The Iowa lemon laws provide very little protection for used car buyers. Unless the original manufacturer's warranty is still in effect and able to be transferred to the new buyer, they don't apply at all. Iowa has other consumer protection laws, however, that do apply to used cars. These require sellers to disclose any significant repairs to a vehicle and prohibit fraudulent dealing. Buyers of used cars in Iowa can also find protection from federal lemon laws and rules.
The lemon laws in Iowa can be found in Chapter 322G of the Iowa Code. The law creates a two-year period after the purchase of an automobile during which the manufacturer is responsible for repairing significant defects that do not conform to the express warranty on the vehicle. This protection, however, only extends to the original warranty provided by the manufacturer of new cars. Buyers of used cars that are not covered by a manufacturer's warranty nevertheless are covered by federal lemon and consumer protection laws and state laws that enforce implied warranties on auto sales.
FTC Used Car Rule
A dealer in Iowa that sells at least six used cars in a 12-month period is bound by the requirements of the Federal Trade Commission (FTC) Used Car Rule. A used vehicle is defined here as one that's been used for any purposes other than relocating or test driving, whether or not a title has been issued or transferred. But the rule doesn't apply to leasors or automobiles, banks or other lenders who sell repossessed vehicles, or vehicles sold to an employee by an employer. The FTC Used Car Rule mandates that a Buyer's Guide be included with a car to give potential buyers information about the vehicle.
Iowa's consumer protection laws shield use car buyers from fraudulent sellers. Prior to the sale, Iowa Code section 321.69 requires the seller of a used car or truck that is less than eight years old to disclose in writing the extent of any damage to the vehicle incurred while in their ownership for which the repair costs were more than half of the pre-damage retail value. This disclosure must appear on the title of the vehicle. In addition, Iowa Code section 714.16 prohibits deceptive trade practices generally, such as false advertising. A defrauded consumer can receive a refund, costs and attorneys fees, as well as up to $40,000 in civil penalties.
The used car Buyer's Guide protects the purchaser by providing important information and notice of rights. The Federal Trade Commission requires it be located in an obvious and accessible place on the vehicle, such as under a windshield wiper. The guide must include the vehicle make, model, model year and vehicle identification number (VIN), and explain the mechanical and electrical systems of the car and any major problems that should be expected. Significantly, it has to inform the buyer of any express warranties applicable to the car, including an original manufacturer's warranty or any warranty or service contract provided by the dealer. It must give the terms of any warranty, particularly the dealer's obligations to pay for repairs, which can be enforced in state court. The guide also lists the buyer's rights, which include have an independent inspector look at the vehicle, and to get all promises by the dealer in writing.
In addition to the protections offered by the FTC, the law in Iowa requires used car dealers to honor any implied warranty related to a used car, even if it is sold "as is." The standard implied warranties applicable to a used vehicle are that it is capable of normal driving and use, is free of unreasonably hazardous conditions, has no unexpected major problems and is similar in quality to like cars in the same price range. Additionally, if a dealer tells the buyer that a particular car is suitable for a given purpose, he creates an implied warranty for that purpose that is enforceable under Iowa laws.
- State of Iowa