Understanding North Dakota Lemon Law
Auto manufacturers sell 150,000 cars in America every year classified as lemons: cars with repeated, unfixable problems. Lemons can come from any manufacturer: Toyota, Nissan, Chevrolet 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.
North Dakota’s lemon law protects consumers who purchase or lease passenger vehicles normally used for personal, family or household purposes.
The lemon law further covers anyone to whom the vehicle is transferred within the duration of the vehicle’s warranty, as well as anyone else entitled by the terms of the warranty to enforce its obligations.
The North Dakota lemon law covers vehicles sold or leased in the state. Vehicles covered must be designed principally for the transportation of persons, trucks with a registered gross weight of 10,000 pounds or less, or vehicles using a truck chassis with a seating capacity of four or more passengers. The lemon law covers used vehicles, but does not cover motorhomes.
North Dakota’s lemon law covers any defect or condition that substantially impairs the use and value of the motor vehicle to the consumer. The lemon law defines these issues as “nonconformities.” North Dakota’s lemon law does not cover nonconformities resulting from abuse, neglect or unauthorized modifications or alterations by the purchaser.
The North Dakota lemon law compels manufacturers to repair eligible nonconformities as long as the consumer reports the problem within the term of the warranty. They must also repair nonconformities reported within the vehicle’s warranty term or one year following the vehicle’s original delivery to the consumer, whichever is sooner.
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The consumer must allow the manufacturer a reasonable number of repair attempts to conform the vehicle to its warranty. The lemon law defines a “reasonable number of attempts” as three attempts to fix the same problem without success. 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 North Dakota lemon law requires manufacturers to pay the vehicle’s full purchase price when repurchasing the vehicle. The manufacturer must also pay all collateral charges associated with the purchase including all applicable taxes. The manufacturer may withhold a reasonable allowance for the consumer’s use of the vehicle. That allowance is calculated from the consumer’s use of the vehicle up until the first report of nonconformity.
When replacing a passenger motor vehicle under the North Dakota lemon law, the manufacturer must provide a comparable passenger motor vehicle. The reasonable allowance for use appears to not apply to a replacement vehicle
The North Dakota lemon law’s provisions regarding replacement or repurchase don’t apply to a consumer until they have resorted to an informal dispute settlement procedure, i.e. arbitration. The arbitration service must comply with federal and state laws, and be approved by the North Dakota Attorney General.
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 North Dakota 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.
North Dakota 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, North Dakota 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.