Understanding Iowa Lemon Law
American car dealerships sell roughly 150,000 cars each year classified as lemons: cars with repeated, unfixable problems. Lemons can come from any manufacturer: Chevrolet, Dodge, 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 provide a legal procedure to 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 and have an unexpired manufacturer’s warranty.
The Iowa lemon law covers persons who purchase or lease a new vehicle for purposes other than resale or sublease.
The lemon law further covers any person entitled by the vehicle’s warranty to enforce its obligations during the lemon law rights period.
The Iowa lemon law covers vehicles purchased or leased in Iowa. The lemon law also covers vehicles purchased or leased in other states if the consumer is an Iowa resident when they assert their lemon law rights. The lemon law covers used vehicles, but does not cover mopeds, motorcycles, or motorhomes. The lemon law further excludes vehicles with a gross vehicle weight rating over 15,000 pounds.
Iowa’s lemon law provides a lemon law rights period that begins with the vehicle’s delivery to the consumer. It ends at the expiration of the manufacturer’s written warranty, 24 months after the original delivery, or after the first 24,000 miles of operation; whichever comes first.
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The lemon law covers vehicle nonconformities. Iowa’s lemon law defines a “nonconformity” as a defect, malfunction, or conditions in a vehicle that renders the vehicle nonconforming to the terms of its warranty. The law does not cover defects, malfunctions or conditions resulting from accidents, abuse, neglect, or unauthorized vehicle modifications.
The Iowa lemon law says a nonconformity “substantially impairs” a vehicle if it renders it unfit, unreliable or unsafe for warranted or ordinary use. It also substantially impairs the vehicle if it significantly diminishes the vehicle’s value.
Iowa’s lemon law compels manufacturers to repair any nonconformity a consumer reports during the lemon law rights period. The manufacturer must do so even if the repairs are completed after the expiration of the aforementioned period.
The Iowa lemon law provides a presumption that the manufacturer and its authorized agents have had a reasonable number of attempts to repair a nonconformity after certain conditions are met. If the manufacturer is unable to repair a less serious nonconformity after three attempts plus a final attempt 10 days after the consumer’s written notice, the presumption is met. It is also met if the manufacturer is unable to repair a dangerous nonconformity following one attempt and a final one after the consumer’s written notice. The presumption is met if the vehicle is out of service for a cumulative total of 30 or more calendar days for any nonconformity repair.
Iowa’s lemon law requires a manufacturer to repurchase or replace a nonconforming vehicle it is unable to conform to the warranty. The manufacturer must repay the full vehicle purchase price when repurchasing, including any net allowance given for a trade-in vehicle. The manufacturer must also pay collateral charges including all taxes and title charges, options installed by the manufacturer or dealer, and finance charges. They must also pay incidental charges including costs of towing and alternative transportation.
Manufacturers may withhold a reasonable allowance for use per the lemon law. That allowance is calculated using the number of miles driven by the vehicle at the time of the third repair attempt for nonconformity, the first attempt for the repair of a dangerous nonconformity, or at the 20th cumulative day out of service.
Manufacturers replacing a nonconforming vehicle must provide a new vehicle acceptable to the consumer. The new vehicle must be identical or reasonably equivalent to the replaced vehicle. The manufacturer must replace the nonconforming vehicle within 40 days of receiving the consumer’s payment of reasonable offset for use. That offset is determined in the same manner as for a repurchase.
The manufacturer must pay collateral and incidental charges when replacing the vehicle, including all use taxes and title charges, earned finance charges, towing charges and the costs of alternative transportation.
The Iowa lemon law’s provisions for repurchase or replacement do not apply if the consumer does not first resort to the manufacturer’s “informal dispute settlement procedure,” i.e. arbitration. The procedure must be certified by the Iowa Attorney General as complying with the lemon law. The consumer must also be notified at the time of purchase or lease on how to file a claim through the procedure.
In some instances, arbitration can allow for a faster resolution of conflicts between consumers and manufacturers. Arbitration hearings usually last only one day, and take place in a much less formal setting than a court. Consumers should bring 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.
However, arbitration often ends with an outcome unfavorable to the consumer. The third party arbitrator may award the consumer with additional repair attempts, which doesn’t provide any remedy they didn’t have before. They may also decide to dismiss the claim, siding with the manufacturer. The law makes no mention of the ability to recoup attorney’s fees during arbitration. Fortunately, the federal Magnuson-Moss Warranty Act allows for consumers to sue for attorney’s fees alongside damage awards in court.
The manufacturer must abide by the decision of the arbitrator, while the consumer does not. If dissatisfied with the outcome, a consumer can bring civil action in court. By filing a claim under the Magnuson-Moss Warranty Act, Iowa 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.