Michigan Law on Used Cars

While most new cars are free of mechanical issues for months or even years, consumers can occasionally find themselves owning a lemon. In those instances, Michigan's Lemon Law/mileg.aspx?page=getobject&objectname=mcl-act-87-of-1986) gives relief to those who buy or lease a defective vehicle. Consumers can receive a refund or replacement vehicle under the law if they meet certain circumstances.

According to the Michigan's Department of the Attorney General, the state's Lemon Law applies to cars, SUVs, pickup trucks and vans bought or leased by Michigan residents. The purchase or lease of these passenger vehicles does not have to occur in Michigan; however, the manufacturer express warranty must be current when they come into ownership. The law does not apply to motorcycles, off-road vehicles, RVs or motor homes, buses or trucks other than those mentioned above.

The Lemon Law usually does not cover used vehicles unless they are "covered by a manufacturer's express warranty at the time of purchase or lease," and the owner reports the issues to the manufacturer or authorized dealer within a year from the time of delivery to the first owner.

Michigan's Lemon Law also applies to people. A person, as defined by the state, can be an individual, a sole proprietorship, a partnership, a corporation, an association, or another legal entity, including a unit or agency of government, a trust or an estate. In regard to the lemon law, this person:

• Buys or leases a motor vehicle with the intention of personal, family or home use and does not sell or lease it to another person.
• Buys or leases fewer than 10 new motor vehicles in a year.
• Buys or leases more than 10 new motor vehicles a year only for personal, family or home use.
• Can enforce the express warranty provisions according to the terms of that warranty.

Some people believe they have the right to return the vehicle within three days of buying or leasing it under the lemon law, but that is not the case. There is no "cooling-off period" in Michigan; generally, the state's contract law does not allow consumers to cancel a sale. However, there are some very limited exceptions for contract cancellation, according to the Attorney General. A dealership may offer a consumer an extended test drive, allowing them to take a vehicle home for a short period before purchase, but that has nothing to do with contract law.

Michigan's Lemon Law gives consumers the right to return their vehicle and get a refund or replacement, but this is not possible until a reasonable number of repair attempts take place. Of course, this will occur in a period of more than three days after purchasing or leasing the vehicle.

The state of Michigan covers any defect or condition that diminishes the value or use of a new vehicle and prevents it from conforming to the vehicle manufacturer's express warranty. It does not cover defects or conditions that result from modifications or installations not made by the manufacturer. It also does not cover an owner's abuse or neglect, or damages resulting from an accident occurring after purchase or lease.

A person with a defective vehicle can find recovery under Michigan's Lemon Law by reporting the problem to the manufacturer or authorized dealer within the term of the warranty or up to a year from the delivery date to the initial purchaser, whichever is first. If the manufacturer receives timely notice of the issue, they must attempt vehicle repairs, even if they cannot do it until after the manufacturer's express warranty expires.

For a vehicle to qualify under Michigan's Lemon Law, it must have an unreasonable repair record while under the warranty. If a manufacturer offers to repair the vehicle, but cannot fix the problem after it reaches a specific number of attempts, entitlement to a refund for the purchase or lease price is indeed possible for the consumer.

The state defines when a reasonable attempt to fix the problem takes place if either of the following is true:

• The same problem exists even though the manufacturer has attempted repairs four or more times within two years of the date of the first attempt.

• The vehicle is out-of-service for over 30 full days or partial days due to repairs under the period of the manufacturer's express warranty or up to a year from the delivery date to the first owner, whichever is first. This does not require the same issue to cause the vehicle to be off the road for multiple days.

To get a refund for a lemon, the consumer must allow the manufacturer to attempt a final repair by giving written notice and return receipt service of the necessity to repair the vehicle. They can do this any time after the third attempt to fix the same defect or condition or after the car has been off the road for a minimum of 25 days in a repair shop.

After receiving notice, the manufacturer must contact the consumer with their intent to take the vehicle to an accessible repair facility. After they do, they have five business days to make the repairs. If they cannot repair it within that time, the consumer may get a similar replacement vehicle or a purchase or lease refund.

If a manufacturer establishes or takes part in an informal dispute settlement, the state Lemon Law will not apply to a customer who has not resorted to a procedure that:

• Applies under the Magnuson Moss Warranty-Federal Trade Commission Improvements Act, 16 CFR 703 (1975), which governs warranties on consumer products.
• Binds the manufacturer by a decision agreed to by the consumer.
• Provides that there is no obligation by the consumer to accept the decision and may pursue the lemon law remedies.
  
• Requires the manufacturer to begin implementation of the final settlement within 30 days after reaching it.

The consumer has the right to demand a refund or choose a comparable replacement vehicle presently in production. A consumer who leases the vehicle and agrees to accept a replacement cannot change their lease except to substitute the VIN, or vehicle identification number.

The purchase price includes any options or modifications and other changes made or installed by the manufacturer, minus a reasonable allowance for the consumer's use of the vehicle and an equivalent to any appraised damage that is not the result of everyday use or the vehicle's defect or condition. The manufacturer must also reimburse the consumer for towing and car rentals while dealing with the flaw or condition.

To protect themselves, consumers should follow all the warranty requirements, including any that state that an authorized dealer approved by the car manufacturer must do the repairs. They should also keep documents and conversations recorded and organized, such as all correspondence with the manufacturer and dealer, and all repair work orders. These should include the dates of the work and the vehicle's mileage at the time.

If the manufacturer is part of the BBB AUTO LINE program, it can help consumers negotiate and hold arbitration hearings for both parties, if necessary. Those who have questions or wish to file a complaint can also contact the Consumer Protection Division, P.O. Box 30213, Lansing, Michigan 48909, or call 517-335-7599 or 877-765-8388. Consumers can also fill out an online complaint form.