Texas Lemon Law
This information was compiled as of April 1, 2006. This brochure is not intended as a comprehensive analysis. It is solely for reference and is not intended to constitute or operate as a substitute for obtaining legal counsel from a licensed attorney.
The Texas Lemon Law applies to new and some used vehicles sold by licensed Texas dealers. The requirements for coverage are technical, but if your vehicle is covered, you can force the manufacturer to buy it back from you or replace it with a comparable vehicle.
You must act fast if you think you have a lemon, as the law requires that you file your complaint by the earlier of 6 months after your vehicle reaches 24,000 miles, 6 months after your warranty expires, or 30 months from the date your car was delivered to the original owner.
If your car does not qualify as a lemon, you can still use the Lemon Law to your advantage. As long as your car is covered by the manufacturer's warranty and has a defect that the manufacturer has failed to fix, you can ask the Department of Transportation to order the manufacturer to fix the defect.
Is Your Vehicle a Lemon?
To bring a Lemon Law claim, you and your vehicle must meet the following criteria:
1. Your vehicle must be a "motor vehicle." This is a very broad term that includes virtually any kind of self-propelled car, truck, motorcycle, or recreational vehicle. It also includes off-road vehicles if they are sold with a certificate of title, and most towable RV's.
2. You must be eligible to bring a lemon law claim. The eligibility rules are different depending upon whether you bought or leased the vehicle new or used.
If you bought or leased the vehicle new, you can use the Texas Lemon Law regardless of where you live, as long as you got the vehicle from a licensed Texas dealer.
If you bought or leased the vehicle used, you can only use the Texas Lemon Law if the first buyer of the vehicle got it from a licensed Texas dealer and you are currently a Texas resident. Note: As a practical matter, because the Lemon Law only applies to vehicles with defects that arise in the first year, it is very rare that a used vehicle qualifies for a Lemon Law claim.
3. Your vehicle must have a defect or other condition that breaches the manufacturer’s warranty and either creates a serious safety hazard or substantially impairs the use or market value of the vehicle.
4. You have reported the defect to the manufacturer or its dealer and the manufacturer is unable to repair the defect or condition after a reasonable number of attempts, which means one of the following:
The defect or condition creates a serious safety hazard, has been subject to repair 2 or more times, and continues to exist, with the first repair attempt occurring within the first 12 months or 12,000 miles after the original delivery of the vehicle, and the second attempt occurring within 12 months or 12,000 miles after the second attempt, or
The defect or condition substantially impairs the use or market value of the vehicle, has been subject to repair 4 or more times, and continues to exist, with at least 2 repair attempts occurring within the first 12 months or 12,000 miles after the original delivery of the vehicle and the other 2 attempts occurring within 12 months or 12,000 miles after the second attempt, or
The vehicle is out of service for repair for a cumulative total of 30 or more days in the 24 months or 24,000 miles following the date of original delivery, at least 2 repair attempts were made in the first 12 months or 12,000 miles after original delivery and a defect or condition continues to exist that substantially impairs the vehicle’s use or market value. However repair days on which the manufacturer lends a comparable motor vehicle to the owner do not count towards the 30 day total.
5. You have given the manufacturer written notice of the defect and an opportunity to repair it.
Even if you and your vehicle meet these criteria, you may not have a lemon claim if the defect or condition is the result of abuse, neglect or unauthorized use of the vehicle. You should be prepared to show through receipts or dealer records that you performed all scheduled maintenance on the vehicle.
If You Have a Lemon What Do You Get?
If you have a lemon, then you are entitled to an order from the Department of Transportation requiring the manufacturer to either replace your vehicle with a comparable vehicle or buyback your vehicle according to a set formula. The formula varies depending upon the type of vehicle, its use, and whether you bought or leased the vehicle. The basic idea of the formula is to give you a refund of what you actually paid for the vehicle, less an allowance for use of the vehicle, plus reimbursement for certain incidental expenses.
If you financed the purchase of your vehicle, the net amount of the refund may or may not be enough to pay off the finance company. If it is not enough, you will have to come up with the difference yourself. In this situation, you may be better off if you request a replacement vehicle rather than a buyback.
If you leased your vehicle, you don't have to worry about early termination or cancellation fees. The leasing company's compensation is fixed in the law and you will not have to come up with money out of your own pocket in order to complete the buyback.
Refund Calculations
If you purchased your vehicle, you will receive the full purchase price of the vehicle (not including finance or insurance charges) less an allowance for your use of the vehicle. If you financed the vehicle, the refund will be paid directly to the finance company and you will receive only the remaining balance, if any.
If you leased your vehicle, you will receive a refund of all your lease payments plus the costs associated with entering into the lease, such as any capitalized cost reduction, down payment, the value of your trade-in, taxes, registration and documentary fees, less an allowance for use of the vehicle. The leasing company will receive a full refund of the actual price it paid for the vehicle plus 5%, less the amount of the payments made by you. The leasing company must terminate the lease without any penalty to you.
Allowance for Use Calculation
The allowance for use is calculated based on mileage for motor vehicles other than towable recreational vehicles and is calculated differently for miles driven before and after the defect was first reported. For towable recreational vehicles, the allowance for use is calculated based on length of ownership and type of use and is also calculated differently for ownership periods before and after the defect was first reported.
Mileage-Based Allowance for Use of Most Motor Vehicles
The allowance for use for miles driven is based upon an expected useful life of 120,000 miles. The amount of the allowance can be reduced if it can be shown that the vehicle in question has an expected useful life of greater than 120,000 miles.
The allowance for use for miles driven before the first report of the defect is the purchase price of the vehicle divided by 120,000 times the number of miles.
The allowance for use for miles driven after the first report of the defect is assessed at one-half the rate for miles driven before the first report of defect. The formula is one-half of the purchase price divided by 120,000 times the number of miles driven from the date of the first report to the date of your lemon law hearing.
If you leased your car, then the purchase price used in this calculation is the price that the leasing company paid when it bought the car from the dealer. This price was probably not disclosed to you when you leased the vehicle. You will probably have to ask the leasing company to provide this information to you.
For example, if you paid $32,342 for your car, and you first took the car to the dealer for the defect that caused your car to be a lemon when it had 2,548 miles, and your lemon law hearing took place when the vehicle had 13,297 miles, then you would calculate the refund as follows:
Miles Before Defect Report = 2,548 miles.
Allowance for Pre-Report Miles = 2,548 / 120,000 x $32,342, or $686.73.
Miles After Defect Report = 13,297 - 2,548, or 10,749 miles.
Allowance for Post-Report Miles = 10,749 / 120,000 x $32,342 / 2 or $1448.52.
Total Allowance For Use = 686.73 + 1448.52, or $2135.25.
Ownership-Based Allowance for Use for Towable Recreational Vehicles
The allowance for ownership of a Towable Recreational Vehicle is based upon an expected useful life of 10 years or 3,625 days, unless the vehicle is occupied on a full-time basis, in which case the expected useful life is 5 years or 1,825 days. The amount of the allowance can be reduced if it can be shown that the vehicle in question has an longer expected useful life.
The allowance for ownership before the first report of the defect is the purchase price of the Towable Recreational Vehicle divided by either 3,650 or 1,825, depending upon the use, multiplied by the number of days of ownership prior to the first report of the defect.
The allowance for ownership after the first report of the defect is the purchase price of the Towable Recreational Vehicle divided by either 3,650 days or 1,825 days, multiplied by the number of days of ownership from the first report of defect to the lemon law hearing, divided by 2.
For example, if you paid $14,342 for your towable recreational vehicle that you do not occupy on a full-time basis, and you first took the vehicle to the dealer for the defect that caused your vehicle to be a lemon 98 days after you took delivery, and your lemon law hearing took place 215 days after you took delivery, then you would calculate the refund as follows:
Days Before Defect Report = 98 days.
Allowance for Pre-Report Ownership = 98 / 3,650 x $14,342, or $385.07.
Days After Defect Report = 215 - 98, or 117 days.
Allowance for Post-Report Ownership = 117 / 3,650 x $14,342 / 2 or $229.86.
Total Allowance For Use = $385.07 + $229.86, or $614.93.
Reimbursement of Incidental Expenses
In addition to repurchase or replacement of your vehicle, you can also be reimbursed for your incidental expenses. This includes expenses such as the cost of alternate transportation, towing, meals and lodging if the vehicle fails during out-of-town travel, loss or damage to property, and accessories added to the vehicle after purchase (less a reasonable allowance for use).
Attorney's Fees
Unfortunately, the Lemon Law is one of the few consumer protection statutes that does not automatically require the defendant to reimburse the consumer for attorney's fees if the consumer wins. The only circumstance in which a consumer's attorney's fees can be reimbursed is if the consumer hires the attorney after being notified that the manufacturer has an attorney. Because manufacturers are usually not represented by attorneys, consumers are rarely reimbursed for attorney's fees.
Steps to Take If You Think You Have a Lemon
As soon as you begin to suspect that your car has a problem that may not be fixed, you need to start collecting documents to build your lemon law case. You will want all of your repair records. It is best if you keep the repair invoices from each repair. If you don't have them, you may be able to get a dealer to pull the warranty claim history for you. You will also want to have all of your maintenance records, particularly if the defect has any relationship to routine maintenance items such as oil changes. If you haven't kept copies of these records, you may be able to get them from the service facility that performed the maintenance, particularly if you use a franchised facility such as Jiffy Lube.
If you have an intermittent problem, you need to document that the problem exists. When you have your lemon law hearing, the hearing examiner is going to inspect your vehicle and drive it if necessary. If the problem does not appear during that brief inspection, you will lose your case unless you can prove that the problem exists by some other means. You may want to keep a video camera in your vehicle and videotape the problem when it occurs. You may want to loan your vehicle to a mechanic you trust to drive until he finds the problem and can then testify that it in fact exists.
You may find that the dealership is beginning to try to prevent you from making a lemon law claim by not writing up the problem on the repair ticket, or by carefully writing it up in such a way that it appears to be a different problem. If this happens, fax the dealership a letter while they have your car in for repairs describing your problem so that there will be no doubt why you have taken the car in for service, or take a friend with you to the dealership who can listen to your conversation with the service manager to verify that you brought your vehicle in for the same problem that was not fixed before.
One of the requirements under the Lemon Law is that you give written notice of the defect to the manufacturer and give it an opportunity to make a repair. Don't wait until you have all the repair attempts or out of service days you need to qualify as a lemon to do this. As soon as it looks like there is going to be a problem fixing a defect, go ahead and send a certified letter to the manufacturer describing the problem. You will have satisfied the notice requirement of the lemon law and the manufacturer's attempt to fix the problem will count as a repair attempt towards the lemon law requirements.
While you can legally represent yourself in a lemon law hearing, your chances of success are greater if you retain an attorney. Despite the informal nature of the proceeding, the lemon law is relatively complex and there are lots of traps for the unwary. An attorney will increase your chances of success.