self-propelled vehicle primarily designed for the transportation of persons or property over public streets and highways which is used primarily for personal, family, or household purposes. For purposes of this definition, a "motor vehicle" also includes a "demonstrator", which means a vehicle assigned by a dealer for the purpose of demonstrating qualities and characteristics common to vehicles of the same or similar model or type, but does not include mopeds, motorcycles, or motor scooters, as those terms are defined in chapter 286, or vehicles over 10,000 pounds, gross vehicle weight rating. For purposes of this definition, a "motor vehicle" also includes (1) an individually registered vehicle used for an individual's business purposes and for personal, family, or household purposes; and (2) a vehicle owned or leased by a sole proprietorship, corporation or partnership which has purchased or leased no more than one vehicle per year, used for household, individual, or personal use in addition to business use.

Nonconformity means a defect, malfunction, or condition that fails to conform to the motor vehicle's applicable express warranty and that substantially impairs the use, market value, or safety of a motor vehicle, but does not include a defect, malfunction, or condition that results from an accident, abuse, neglect, modification, or alteration of the motor vehicle by persons other than the manufacturer, its agent, distributor, or authorized dealer.

Purchase price means the cash price appearing in the sales agreement or contract and paid for the motor vehicle, including any net allowance for a trade-in vehicle. Where the consumer is a second or subsequent purchaser and the arbitration award is for a refund of the motor vehicle, "purchase price" means the purchase price of the second or subsequent purchase not to exceed the purchase price paid by the original purchaser.

Reasonable offset for use means the number of miles attributable to a consumer up to the date of the third repair attempt of the same nonconformity which is the subject of the claim, the date of the first repair attempt of a nonconformity that is likely to cause death or serious bodily injury, or the date of the thirtieth cumulative business day when the vehicle is out of service by reason of repair of one or more nonconformities, whichever occurs first. The reasonable offset for use shall be equal to one per cent of the purchase price for every thousand miles of use.

Replacement motor vehicle means a motor vehicle which is identical or reasonably equivalent to the motor vehicle to be replaced, as the motor vehicle to be replaced existed at the time of original acquisition, including any service contract, undercoating, rustproofing, and factory or dealer installed options.

Settlement means an agreement for repurchase or replacement of a motor vehicle entered into between a manufacturer and a consumer that occurs after a dispute is submitted to an informal dispute resolution procedure or arbitration program or after a dispute is approved for arbitration under section 481I-4. "Settlement" does not include an agreement for a motor vehicle to be repurchased pursuant to a guaranteed repurchase or satisfaction program advertised by the manufacturer in which the vehicle was not alleged or found to have a nonconformity as defined in this section.

Substantially impairs means to render the motor vehicle unfit, unreliable, or unsafe for warranted or normal use, or to significantly diminish the value of the motor vehicle. [L 1992, c 314, pt of §1; am L 1998, c 197, §§1, 2; am L 2000, c 44, §1]

(a) If a motor vehicle does not conform to all applicable express warranties, and the consumer reports the nonconformity in writing to the manufacturer, its agent, distributor, or its authorized dealer during the term of the lemon law rights period, then the manufacturer, or, at its option, its agent, distributor, or its authorized dealer, shall make such repairs as are necessary to conform the vehicle to such express warranties, notwithstanding the fact that such repairs are made after the expiration of such term.

(b) If the manufacturer, its agents, distributors, or authorized dealers are unable to conform the motor vehicle to any applicable express warranty by repairing or correcting any defect or condition which substantially impairs the use, market value, or safety of the motor vehicle after a reasonable number of documented attempts, then the manufacturer shall provide the consumer with a replacement motor vehicle or accept return of the vehicle from the consumer and refund to the consumer the following: the full purchase price including but not limited to charges for undercoating, dealer preparation, transportation, installed options, and all collateral and incidental charges, and less a reasonable offset for the consumer's use of the motor vehicle.

If either a replacement motor vehicle or a refund is awarded, an "offset" may be made for damage to the vehicle not attributable to normal wear and tear, if unrelated to the nonconformity. If a replacement motor vehicle is awarded, a reasonable offset shall be made for the use of the motor vehicle and an additional offset may be made for loss to the fair market value of the vehicle resulting from damage beyond normal wear and tear, unless the damage resulted from the nonconformity. When the manufacturer supplies a replacement motor vehicle, the manufacturer shall be responsible for the general excise tax, and license and registration fees. Refunds made pursuant to this subsection shall be deemed to be refunds of the sales price and treated as such for purposes of section 237-3. Refunds shall be made to the consumer and lienholder, if any, as their interests may appear on the records of ownership. If applicable, refunds shall be made to the lessor and lessee pursuant to rules adopted by the department of commerce and consumer affairs.

(c) It shall be an affirmative defense to any claim under this section that a nonconformity is the result of abuse, neglect, or unauthorized modifications or alterations of a motor vehicle by a consumer.

(d) It shall be presumed that a reasonable number of attempts have been undertaken to conform a motor vehicle to the applicable express warranties, if, during the lemon law rights period, any of the following occurs:

1. The same nonconformity has been subject to examination or repair at least three times by the manufacturer, its agents, distributors, or authorized dealers, but such nonconformity continues to exist; or
2. The nonconformity has been subject to examination or repair at least once by the manufacturer, its agents, distributors, or authorized dealers, but continues to be a nonconformity which is likely to cause death or serious bodily injury if the vehicle is driven; or
3. The motor vehicle is out of service by reason of repair by the manufacturer, its agents, distributors, or authorized dealers for one or more nonconformities for a cumulative total of thirty or more business days during the lemon law rights period.

The term of the lemon law rights period and such thirty-day period shall be extended by any period of time during which repair services are not available to the consumer because of a war, invasion, strike, fire, flood or other natural disaster.

The presumptions provided in this subsection shall not apply unless the manufacturer has received a written report of the nonconformity from the consumer and has had a reasonable opportunity to repair the nonconformity alleged.

Upon a second notice of the nonconformity, or, if the motor vehicle has been out of service by reason of repair in excess of twenty business days, the dealer shall notify the manufacturer of the nonconformity.

(e) During the lemon law rights period, the manufacturer or its agent, distributor, or authorized dealer shall provide to the consumer, each time the consumer's vehicle is returned from being diagnosed or repaired under the warranty, a fully itemized, legible statement or repair order indicating any diagnosis made and all work performed on the vehicle, including, but not limited to, a general description of the problem reported by the consumer or an identification of the defect or condition, parts and labor supplied, the date and the odometer reading when the vehicle was submitted for repair, and the date when the vehicle was made available to the consumer. The consumer shall sign and receive a copy of the statement or repair order.

(f) Upon request from the consumer, the manufacturer, or at its option its agent, distributor, or authorized dealer, shall provide a copy of any report or computer reading regarding inspection, diagnosis, or test-drive of the consumer's motor vehicle, and shall provide a copy of any technical service bulletin related to the nonconformity issued by the manufacturer regarding the year and model of the consumer's motor vehicle as it pertains to any material, feature, component, or the performance thereof.

Upon receipt of a consumer's written report of a nonconformity to the manufacturer, the manufacturer or, at its option, its agent, distributor, or authorized dealer, shall inform the consumer of any technical service bulletin or report relating to the nonconformity, and shall advise the consumer of the consumer's right to obtain a copy of such report or technical service bulletin.

(g) The manufacturer, its agent, distributor, or authorized dealer, shall provide the consumer at the time of purchase of the motor vehicle a written notice setting forth the terms of a state certified arbitration program and a statement of the rights of the consumer under this section in plain language, the form of which has been previously reviewed and approved by the department of commerce and consumer affairs for substantial compliance with title 16, Code of Federal Regulations, part 703, as may be modified by the requirements of this chapter. The written notice must specify the requirement that written notification to the manufacturer of the motor vehicle nonconformity is required before the consumer is eligible for a refund or replacement of the motor vehicle. The notice must also include the name and address to which the consumer must send such written notification. The provision of this statement is the direct responsibility of the dealer, as that term is defined in chapter 437.

(h) The consumer shall be required to notify the manufacturer of the nonconformity only if the consumer has received a written notice setting forth the terms of the state certified arbitration program and a statement of the rights of the consumer as set out in subsection (g).

(i) Where the state certified arbitration program is invoked by the consumer of a motor vehicle under express warranties, a decision resolving the dispute shall be rendered within forty-five days after the procedure is invoked. However, the failure of an arbitrator to render a decision within forty- five days because of unforeseen circumstances shall not void any subsequent decision.

Any decision rendered resolving the dispute shall provide appropriate remedies including, but not limited to, the following:

1. Provision of a replacement motor vehicle; or
2. Acceptance of the motor vehicle from the consumer, refund of the full purchase price, and all collateral and incidental charges.

The decision shall specify a date for performance and completion of all awarded remedies.

(j) Any action brought under this section must be initiated within one year following expiration of the lemon law rights period.

(k) No vehicle transferred to a dealer or manufacturer by a buyer or a lessee under this chapter or by judgment, settlement, or arbitration award in this State or in another state may be sold, leased, or auctioned by any person unless:

1. The nature of the defect experienced by the original buyer or lessee is clearly and conspicuously disclosed on a separate document that must be signed by the manufacturer and the purchaser and must be in ten-point, capitalized type, in substantially the following form:
   IMPORTANT: THIS VEHICLE WAS RETURNED TO THE MANUFACTURER BECAUSE A DEFECT(S) COVERED BY THE MANUFACTURER'S EXPRESS WARRANTY WAS NOT REPAIRED WITHIN A REASONABLE TIME AS PROVIDED BY LAW.
   The defect is corrected; and
2. The manufacturer warrants to the new buyer or lessee, in writing, that if the defect reappears within one year or 12,000 miles after the date of resale, whichever occurs first, it will be corrected at no expense to the consumer.

(l) A violation of subsection (k) shall constitute prima facie evidence of an unfair or deceptive act or practice under chapter 480. [L 1992, c 314, pt of §1; am L 1993, c 58, §1; am L 1998, c 197, §§3 to 5; am L 2000, c 44, §2]

(a) The department of commerce and consumer affairs shall establish and monitor a state certified arbitration program which is in substantial compliance with title 16, Code of Federal Regulations, part 703, as may be modified by this section, and shall adopt appropriate rules governing its operation.

(b) The director of commerce and consumer affairs may contract with an independent arbitration organization for annual term appointments to screen, hear, and resolve consumer complaints which have been initiated pursuant to section 481I-3.

The following criteria shall be considered in evaluating the suitability of independent arbitration mechanisms: capability, objectivity, experience, nonaffiliation with manufacturers of or dealers in new motor vehicles, reliability, financial stability, and fee structure.

(c) If a consumer agrees to participate in and be bound by the operation and decision of the state certified arbitration program, then all parties shall also participate in, and be bound by, the operation and decision of the state certified arbitration program. The prevailing party of an arbitration decision made pursuant to this section may be allowed reasonable attorney's fees.

(d) The submission of any dispute to arbitration in which the consumer elects nonbinding arbitration shall not limit the right of any party to a subsequent trial de novo upon written demand made upon the opposing party to the arbitration within thirty calendar days after service of the arbitration award, and the award shall not be admissible as evidence at that trial. If the party demanding a trial de novo does not improve its position as a result of the trial by at least twenty-five per cent, then the court shall order that all of the reasonable costs of trial, consultation, and attorney's fees be paid for by the party making the demand.

If neither party to a nonbinding arbitration demands a trial de novo within thirty days after service of the arbitration award, the arbitrator's decision shall become binding on both parties upon the expiration of the thirty-day period.

(e) Funding of the state certified arbitration program shall be provided through an initial filing fee of $200 to be paid by the manufacturer and $50 to be paid by the consumer upon initiating a case for arbitration under this section. Every final decision in favor of the consumer issued by the independent arbitration mechanism shall include within its relief the return of the $50 filing fee to the consumer. The director of commerce and consumer affairs may establish a trust fund for the purpose of administering fees and costs associated with the state certified arbitration program.

(f) The failure of a manufacturer to timely comply with a binding decision of a state certified arbitration program shall be prima facie evidence of an unfair or deceptive act or practice under chapter 480 unless the manufacturer can prove that it attempted in "good faith" to comply, or that the failure was beyond the manufacturer's control, the result of a written agreement with the consumer, or based on an appeal filed under chapter 658A. [L 1992, c 314, pt of §1; am L 1996, c 185, §1; am L 2001, c 265, §4]

When used in this chapter unless the context otherwise requires:

Consumer means the purchaser, other than for purposes of resale, of a used motor vehicle primarily used for personal, family, or household purposes and subject to a warranty, and the spouse or child of the purchaser if the motor vehicle is transferred to the spouse or child during the duration of any warranty applicable to such motor vehicle, and any other person entitled by the terms of such warranty to enforce the obligations of the warranty.

Dealer is defined in section 437-1.1.

Used motor vehicle means a "motor vehicle" as that term is defined in section 481I-2, which has been purchased or transferred either after one year from the date of original delivery, or after twelve thousand miles of operation, whichever occurs first.

Warranty means any undertaking in connection with the sale by a dealer of a used motor vehicle to refund, repair, replace, maintain, or take other action with respect to that used motor vehicle and provided at no extra charge beyond the price of the used motor vehicle.

[L 1994, c 224, pt of §1]

(a) No used motor vehicle shall be sold in this State by a dealer to a consumer unless accompanied by a written warranty covering the full cost of both parts and labor necessary to repair any defect or malfunction in a part covered under subsection (c) that impairs the used motor vehicle's safety or use. Defects and malfunctions that affect only appearance shall not be deemed to impair safety or use for the purposes of this chapter.

(b) The written warranty shall apply for the following durations:

1. For a used motor vehicle which, at the time of sale, has been operated less than twenty-five thousand miles, the warranty shall be a minimum of ninety days or five thousand miles, whichever occurs first. This ninety days or five thousand mile warranty is in addition to any rights the consumer may have under chapter 481I;
2. For a used motor vehicle which, at the time of sale, has been operated twenty-five thousand miles or more, but less than fifty thousand miles, the warranty shall be a minimum of sixty days or three thousand miles, whichever occurs first; and
3. For a used motor vehicle which, at the time of sale, has fifty thousand miles or more but no more than seventy-five thousand miles, the warranty shall be a minimum of thirty days or one thousand miles, whichever occurs first.

(c) The written warranty shall require the dealer or its agent to repair or, at the election of the dealer, reimburse the consumer for the reasonable costs of repairing the failure of a covered part. Covered parts shall at least include the following items:

1. Engine, including all lubricated parts, water pump, fuel pump, manifolds, engine block, cylinder head, rotary engine housings, flywheel, gaskets, and seals;
2. Transmission, including the transmission case, internal parts, torque converter, gaskets, and seals, except four-wheel drive vehicles shall be excluded from coverage as provided for in this paragraph;
3. Drive axle, including front and rear drive axle housings and internal parts, axle shafts, propeller shafts, and universal joints, except four-wheel drive vehicles shall be excluded from coverage as provided in this paragraph;
4. Brakes, including master cylinder, vacuum assist booster, wheel cylinders, hydraulic lines and fittings, and disc brake calipers;
5. Radiator;
6. Steering, including the steering gear housing and all internal parts, power steering pump, valve body, piston, and rack; and
7. Alternator, generator, starter, and ignition system, excluding the battery.

(d) The written warranty may contain additional language excluding coverage:

1. For a defect or malfunction in a part caused by a lack of customary maintenance after the vehicle is sold;
2. For a defect or malfunction in a part caused by collision, abuse, negligence, theft, vandalism, fire, or other casualty, and for damage from the environment, including but not limited to windstorms, hurricanes, and lightning;
3. If the odometer has been stopped or altered such that the vehicle's actual mileage cannot be readily determined or a part has been altered in a manner which caused it to fail;
4. For a motor tune-up;
5. For maintenance services and the parts used in connection with such services such as seals, gaskets, oil, or grease unless required in connection with the repair of a covered part;
6. For a defect or malfunction in a part resulting from racing or other competition;
7. For a defect or malfunction in a part caused by towing a trailer or another vehicle unless the used motor vehicle is equipped for this as recommended by the manufacturer;
8. If the used motor vehicle is used to carry passengers for hire;
9. If the used motor vehicle is rented to someone other than the consumer;
10. For repair of valves and rings to correct low compression and oil consumption which are considered normal wear;
11. To the extent otherwise permitted by law, for property damage arising or allegedly arising out of the defect or malfunction in a part; and
12. To the extent otherwise permitted by law, for loss of the use of the used motor vehicle, loss of time, inconvenience, commercial loss, or consequential damages.

(e) Nothing in this chapter diminishes the obligations of a manufacturer under a warranty issued by the manufacturer. The express warranties created by this section do not require a dealer to repair or replace a covered part if the repair or replacement is covered by a manufacturer's warranty, or the manufacturer otherwise agrees to repair or replace the part.

The terms of the dealer's warranty shall be tolled for any period of time the used motor vehicle is out of service by reason of repair under the manufacturer's warranty.

(f) A consumer shall return a vehicle for repair under this section by presenting it to the dealer prior to the expiration of the applicable warranty period and providing written notice to the dealer of the defect. The dealer shall immediately accept return of a vehicle when it is so presented. The used motor vehicle shall be deemed out of service commencing the day it is presented, notwithstanding any dealer's failure to accept its return on that day.

During the applicable warranty period and the return period, the dealer shall pay the reasonable costs of towing from the point of breakdown up to fifteen miles to obtain the required repairs or to return the vehicle to the dealer.

(g) The term of any warranty established by this section shall be extended by any time period during which:

1. The used motor vehicle is in the possession of the dealer or its duly authorized agent for the purpose of repairing the used motor vehicle under the terms and obligations of the warranty;
2. Repair services are not available to the consumer because of war, invasion or strike, fire, flood or other natural disaster; or
3. The consumer has notified the dealer that a used motor vehicle is inoperable, but cannot reasonably present the vehicle to the dealer and the dealer refuses to pay the charge to tow the vehicle.

(h) The applicable warranty period shall end thirty days from the date of completion of any repair required by this section as to the defect repaired if the warranty would otherwise have expired during this period.

(i) The dealer shall provide to the consumer, each time the consumer's vehicle is returned from being diagnosed or repaired under the warranty, a fully itemized, legible warranty repair receipt indicating any diagnosis made and all work performed on the vehicle, including, but not limited to:

1. The defect or malfunction complained of;
2. The work performed in an attempt to correct the defect or malfunction and the identity of the repairer if it is not the dealer;
3. The parts replaced in performing such work;
4. The date and odometer reading when the vehicle was submitted for repair; and
5. The date when the vehicle was made available to the consumer. The consumer shall sign a copy of the warranty repair receipt.

(j) A dealer may repair, within the meaning of this section, either by performing the repair itself or, if the dealer does not have a repair facility, by arranging and making payment for prompt repair by a motor vehicle repair dealer registered under chapter 437B.

(k) The dealer shall provide repair or reimbursement notwithstanding the fact that the warranty period has expired, provided that the consumer provides notification to the dealer of the failure of a covered part within the specified warranty period.

[L 1994, c 224, pt of §1]

(a) Any agreement entered into by a consumer for the purchase of a used motor vehicle that waives, limits, or disclaims any of the rights set forth in section 481J-2 shall be void as contrary to public policy. If a dealer fails to give the written warranty required by this chapter, the dealer nevertheless shall be deemed to have given the warranty as a matter of law.

(b) Notwithstanding subsection (a), the consumer may waive a warranty required pursuant to this chapter only as to a particular defect or malfunction which the dealer has disclosed to the consumer. No such waiver shall be effective unless such waiver:

1. Is in writing;
2. Is conspicuous and is in plain language;
3. Identifies the particular disclosed defect or malfunction in the used motor vehicle for which the warranty is to be waived;
4. States what warranty, if any, shall apply to the disclosed defect or malfunction; and
5. Is signed by both the consumer and the dealer prior to sale.

(c) This chapter shall not apply to:

1. Used motor vehicles sold for less than $1,500;
2. Used motor vehicles with over seventy-five thousand miles at the time of sale if the mileage is indicated in writing at the time of sale;
3. Used motor vehicles that are five years of age or older, calculated from the first day in January of the designated model year of the vehicle;
4. Vehicles that have been custom-built or modified for show purposes or racing; or
5. Vehicles which are inoperable and a total loss. For the purpose of this paragraph, a vehicle is a "total loss" only if there is material damage to the vehicle's frame, unitized structure, or suspension system, and the projected cost of repairing the damage exceeds the market value of the vehicle at the time of the incident causing it to be declared a total loss.

(d) A used motor vehicle may be sold "as is" by a dealer only if it falls within the exemptions set out in this section. No "as is" disclaimer by a dealer shall be enforceable unless all of the following conditions are met:

1. A disclaimer shall appear on the front page of the contract of sale, which shall read as follows:
   "AS IS" THIS VEHICLE IS SOLD "AS IS". YOU WILL HAVE TO PAY FOR ANY REPAIRS NEEDED AFTER SALE. IF WE HAVE MADE ANY PROMISES TO YOU, THE LAW SAYS WE MUST KEEP OUR PROMISES, EVEN IF WE SELL "AS IS". TO PROTECT YOURSELF, ASK US TO PUT ALL PROMISES IN WRITING.
2. The text of the disclaimer shall be printed in twelve- point boldface type, except the heading, which shall be in sixteen-point extra boldface type. The entire notice shall be boxed.
3. The consumer shall sign the consumer's name and the date within the box containing the disclaimer prior to sale. A copy of the signed disclaimer shall be kept by the dealer for a two-year period from the date of the consumer's signature.
4. An "as is" sale of a used motor vehicle waives implied warranties but shall not waive any express warranties, either oral or written, upon which the consumer relied in entering into the transaction.

(f) In selling or offering to sell any used motor vehicle, and in providing the express warranty required by this chapter, a dealer shall comply in all respects with the Federal Trade Commission's "Used Motor Vehicle Trade Regulation Rule," 16 Code of Federal Regulations, part 455.

[L 1994, c 224, pt of §1]

(a) No dealer may offer for sale any used motor vehicle without first providing:

1. Written notice to the prospective consumer of any material mechanical defect in the motor vehicle and any damage sustained by the motor vehicle due to fire, water, collision, or other causes for which the cost of repairs exceeds $1,000 for parts and labor, when the defect or damage is known to the dealer; and
2. Written notice to the prospective consumer whether the dealer has conducted any inspection of the motor vehicle to determine known defects or damage.

(b) If a dealer promises that any repairs will be made or any conditions corrected in connection with the purchase of a used motor vehicle, such promises shall be provided in writing and either attached or incorporated into the sales contract.

(c) For purposes of this section:

Known means that a dealer or the dealer's agent or employee has obtained facts or information about the condition of a motor vehicle which would lead a reasonable person in similar circumstances to believe that the motor vehicle contained one or more material mechanical defects. The term "known" encompasses knowledge obtained through an inspection, from a previous owner, from the salesperson at an auction or another dealer, or through other means.

Material mechanical defect means any defect or malfunction which renders the motor vehicle mechanically unsound or inoperable.

[L 1994, c 224, pt of §1]

(a) The written warranty provided for in section 481J-2 and the written notices provided for in sections 481J-3 and 481J-4 shall be delivered to the consumer at or before the time the consumer signs the sales contract for the used motor vehicle. The warranty and the notice may be set forth on one sheet or on separate sheets. They may be separate from, attached to, or a part of the sales contract. If they are part of the sales contract, they shall be separated from the other contract provisions and each headed by a conspicuous title.

(b) The director of commerce and consumer affairs may adopt rules pursuant to chapter 91 necessary to implement the notice provisions of this chapter. The rules may include the establishment of wording, format, placement, and distribution requirement for all notices specified in this chapter.

(c) The failure of a dealer to provide the warranty or notices required by this chapter or the provision of false or misleading notices or warranties shall constitute prima facie evidence of an unfair or deceptive act under chapter 480.

[L 1994, c 224, pt of §1]

(a) If the dealer or its agent fails to correct a defect or malfunction as required by the warranty specified in section 481J-2 after a reasonable period of time, the dealer shall accept return of the used motor vehicle from the consumer and refund the full purchase price, including sales tax, less a reasonable allowance for any damage not attributable to normal wear or usage, and with an adjustment for any modifications which either increase or decrease the market value of the vehicle. A reasonable allowance for use shall be fifteen cents for each mile the used motor vehicle has been operated between its sale and its return.

(b) It shall be presumed that a dealer has had a reasonable opportunity to correct a defect or malfunction in a used motor vehicle if the dealer fails to repair the same defect or malfunction within three attempts, or if the used motor vehicle is out of service for more than a cumulative total of ten business days after the consumer has returned it to the dealer for repair.

(c) A used motor vehicle shall not be considered out of service for purposes of the ten-business-day period described in subsection

(b) for any day in which a part necessary to repair a defect or malfunction complained of is not in the dealer's possession; provided that the dealer has ordered the part by reasonable means on the same day on which the dealer knew or should have known that the part was necessary, except that in no event shall a part's unavailability operate to toll the ten- business-day period for more than twenty-one days. The applicable warranty period shall be extended by the number of days a part is unavailable.

(d) In determining the purchase price to be refunded, the purchase price shall be deemed equal to the sum of the actual cash difference paid for the used motor vehicle, plus return of any vehicles traded in at the time of purchase. If the dealer elects to not return any vehicles traded in by the consumer, or is unable to return such vehicles in substantially the same condition as received from the consumer, the dealer shall pay the consumer the wholesale value of any such traded-in vehicles as listed in the National Automobile Dealers' Association Used Car Guide, or such other guide as may be specified in rules adopted by the director of commerce and consumer affairs pursuant to chapter 91, as adjusted for mileage, improvements, and any major physical or mechanical defects in the vehicle at the time of trade-in.

(e) The dealer selling the used motor vehicle shall deliver to the consumer a written notice either attached to or within the contract of sale containing conspicuous language indicating that if the consumer should be entitled to a refund pursuant to this section, the value of any vehicle traded in by the consumer will be determined by the method described in subsection (d), rather than the value listed in the sales contract.

(f) Refunds shall be made to the consumer and lienholder, if any, as their interests may appear on the records of ownership kept by the county director of finance.

(g) Alternatively, the dealer may elect to offer to replace the used motor vehicle with a comparably priced vehicle, with such adjustment in price as the parties may agree to. The consumer shall not be obligated to accept a replacement vehicle, but may instead elect to receive the refund provided under this section.

[L 1994, c 224, pt of §1]

(a) A consumer of a used motor vehicle shall have a private right of action against a dealer to enforce this section and recover costs, including reasonable attorney's fees, incurred in the civil action.

(b) It shall be an affirmative defense to any claim under this section that: (1) The alleged malfunction or defect does not substantially impair the use or safety of the used motor vehicle;

1. The alleged malfunction or defect is the result of abuse, neglect, or unreasonable modifications or alterations of the used motor vehicle; or
2. The alleged malfunction or defect was covered or warranted under an express warranty issued by the manufacturer of the used motor vehicle, and that such warranty issued by the manufacturer of the used motor vehicle was in effect during the warranty period established by this section.

(c) Any private civil action brought pursuant to this section shall be commenced within one year of the date of original delivery of the used motor vehicle to the consumer.

(d) Nothing in this chapter shall in any way limit the rights or remedies which are otherwise available to a consumer under any other law.

(e) A motor vehicle dealer's failure to comply with any of the provisions of this chapter may result in disciplinary action pursuant to chapter 437, which may result in sanctions, including, but not limited to, suspension or revocation of license, and the imposition of fines or restitution.

[L 1994, c 224, pt of §1]