Tag Archives: Certified Pre-Owned

The Lemon Law and Used Vehicles
A Major Law Change

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One of the most critical legal elements under the California lemon law is that a vehicle must be a “new motor vehicle” to qualify under the law. Since its inception decades ago, the California lemon law has enjoyed a very broad definition of the term, “new motor vehicle” which included new vehicles, but also included used vehicles which had some of the factory warranty left remaining on the used vehicle at the time of purchase. For example, if you purchased a used vehicle from a dealership with 25,000 miles on the odometer, and the vehicle had a 36,000 mile warranty when sold as new, the vehicle would still qualify under the lemon law despite being a used vehicle.

Sadly, however, the new recent case law sent a punch to consumers who have bought used vehicles. In Rodriguez v. Us, the California Court of Appeals determined that a used vehicle with some of the factory warranty remaining is not to be considered a “new motor vehicle” and is therefore not protected by the lemon law. (There are some exceptions to this such as the vehicle was a certified pre-owned vehicle, and dealership demos.) Rodriguez basically wipes out access to the lemon law for about 30% of all consumers.

The full effect of this new law is still unfolding and the full impact yet unknown. Rodriguez may also be appealed before California’s Supreme Court. However, in the meantime, we do know that the Rodriguez case has sent a shock wave in the California lemon law legal world, and significantly impacts consumers who have purchased used vehicles.

Is The Manufacturer Directly Liable For Breach Of The Express CPO Warranty?

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Last month, an important case, for the first time put manufacturers on the hook for sales of used vehicles with problems beginning outside of the original manufacturer’s warranty, but still within the Certified Pre-Owned warranty. It has been unclear for years whether a manufacturer was required to buy back a used vehicle when the problems occurred after the original warranty expired.  As long as the problems still occur during the CPO warranty, they’re subject to the lemon law.  On the caveat, if the vehicle wasn’t purchased as a Certified Pre Owned vehicle, the manufacturer is off the hook if the problem occurs for the first time outside of the original warranty.  The concern with this case, if any, would be that the Certified Pre-Owned program given by all manufacturers may be canceled since the manufacturers don’t want the added responsibility.

The case involves the sale of a certified preowned Mercedes Benz that still had a portion of the new vehicle warranty remaining and an additional used vehicle warranty from the manufacturer. An un-repairable defect manifested after the expiration of the new vehicle warranty, but during the duration of the used vehicle warranty. Mercedes Benz refused to repurchase the vehicle. The plaintiff sued and a jury found Mercedes Benz liable under the Song Beverly Act for breach of the express warranty and the implied warranty of merchantability. The plaintiff was awarded the same compensatory damages on both causes of action.

Click Here to read a transcript of the case.

FTC Sued Over Changes To Certified Pre-Owned Designation

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The Center for Auto Safety along with five other consumer and safety groups have filed a lawsuit against the Federal Trade Commission (FTC) over its recent decision to permit dealerships to advertise a vehicle as Certified Pre-Owned (CPO) despite having open recalls. The FTC reached an agreement last year with General Motors and two other dealerships, allowing them to advertise automobiles as “certified pre-owned” even though they might have an issue related to a safety recall that still needs to be fixed. The agency did require the companies to disclose any uncompleted safety recalls to the buyer.

The groups suing the FTC say that dealerships could previously sell vehicles with dangerous, unaddressed safety recalls, but allowing them to designate them as CPO will permit unscrupulous auto dealers to engage in false and deceptive advertising about the safety of the vehicles they are selling.