Understanding Hawaii 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: Honda, Dodge, Chevrolet and 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.
Hawaii’s lemon law covers vehicles primarily designed for the transportation of persons or property over public streets and highways that are used for personal, family or household purposes. The lemon law further covers motorcycles bought or leased after Sept. 1, 2010 and vehicles used for an individual’s business purposes. The lemon law covers vehicles owned or leased by a sole proprietorship, corporation or partnership that has purchased or leased with no more than one vehicle per year.
The Hawaii lemon law covers purchasers of motor vehicles, as well as consumers who lease vehicles for one year or more. The lemon law further covers anyone to whom the vehicle is transferred within the vehicle’s warranty period, and anyone else entitled to enforce the warranty’s terms.
Hawaii’s lemon law covers nonconformities. The lemon law defines a nonconformity as a defect, malfunction or condition that substantially impairs the use, market value or safety of a vehicle, and causes it to not conform to its applicable express warranty. The lemon law further defines “substantially impairs” as rendering the vehicle unfit, unreliable or unsafe for warrantied or normal use, or significantly diminishing its value.
The lemon law does not cover nonconformities caused as a result of abuse, neglect, or unauthorized modifications or alterations by the consumer.
Hawaii’s lemon law establishes a “lemon law rights period.” That period is defined as the term of the manufacturer’s express warranty, two years after the vehicle’s delivery to the consumer, or the first 24,000 miles of operation; whichever is sooner.
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The Hawaii lemon law compels manufacturers to repair nonconformities reported during the lemon law rights period. Hawaii’s lemon law presumes the manufacturer has been allowed a “reasonable number of repair attempts” to fix the nonconformity. The law defines this number as three or more repair attempts by the manufacturer or their authorized agents. After this, if the nonconformity remains, or if the vehicle is out of service for more than 30 business days, the manufacturer must repurchase or replace the vehicle. The number of reasonable attempts falls to one if the nonconformity in question could potentially cause death or serious injury if driven.
If the manufacturer cannot repair the nonconformity, they must either repurchase or replace the vehicle. The Hawaii lemon law requires manufacturers to pay the full purchase price paid for the vehicle when repurchasing. Manufacturers must also pay collateral charges including taxes, license and registration fees, title charges, etc. They must pay incidental charges as well, which include towing charges and the cost to the consumer of obtaining alternative transportation. The manufacturer may withhold a reasonable allowance for use. The allowance is defined as 1% of the purchase price for every 1,000 miles of use up to the date of the third repair attempt, the date of the first repair attempt for a life-threatening nonconformity, or the 30th cumulative business day the vehicle is out of service.
Hawaii’s lemon law requires manufacturer’s replacing a nonconforming vehicle to provide a new vehicle that is identical or reasonably equivalent to the vehicle being replaced. The manufacturer is responsible for any general excise taxes and governmental fees for the replacement vehicle. The consumer must pay a reasonable offset for the use of the nonconforming vehicle, calculated as a repurchased vehicle above.
The Hawaii lemon law allows consumers to pursue arbitration through the State Certified Arbitration Program. Consumers can choose either binding or non-binding arbitration. The main difference between binding and non-binding arbitration is after a non-binding arbitration, either party can demand a court trial within 30 days of the arbitrator’s decision. If neither party does so, the arbitrator’s decision becomes final and binding upon all parties.
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, should be granted to the consumer. If the consumer accepts the arbitrator’s decision, the manufacturer agrees to comply with it. A manufacturer’s arbitration process must comply with the Code of Federal Regulations.
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. Consumers can bring legal representation, though legal fees may not be awarded by the arbitrator unless the manufacturer has chosen to include them as an award in their arbitration application. Any consumer looking to pursue the arbitration process in Hawaii is advised to speak 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 prior to the hearing. Unfortunately, in arbitration both sides have fewer rights to discovery: the legal process by which litigants can obtain evidence. In a lemon law case this puts consumers at a disadvantage, 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.
Hawaii consumers with warrantied vehicle problems would be well served to contact a law firm for a consultation on what their next step should be, whether it be going through with arbitration or proceeding to trial. In court, consumers are guaranteed the ability to gather evidence under the state’s civil discovery rules, and to be represented by a qualified lawyer who can guide them through the often complex legal process.
By pursuing a claim under the Magnuson-Moss Warranty Act, Hawaii 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 have to pay the claimants’ reasonable attorneys’ fees if the claimant prevails against the manufacturer.