STANDARDS OF THE NORTH CAROLINA LEMON LAW
The following is a brief explanation of most relevant provisions of the North Carolina
lemon law. The complete text of the lemon law can be found at North Carolina Gen.
Stat. section 20-351 et seq.
VEHICLES COVERED
The North Carolina lemon law covers any new motor vehicle or new motorcycle, sold or
leased in the state. The lemon law does not cover used vehicles, mopeds, house trailers,
or any motor vehicle (1) purchased or leased before October 1, 2005 that has a gross
vehicle weight of 10,000 pounds or more or (2) purchased or leased on or after October
1, 2005 that weighs more than 10,000 pounds.
CONSUMERS COVERED
The lemon law covers the following consumers:
1. The purchaser, other than for purposes of resale, of a motor vehicle;
2. The lessee of a motor vehicle from a commercial lender, lessor or manufacturer or
dealer; and
3. Any other person entitled by the terms of an express warranty to enforce its
obligations.
VEHICLE CONVERTERS
The lemon law applies to vehicle conv erters.
PROBLEMS COVERED
The lemon law covers any defect, condition, or series of defects or conditions that
substantially impairs the value of the motor vehicle to the consumer. This is referred to
as a nonconformity.
The lemon law provides manufacturers with an affirmative defense if it can be shown
that an alleged nonconformity or series of nonconformities is the result of abuse,
neglect, odometer tampering by the consumer, or unauthorized modifications or
alterations of a motor vehicle.
MANUFACTURER’S DUTY TO REPAIR A VEHICLE
If a new motor vehicle does not conform to all applicable express warranties, and the
consumer reports the nonconformity to the manufacturer, its agent or authorized dealer
during the term of the express warranties or during a period of one year following the
date of the motor vehicle’s original delivery to the consumer, whichever is greater, then
the manufacturer must make or arrange to have made the necessary repairs to conform
the vehicle to the express warranties.
The necessary repairs must be made even after the expiration of the term of the express
warranties or the one year period.
Express warranties must be in effect for at least one year or 12,000 miles. The mileage
limit of express warranties begins to accrue from the mileage on the odometer at the
date of original delivery to the consumer.
MANUFACTURER’S DUTY TO REPURCHASE OR REPLACE A VEHICLE
If the manufacturer is unable to conform the motor vehicle to any applicable express
warranty by repairing or correcting, or arranging for the repair or correction of, any
nonconformity after a reasonable number of repair attempts, and the nonconformity
occurred no later than two years or 24,000 miles following the motor vehicle’s original
delivery, then the manufacturer must, at the option of the consumer, either replace or
repurchase the motor vehicle.
REASONABLE NUMBER OF REPAIR ATTEMPTS
The North Carolina lemon law establishes a presumption that a reasonable number of
repair attempts has been undertaken to conform a motor vehicle to the applicable
express warranties if either of the following occurs:
1. The same nonconformity has been presented for repair to the manufacturer, its
agent or authorized dealer four or more times but the nonconformity continues to
exist; or
2. The motor vehicle was out of service to the consumer during or while awaiting repair
of the nonconformity or a series of nonconformities for a cumulative total of 20 or
more business days during any one year period of the warranty.
The express warranty term, one year period, and 20 day period are extended by any
period of time during which repair services are not available to the consumer because of
war, strike, or natural disaster.
The consumer may prove that a defect or condition substantially impairs the value of the
motor vehicle to the consumer in a manner other than the terms of the presumption set
out above.
NOTICE AND FINAL REPAIR ATTEMPT
The lemon law contains two provisions for written notice from the consumer to the
manufacturer:
1. If the consumer wishes to rely on the presumption of a reasonable number of repair
attempts, the consumer must notify the manufacturer directly in writing of the
existence of the nonconformity or series of nonconformities, and allowed the
manufacturer a reasonable period no longer than 15 calendar days to correct the
nonconformity or series of nonconformities.
This notice requirement applies if the manufacturer clearly and conspicuously
discloses to the consumer in the warranty or owners manual that written notification
of a nonconformity is required before a consumer may be eligible for a refund or
replacement. The manufacturer must also include in the warranty or owners manual
the name and address where written notification may be sent.
2. A consumer bringing a civil action against the manufacturer must give the
manufacturer written notice of his intent to bring the action at least 10 days prior to
filing the suit.
DISPUTE RESOLUTION
The manufacturer may require that the consumer first utilize the informal dispute
settlement procedure before bringing an action under the lemon law if:
1. The procedure complies with 16 C.F.R. Part 703, and
2. The manufacturer has clearly and conspicuously written this requirement into the
written warranty and any warranty instructions provided to the consumer.
TIME PERIOD FOR FILING CLAIMS
Not specified in the lemon law. The North Carolina Department of Justice advises
consumers to file claims within three years from the date the alleged defect is
discovered.
A claim must be filed with BBB AUTO LINE within four years from the date the alleged
defect is discovered.
REMEDIES UNDER THE NORTH CAROLINA LEMON LAW
REPURCHASE OF AN OWNED VEHICLE
The North Carolina lemon law sets out the following amounts that a manufacturer must
pay when it repurchases an owned motor vehicle under the lemon law:
1. The full contract price, including but not limited to charges for undercoating, dealer
preparation and transportation, installed options, and the non-refundable portions
of extended warranties and service contracts;
2. All collateral charges, including but not limited to sales tax, license and registration
fees, and similar government charges;
3. All finance charges incurred by the consumer after the first report of the
nonconformity to the manufacturer, its agent or authorized dealer; and
4. Any incidental damages and monetary consequential damages;
5. Less a reasonable allowance for the consumer’s use of the vehicle.
Refunds must be made to the consumer and any lienholder as their interests may
appear.
For vehicles purchased before October 1, 2005, the reasonable allowance for use is that
amount directly attributable to use by the consumer prior to the first report of the
nonconformity to the manufacturer, its agent or authorized dealer, and during any
subsequent period when the vehicle is not out of service because of repair. The
reasonable allowance is presumed to be an amount calculated in accordance with the
following formula:
Number of miles attributable to the consumer
100,000
X Cash Price
For vehicles purchased on or after October 1, 2005, the reasonable allowance for use is
calculated in accordance with the following formula:
Number of miles used by the consumer up to the
date of the third attempt to repair the same nonconformity
which is the subject of the claim,
or the twentieth cumulative business day when the vehicle is
out of service by reason of repair of one or more
Vehicle
nonconformities, whichever occurs first
120,000
REPURCHASE OF A LEASED VEHICLE
X
purchase
price
The North Carolina lemon law sets out the following amounts that a manufacturer must
pay when it repurchases a leased motor vehicle under the lemon law:
To the lessee:
1. All sums previously paid by the consumer under the terms of the lease;
2. All sums previously paid by the consumer in connection with entering into the lease
agreement, including but not limited to any capitalized cost reduction, sales tax,
license and registration fees, and similar government charges; and
3. Any incidental and monetary consequential damages;
4. Less a reasonable allowance for the consumer’s use of the vehicle.
To the lessor:
1. 105% of the actual purchase cost of the vehicle to the lessor;
2. Less 85% of the amount actually paid by the consumer to the lessor pursuant to the
lease.
Refunds must be made to the consumer and lessor as their interests may appear. The
consumer’s written lease must be terminated by the lessor without any penalty to the
consumer. The lessor must transfer title of the motor vehicle to the manufacturer as
necessary to effectuate the consumer’s rights under the lemon law.
For vehicles leased before October 1, 2005, the reasonable allowance for use is that
amount directly attributable to use by the consumer prior to the first report of the
nonconformity to the manufacturer, its agent or authorized dealer, and during any
subsequent period when the vehicle is not out of service because of repair. The
reasonable allowance is presumed to be an amount calculated in accordance with the
following formula:
Actual purchase cost
Number of miles attributable to the consumer X
100,000
of the vehicle to the
lessor
For vehicles leased on or after October 1, 2005, the reasonable allowance for use is
calculated in accordance with the following formula:
Number of miles used by the consumer up to the
date of the third attempt to repair the same nonconformity
which is the subject of the claim,
or the twentieth cumulative business day when the vehicle is
out of service by reason of repair of one or more
Lessor’s
actual
nonconformities, whichever occurs first
120,000
X
lease
price
REPLACEMENT
When replacing a vehicle under the North Carolina lemon law, the manufacturer must
replace the motor vehicle with a comparable new motor vehicle. The reasonable
allowance for use does not apply to a replacement.
In the replacement of a leased vehicle, the lessor must transfer title of the motor vehicle
to the manufacturer as necessary to effectuate the consumer’s rights under the lemon
law.