North Carolina Lemon Law

North Carolina Lemon Law

The 1987 General Assembly enacted the "North Carolina lemon law" to give better remedies to North Carolina consumers who buy or lease a new car that is a "lemon." The North Carolina lemon law (1) defines clearly which cars are lemons, (2) spells out exactly the relief to which the purchaser of, and consumer leasing a lemon is entitled and (3) provides that a manufacturer who unreasonably refuses to grant to the buyer of or consumer leasing a lemon the relief to which he is entitled must pay the consumer triple damages and attorney's fees.

The North Carolina lemon law does not apply just to passenger cars. It covers any new motor vehicle other than a house trailer, provided that the vehicle does not have a gross vehicle weight of 10,000 pounds or more. Thus, the law covers pickup trucks, motorcycles and most vans, as well as cars. And the purpose for which the vehicle is purchased or leased is not relevant. But, any cars purchased or leased prior to October 1, 1987 is not covered by the lemon law.

 What solutions does the Lemon Law provide?

If the manufacturer has not fixed the vehicle after a reasonable number of attempts, the purchaser or leasing consumer is entitled to choose a comparable, new replacement vehicle or a refund. The statute is not specific as to what is a comparable new replacement vehicle, though it would clearly include an identical make and model. However, the consumer may choose a refund instead of a replacement. The statute is very specific about how to determine the amount of the refund.

A purchaser is entitled to a refund of:

1. The full contract price including, but not limited to, charges for undercoating, dealer-preparation and installed options, plus the non-refundable portions of extended warranties and service contracts;
   
   
2. All supplemental or collateral charges, including but not limited to, sales tax, license and registration fees, and similar government charges;
   
   
3. All finance charges incurred by the consumer after he first reports the defect to the manufacturer, its agent, or its authorized dealer; and
   
   
4. Any incidental damages and monetary consequential damages, less a reasonable allowance for the consumer's use of the vehicle.
   
   Incidental damages include, among other things, reasonable expenses for inspecting and transporting the vehicle (e.g., towing expenses), costs to cover alternate transportation (e.g., rental car fees), and hotel expenses, if any. Monetary consequential damages include the value of lost use generally.

A leasing consumer is entitled to a refund of:

1. All sums previously paid by the leasing consumer under the terms of the lease;
   
   
2. All sums previously paid by the leasing consumer in connection with entering into the lease agreement, including, but not limited to, any capitalized cost reduction, sales tax, license and registration fees, and similar government charges; and
   
   
3. Any incidental and monetary consequential damages.

Because it is the manufacturer that is responsible for the vehicle, the leasing must recover from the manufacturer, not the lessor. The lessor also may recover from the manufacturer. Remedies available to the lessor are described at G.S. § 20-351.3(b)(2).

The statute defines a "reasonable allowance for use" as that amount directly attributable to use by the consumer prior to his first report of the defect to the manufacturer, its agent, or its authorized dealer, and during any subsequent period when the vehicle is not out of service because of repair. "Reasonable allowance is presumed to be the cash price of the vehicle multiplied by a fraction having as its denominator 100,000 miles and its numerator the number of miles on the vehicle attributed to the consumer." For example, if the cash price of the vehicle was $20,000 and the purchaser or leasing consumer had driven the car 10,000 miles before getting a refund, the owner would be entitled to the full refund, less $20,000 (10,000/100,000), or $2,000.