Understanding Colorado Lemon Law
Roughly 150,000 cars sold in America every year are classified as lemons: cars with repeated, unfixable problems. Lemons can come from any manufacturer: Chevrolet, Honda, Ford and almost every other manufacturer has built lemon vehicles over the years.
“Lemon laws” enacted across the United States help protect consumers who purchase defective vehicles and compensate them for their losses. Additionally, a powerful federal law known as the Magnuson-Moss Warranty Act provides protection for consumers who purchase cars that are having problems under the manufacturer’s warranty. Some lemons may eventually be recalled by the manufacturer, if the problems are systemic.
Colorado’s lemon law covers private passenger vehicles, pickup trucks and vans designed primarily for travel on public highways, used to carry no more than 10 people and sold to Colorado consumers.
The lemon law does not cover motorhomes or vehicles designed to travel on three or fewer wheels. The law does not cover leased vehicles but does cover used vehicles.
The Colorado lemon law covers consumers who purchase vehicles normally used for personal or household purposes. The law further covers anyone to whom a vehicle is transferred for similar purposes during the warranty term, or anyone else entitled to enforce the warranty’s obligations.
Colorado’s lemon law covers any defect or condition that substantially impairs the vehicle’s use and market value. The law calls such a defect or condition a “nonconformity.” The law does not cover any nonconformity caused by the consumer abusing, neglecting, or making unauthorized modifications of the vehicle.
The lemon law mandates that the manufacturer bring any nonconforming vehicle into conformity with its warranty. The law defines “warranty” as the express warranty or any affirmation of fact or promise the manufacturer makes in connection with selling a new motor vehicle.
The manufacturer must be allowed a reasonable number of attempts to fix any nonconformity reported to them by the consumer. The Colorado lemon law defines a “reasonable number of attempts” as four or more times for the same problem without success, or if the vehicle is in the shop for 30 days or more without successfully repairing the problem.
Before pursuing further action, consumers in Colorado must allow a manufacturer whom they previously gave written notice of the nonconformity one final attempt to fix the problem. The final attempt counts as one repair attempt toward meeting the reasonable number of repair attempts.
If the manufacturer cannot bring the vehicle into conformity with its warranty, they must repurchase or replace it. Colorado’s lemon law compels manufacturers to repay the vehicle’s full purchase price. The manufacturer must also pay the sales tax, license fees, registration fees and any similar governmental charges. Manufacturers may withhold a reasonable allowance for the consumer’s vehicle use, depending on the use amount before the consumer’s first written report of a nonconformity.
When replacing a vehicle under the Colorado lemon law, the manufacturer must provide a comparable motor vehicle. The reasonable use allowance doesn’t apply to a replacement vehicle.
Colorado’s lemon law requires consumers to initially use a manufacturer’s “informal dispute settlement procedure,” i.e. arbitration, if the manufacturer has established such a procedure. The lemon law’s provisions concerning repurchase or replacement don’t apply until the consumer has first resorted to arbitration.
In an arbitration, a neutral third party (an arbitrator) decides whether a reasonable number of repair attempts have been made and what award, if any, the consumer should receive. If the consumer accepts the arbitrator’s decision, the manufacturer agrees to comply with it.
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There are downsides to the arbitration process. Firstly, attorneys are not required for either side in arbitration. However, the manufacturer will certainly either send an attorney or someone advised by an attorney. Any consumer looking to pursue the Colorado arbitration process should consult with a law firm beforehand.
Arbitration programs allegedly assist both consumer and manufacturer in collecting evidence to be presented from each side, so that it may be shared with both sides before the hearing. Unfortunately, in arbitration both sides have fewer rights to discovery: the legal process litigants can use to obtain evidence. In a lemon law case this disadvantages consumers, as they need discovery to gather evidence to prove their cases, and much of the evidence is held by the manufacturer and dealership.
Before the arbitration begins, the owner should collect all documents relating to the vehicle and the repair process, including the letters exchanged with the manufacturer. They should also arrange for witnesses to appear at the hearing, including friends who have witnessed the vehicle’s problems. The vehicle in question should also be ready for inspection and test drive at the hearing.
By pursuing a claim under the Magnuson-Moss Warranty Act, Colorado consumers can hire lawyers who will represent them without the vehicle owner having to pay any attorneys’ fees directly out of their pocket. This is because the federal Act provides that the vehicle manufacturer shall pay the claimants’ reasonable attorneys’ fees if the claimant prevails against the manufacturer.
Lemonlawusa.org encourages vehicle owners with a lemon to obtain legal counsel. You can bet the car manufacturers have legal counsel at the ready to help defend against lemon law claims both in arbitration and in court.