Tag Archives: Certified Pre-Owned

Lemon Law Coverage On Used Vehicles

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Purchasing a used vehicle is a decision many consumers make for perfectly valid reasons. Used cars, trucks, RVs, motorcycles, and other recreational vehicles often come with a significantly lower price tag than new models, making them an attractive option for budget-conscious buyers. When a used vehicle still has some factory warranty remaining, the deal can appear even more appealing.

However, one critical factor is often overlooked during the buying process: lemon law protection. In many cases, used vehicles are not covered by the lemon law at all, leaving buyers exposed if serious defects arise after purchase.

Why Lemon Law Coverage Matters

California’s lemon law was designed to protect consumers from vehicles that have substantial defects and cannot be properly repaired within a reasonable number of attempts. While this protection is strong for new vehicles, it is far more limited when it comes to used ones.

In some situations, purchasing a used vehicle means the buyer assumes the risk of mechanical problems—even if the vehicle still carries a partial manufacturer warranty. This can come as a surprise to consumers who reasonably expect that any remaining warranty automatically provides full legal protection. Unfortunately, that is rarely the case.

The Important Exception: Certified Pre-Owned Vehicles

One category of used vehicles does stand apart: true Certified Pre-Owned (CPO) vehicles. These vehicles are sold exclusively by new car dealerships that represent the same manufacturer as the vehicle being sold. A manufacturer-backed CPO vehicle has undergone a standardized inspection process and includes a factory-supported warranty.

It is important to note that not every vehicle advertised as “certified” qualifies as a true CPO. Independent dealerships frequently use the term “certified” to describe their own inspection programs, but these designations do not carry legal weight under the lemon law. Only manufacturer-backed CPO vehicles receive this special consideration.

Because of the added protections and warranties, CPO vehicles are typically priced higher than other used vehicles. While the upfront cost may be greater, the added security can prove invaluable if serious defects arise later.

Courtesy and Demonstrator Vehicles: Another Protected Category

Another lesser-known exception involves courtesy vehicles and demonstrator vehicles. These are vehicles that were previously used by dealerships as loaners for customers or driven by dealership staff. Although they may have mileage on them, title was never transferred to a consumer.

From a legal standpoint, these vehicles are often treated as new under the lemon law, meaning buyers may still be entitled to full lemon law protections. This makes courtesy and demonstrator vehicles an attractive option for consumers seeking the benefits of lemon law coverage without purchasing a brand-new vehicle.

Balancing Savings and Risk

Buying used can absolutely make financial sense—but it is not without trade-offs. The lower purchase price often comes with reduced legal protection, and consumers must decide how much risk they are willing to assume.

Choosing a true Certified Pre-Owned vehicle or a dealership courtesy or demonstrator vehicle may cost more upfront, but these options offer a level of protection similar to purchasing new. In many ways, the additional cost functions like insurance: an investment in peace of mind should the vehicle turn out to have serious defects.

Making an Informed Decision

The key to a smart purchase is understanding what protections come with the vehicle before signing the paperwork. Consumers should ask detailed questions, verify whether a vehicle is truly manufacturer-certified, and confirm the warranty terms in writing.

An informed buyer is far less likely to face unpleasant surprises down the road. When it comes to used vehicles, knowing where lemon law protection applies—and where it does not—can make all the difference.

The Lemon Law and Used Vehicles
A Major Law Change

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One of the most critical legal elements under the California lemon law is that a vehicle must be a “new motor vehicle” to qualify under the law. Since its inception decades ago, the California lemon law has enjoyed a very broad definition of the term, “new motor vehicle” which included new vehicles, but also included used vehicles which had some of the factory warranty left remaining on the used vehicle at the time of purchase. For example, if you purchased a used vehicle from a dealership with 25,000 miles on the odometer, and the vehicle had a 36,000 mile warranty when sold as new, the vehicle would still qualify under the lemon law despite being a used vehicle.

Sadly, however, the new recent case law sent a punch to consumers who have bought used vehicles. In Rodriguez v. Us, the California Court of Appeals determined that a used vehicle with some of the factory warranty remaining is not to be considered a “new motor vehicle” and is therefore not protected by the lemon law. (There are some exceptions to this such as the vehicle was a certified pre-owned vehicle, and dealership demos.) Rodriguez basically wipes out access to the lemon law for about 30% of all consumers.

The full effect of this new law is still unfolding and the full impact yet unknown. Rodriguez may also be appealed before California’s Supreme Court. However, in the meantime, we do know that the Rodriguez case has sent a shock wave in the California lemon law legal world, and significantly impacts consumers who have purchased used vehicles.

Is The Manufacturer Directly Liable For Breach Of The Express CPO Warranty?

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Last month, an important case, for the first time put manufacturers on the hook for sales of used vehicles with problems beginning outside of the original manufacturer’s warranty, but still within the Certified Pre-Owned warranty. It has been unclear for years whether a manufacturer was required to buy back a used vehicle when the problems occurred after the original warranty expired.  As long as the problems still occur during the CPO warranty, they’re subject to the lemon law.  On the caveat, if the vehicle wasn’t purchased as a Certified Pre Owned vehicle, the manufacturer is off the hook if the problem occurs for the first time outside of the original warranty.  The concern with this case, if any, would be that the Certified Pre-Owned program given by all manufacturers may be canceled since the manufacturers don’t want the added responsibility.

The case involves the sale of a certified preowned Mercedes Benz that still had a portion of the new vehicle warranty remaining and an additional used vehicle warranty from the manufacturer. An un-repairable defect manifested after the expiration of the new vehicle warranty, but during the duration of the used vehicle warranty. Mercedes Benz refused to repurchase the vehicle. The plaintiff sued and a jury found Mercedes Benz liable under the Song Beverly Act for breach of the express warranty and the implied warranty of merchantability. The plaintiff was awarded the same compensatory damages on both causes of action.

Click Here to read a transcript of the case.

FTC Sued Over Changes To Certified Pre-Owned Designation

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The Center for Auto Safety along with five other consumer and safety groups have filed a lawsuit against the Federal Trade Commission (FTC) over its recent decision to permit dealerships to advertise a vehicle as Certified Pre-Owned (CPO) despite having open recalls. The FTC reached an agreement last year with General Motors and two other dealerships, allowing them to advertise automobiles as “certified pre-owned” even though they might have an issue related to a safety recall that still needs to be fixed. The agency did require the companies to disclose any uncompleted safety recalls to the buyer.

The groups suing the FTC say that dealerships could previously sell vehicles with dangerous, unaddressed safety recalls, but allowing them to designate them as CPO will permit unscrupulous auto dealers to engage in false and deceptive advertising about the safety of the vehicles they are selling.