DCCA Case Administrator Stacia Silva joins producer/host Coralie Chun Matayoshi to discuss how to tell if your vehicle is a lemon, when the lemon rights law time period expires, what information is needed at an arbitration hearing, and whether you can get your lemon vehicle repurchased or replaced.

Hawaii’s Lemon Law helps consumers who have problems getting their new vehicle repaired under a manufacturer’s warranty.  Covered vehicles include cars, trucks, motorcycles, and even autocycles.  The law does not cover mopeds or motor scooters, industrial vehicles, and motor homes or RVs.  The vehicle must have been purchased, leased, or initially registered in Hawaii and must either be used primarily for personal, family, or household purposes or a combination of both business purposes and personal, family, or household purposes.  Through the State Certified Arbitration Program, a consumer may be awarded a refund or a replacement if their vehicle is determined to be a “lemon”.  This program provides the consumer with a self-help arbitration process to resolve a warranty dispute with a manufacturer that is less complicated and less expensive than going to court.

Q.  At what point can you call a vehicle a “lemon”?

A vehicle may be declared a lemon if it meets all of the following conditions:

  • it has a defect or malfunction that is covered by the manufacturer’s express warranty which typically refers to the written warranty issued by the manufacturer making certain assurances about the quality and durability of vehicle’s materials and workmanship (i.e., the New Vehicle Limited Warranty that comes with every new vehicle).  This warranty is sometimes referred to as a “bumper to bumper” warranty.  Its terms can often be found in the back of the vehicle’s car manual or on the manufacturer’s website.
  • the defect SUBSTANTIALLY impairs the use, safety, or market value of the vehicle, which means “to render the vehicle unfit, unreliable, or unsafe for warranted or normal use, or to significantly diminish the value of the motor vehicle”.  The consumer may be able to prove the vehicle’s use is impaired if one of its major systems is defective or if the defect prevents it from being used in a normal fashion.  Alternatively, a vehicle’s value may be decreased by defects that would lead a buyer to pay much less than the market price for the vehicle.
  • the manufacturer was given a reasonable opportunity to repair the defect during the Lemon Law Rights Period, in any of the following three ways:
    • Three times presumption – the vehicle went in for repair for the same defect at least three times within the Lemon Law Rights Period but the defect continued to exist after the third repair.
    • One time “death or serious bodily injury” presumption – the vehicle went in for repair at least once for a serious defect within the Lemon Law Rights Period, but the defect continued to exist after the first repair and is likely to cause death or serious bodily injury if the vehicle is driven.
    • 30 days presumption – the vehicle went in for repair for one or more defects within the Lemon Law Rights Period and the vehicle was in the manufacturer’s repair shop for 30 or more business days.
  • the consumer sent written notification to the manufacturer during the Lemon Law Rights Period.  Assuming the manufacturer’s warranty is still in effect, the Lemon Law Rights Period expires two years after the date of the original delivery of the vehicle to a consumer or the first 24,000 miles of operation, whichever occurs first.  This means that Lemon Law is meant for vehicles that have been on the road for no more than two years and have less than 24,000 miles on their odometer.  The Lemon Law Rights Period is very important as several things must happen during this time period, including the vehicle’s malfunctioning, the manufacturer’s attempts to repair the vehicle, and very often, written notification to the manufacturer by the consumer about their defective vehicle.  Written notification should be sent by certified mail, return receipt requested to the manufacturer at the address given for the manufacturer in the Lemon Law Rights Notice.  This one-page notice, which notifies consumers of new vehicles of their basic legal rights under Lemon Law in Hawaii, should have been given to the consumer when they purchased the vehicle.  Though not technically required by the law, sending the letter by certified mail ensures that the consumer has proof that the notification was received by the manufacturer.  This letter must be sent unless the Lemon Law Rights Notice was not properly given to the consumer by the dealership. 

Q.  How do you start the arbitration process and what information is needed to prove your case?

The consumer can submit a Demand for Arbitration in one of two ways — online through our website or by mail. Go to cca.hawaii.gov/rico/ and click on “Do I have a lemon vehicle?”  This will lead to a secure portal where consumers can complete the Demand for Arbitration form.  The portal also allows consumers to electronically scan and upload necessary supporting documents.  After completing the online process, the consumer must mail to DCCA a $50 filing fee and two copies of any supporting documents not already scanned and uploaded.  Alternatively, consumers can manually fill out a two page “Demand for Arbitration” form provided on the DCCA website and then mail two copies of the Demand form and all the supporting documents requested, along with the $50 filing fee.

In addition to the Demand for Arbitration, a consumer will need to gather:

  • The vehicle’s sales contract or lease agreement;
  • The consumer’s letter to the manufacturer along with proof the manufacturer received the letter;
  • The vehicle’s repair orders;
  • A copy of the vehicle’s manufacturer’s warranty;
  • A copy of the consumer’s Lemon Law Rights Notice;
  • A payment history if the vehicle is leased or has an auto loan; AND
  • Any evidence the consumer feels show the car is a lemon, such as photos, videos, and witness or expert testimony.

The hearing is run by a trained volunteer arbitrator and is meant to be short and relatively informal when compared to going to court.  The rules of evidence do not apply, but the consumer does have the burden of proving their vehicle is a “lemon.”  Basically, the consumer gets to present their side of the story first and then the manufacturer’s case is presented.  Everybody gets to ask questions of each other when it is their turn.  At the conclusion of the hearing, each party may summarize and argue for a specific result.  Then the arbitrator may issue extra instructions to one or both sides or close the hearing with details about when the parties can expect the arbitrator’s decision.  The program is designed be a user-friendly, self-help program.  The decision on whether to hire an attorney is a personal one, and a consumer has the right to be represented in their claim by an attorney.  Generally, most consumers present their own cases without an attorney and manufacturers usually only have a non-attorney representative at the hearing.  However, if a manufacturer has an attorney or if a consumer feels uncomfortable without one, they may want to consider consulting or hiring an attorney.

Q.  What kind of relief can a consumer get if their vehicle is determined to be a lemon?

If a vehicle has been determined to be a “lemon”, the arbitrator has two options for ordering relief to a consumer—repurchase or replacement.  In a repurchase, the manufacturer is ordered to buy the vehicle back from the consumer, which may include a refund to the consumer and a payoff of any auto loan on the vehicle.  In a replacement, the manufacturer is ordered to replace the vehicle with a vehicle identical or reasonably equivalent to the vehicle to be replaced.  The consumer will notify the arbitrator which option they prefer.  The consumer can also ask the arbitrator to award them reimbursement on costs incurred because of their purchase of the vehicle, such as seat liners, window tinting, or costs incurred because of the problems with the vehicle, such as towing charges and costs of alternative transportation, such as taxi rides or a rental car.  It is up to the discretion of the arbitrator to decide which, if any, of these costs will be reimbursed to the consumer by the manufacturer.  The arbitrator can also award attorney’s fees to be paid by the vehicle’s manufacturer.  If a consumer is successful and prevails in their claim, the arbitrator orders the DCC to reimburse the consumer’s $50 filing fee.  In some cases, the arbitrator’s decision is appealable.  This largely depends on whether the consumer has chosen prior to their arbitration hearing to be “bound” by the arbitrator’s decision.  If a consumer does not choose to be bound to what the arbitrator has decided, they may appeal to Circuit Court within 30 days of their receiving the unfavorable decision.

To learn more about this subject, tune into this video podcast.

Disclaimer:  this material is intended for informational purposes only and does not constitute legal advice.  The law varies by jurisdiction and is constantly changing.  For legal advice, you should consult a lawyer that can apply the appropriate law to the facts in your case.