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A Dealers’ Guide To The Massachusetts Used Vehicle Warranty Law Deval L. Patric

A Dealers’ Guide To The Massachusetts Used Vehicle Warranty Law Deval L. Patrick, Governor Barbara Anthony, Undersecretary 2 A DEALER’s GUIDE TO THE MASSACHUSETTS USED VEHICLE WARRANTY LAW The Massachusetts Used Vehicle Warranty Law, G.L. c. 90, § 7N ¼, (General Laws chapter 90, section 7 N ¼) has been in effect since July 1, 1988, but consumers and dealers still often have questions about particular provisions of the law. This guide is written to provide information for dealers, to ensure that new dealers coming into the marketplace are aware of their obligations under the law. For individual legal advice, dealers should contact private counsel. Additional information about the law and about other consumer laws related to motor vehicles is available on the Consumer Affairs web site: www.mass.gov/consumer Focus of the Law The Used Vehicle Warranty Law is intended to provide certain warranty rights to consumers who purchase a vehicle costing $700 or more, from a dealer. A “dealer” is specifically defined under the law—you qualify as a dealer if you have sold more than three vehicles in the preceding 12 months. Under the law, you must provide a Massachusetts-specific written warranty to consumer purchasers. The law also requires dealers to buy back vehicles under certain conditions, if the vehicle has a defect that impairs use or safety and cannot be repaired by the dealer within three repair attempts for the same defect, or the vehicle is out of service for more than 10 business days. Vehicles Covered by the Law • A used car, van or truck that is sold by a Massachusetts new or used car dealer, for $700 or more, that has fewer than 125,000 miles on the odometer when it is sold. • To qualify for the $700 exemption, these costs must total less than $700: the purchase price of the vehicle, including any trade-in and/or over-allowance; the cost of any options purchased from or through the dealer; the cost of preparing the vehicle for its sale and delivery to the consumer; and any other costs related to the sale that the consumer paid to the dealer. • Not included in the $700: sales or excise tax, finance charges*, registration fees, the cost of any extended warranty or service contract, and the cost of motor vehicle insurance. *Note: Any motor vehicle dealer who finances the sale of a vehicle under a retail installment contract and holds the contract, must obtain a sales finance company license from the Division of Banks pursuant to G.L. c. 255B. This applies regardless of whether you are charging interest on the sale. • Demonstrator/fleet/executive vehicles are covered by the Used Vehicle Warranty Law but consumers who qualify for both new and used car arbitration must seek relief from the manufacturer under the new car Lemon Law before seeking relief from you under the Used Vehicle Warranty Law. When a consumer buys a demonstrator/fleet/executive vehicle, the new car Lemon Law, G.L. c. 90, §7N ½ covers the vehicle for the remainder of the first year from the date the dealer or manufacturer first puts the vehicle into regular use (the “in-service” date), or 15,000 miles, whichever comes first. To qualify for arbitration under the new car Lemon Law, a consumer must have his car repaired by the manufacturer three or more times for the same substantial defect, or the vehicle must be out of service for repair of a substantial defect or combination of defects 3 for fifteen (15) or more business days. Repairs must be made within one year of the original “in-service” date or within 15,000 miles, whichever comes first. The consumer’s request for new car arbitration must be received by the new car Lemon Law arbitration program at the Office of Consumer Affairs and Business Regulation within eighteen (18) months of the date the consumer takes delivery of the vehicle. A consumer who owns a demonstrator/fleet/executive vehicle may use the Used Vehicle Warranty Law only if he does not qualify to be accepted for the New Car Lemon Law program. • Antique/classic cars are covered by this law, if they are sold for $700 or more, with fewer than 125,000 miles on them at the time of sale. There is no specific exemption provided for them under the law. • Salvage title vehicles are also covered by this law if they are sold for $700 or more, with fewer than 125,000 miles on them at the time of sale. They are also covered by the “Lemon Aid” law, G.L. c. 90, § 7N. There is no specific exemption provided for salvage title vehicles under either of these laws. Vehicles NOT Covered by the Law • Motorcycles, mopeds, dirtbikes; • Vehicles sold for less than $700; • Vehicles sold with more than 125,000 miles on the odometer (Note: it is a violation of state and federal law to alter odometer readings or to tamper with an odometer); • Leased vehicles (unlike the new car Lemon Law, which covers leased vehicles); • Previously leased vehicles that are subsequently sold are specifically exempted from the used vehicle warranty law, but only if the vehicle is sold to the lessee, a family member of the lessee, or an employee of the lessee; • Any vehicle used primarily for business purposes, or purchased by, owned by or registered to a business; and • Auto homes, and vehicles built primarily for off-road use (ATVs and “dune buggies”) DISCLAIMER/DISCLOSURE You cannot disclaim your obligations under this required state warranty, and telling the consumer about known defects does not excuse you from your responsibility to repair problems under the warranty. You cannot ask a consumer to give up his or her rights under the Used Vehicle Warranty law. A statement or notice that the consumer has given up his rights under this law does not excuse you from your obligation to give the consumer a warranty, or your obligation to repair covered defects. This is true even if the consumer signs such a statement. Private party sales A “private party sale” is a sale between two non-dealers. The Used Vehicle Warranty law provides that for such transactions, a private party seller must disclose known defects to purchasers. If the purchaser can prove that a seller knew about a defect which impairs the used vehicle’s safety or substantially impairs its use, the purchaser can notify the seller he is cancelling the sale within thirty (30) days after the sale. The purchaser is entitled to the return of all monies paid to the seller, less a deduction for use of fifteen (15) cents a mile. If the purchaser ends up suing the seller, and the court finds that an offer of settlement made by the seller in response to a refund request from the purchaser was not 4 reasonable, the purchaser can also recover attorney’s fees and costs from the seller, but if the court finds that the lawsuit was frivolous or not in good faith, the seller can recover attorney’s fees and costs from the purchaser. Private party sellers are not required to repair vehicles. Private party sellers must also comply with the Lemon Aid law (sales cancellation), but not with the Implied Warranty of Merchantability or the Implied Warranty of Fitness for a Particular Purpose, as consumers are not “merchants,” nor generally with the Consumer Protection Act, since consumers are not customarily engaged in trade or commerce simply by selling their own vehicles. The Warranty What is covered by the Used Vehicle Warranty You as the dealer are responsible under this law for all parts and labor necessary to repair any defects or malfunctions, or combination of defects or malfunctions, which impair a vehicle’s use or safety. In deciding whether a defect or malfunction impairs safety, determine whether the defect or malfunction creates or has the potential to create danger to the consumer, the passengers, to others, or to property. You can charge a consumer a fee of up to $100 for repair of all defects during the warranty period. That is, the most you can charge for any one vehicle is $100, and in order to do this, you must have stated on the consumer’s copy of the warranty the amount (up to $100) that may be charged. If you do not state an amount on the warranty, you cannot charge the consumer anything at all for repair of qualified defects during the warranty period. Length of Warranty The length of the dealer warranty depends on how many miles are on the vehicle when you sell it. Mileage at time of Purchase Warranty (whichever comes first) Fewer than 40,000 miles 90 days or 3,750 miles 40,000 to 79,999 miles 60 days or 2,500 miles 80,000 to 124,999 miles 30 days or 1,250 miles 125,000 miles or over Implied Warranty only If the true mileage cannot be determined at the time of the sale, the length of warranty will depend on the age of the vehicle. To determine the vehicle’s age, subtract the model year from the uploads/Geographie/ dealer-guide-brochure.pdf