How does Vehicle Negative Equity Affect your Lemon Law Settlement?
May 13, 2021
Lemon Law Vehicle Inspection
July 3, 2021
We get this question frequently: what happens to the expensive rims, radio, alarm system the consumer installed to the vehicle when the vehicle manufacturer accepts to repurchase or buy back the consumer’s vehicle? The short answer is that the vehicle manufacturer is not required to reimburse a consumer, “extras” because they are considered “non-manufacturer installed items.” This is true whether the consumer installed these extra items him or herself, or the dealership. Examples of these extras are third-party vehicle extended warranties or service agreements, dealership or consumer installed GPS or alarm system, etc. The Song Beverly Consumer Warranty Act specifies this in California Civil Code 1793.2 as follows:
“In the case of restitution, the manufacturer shall make restitution in an amount equal to the actual price paid or payable by the buyer, including any charges for transportation and manufacturer-installed options, but excluding non-manufacturer items installed by the dealer or the buyer . . .” (Emphasis added).
Now, a consumer could probably remove the expensive item or items but must be careful not to damage the vehicle in the process.
As you may now know if you have read my blog, there are other items that the vehicle manufacturer is not required to reimburse a consumer who makes, and prevails, on a lemon law claim under the Song Beverly Consumer Warranty Act. One of those items is a vehicle’s negative equity. Negative equity is an amount a vehicle is underwater (upside down in value) or in the red at the time of the lemon law settlement. Generally, a vehicle can be in the red or underwater when the consumer trades in a vehicle for which the consumer owes more money to the vehicle lienholder, generally a bank, than what the vehicle is worth in the marketplace.
Related reading: Vehicle Negative Equity
The other item that the vehicle manufacturer is not required to reimburse a consumer is the vehicle’s mileage offset. A vehicle mileage offset is an amount the vehicle manufacturer would deduct from a lemon law settlement for the number of miles the consumer drove the vehicle up until the time the vehicle was repaired for the issue that gave rise to the vehicle being deemed a lemon.
Related reading: vehicle mileage offset.
And as you now know from reading this blog, the third item that the vehicle manufacturer is not required to reimburse a consumer is non-manufacturer items installed by the dealership or consumer.
Nevertheless, sometimes, a California lemon law attorney may be able to negotiate with the vehicle manufacturer that the vehicle manufacturer reimburses to the consumer the non-manufacturer items installed by the dealership or consumer. This is why it is important to contact a competent California lemon law attorney to handle a potential lemon law matter.
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Luis Aguirre California Lemon Law Attorney 26060 Acero Suite 111
Mission Viejo, CA 92691 Telephone: 949.342.6199.
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