STANDARDS OF THE TEXAS LEMON LAW

The following is a brief explanation of most relevant provisions of the Texas lemon law. 
The complete text of the lemon law can be found at Texas Rev. Civ. Stat. Ann. art.
4413(36) § 6.07.
VEHICLES COVERED
The Texas lemon law covers a motor vehicle, defined as:
1.   Every fully self-propelled vehicle that has two or more wheels and has as its primary
purpose the transport of persons or property on a public highway;
2.   Every fully self-propelled, titled vehicle that has two or more wheels and has as its
primary purpose of off-road transportation of persons or property; or
3.   An engine, transmission, or rear axle whether or not attached to a vehicle chassis,
that is manufactured for installation in a vehicle having as its primary purpose the
transport of persons or property on a public highway and having a gross vehicle
weight rating of more than 16,000 pounds.
CONSUMERS COVERED
The lemon law covers the following consumers:
1.   A person who purchases a motor vehicle at retail from a Texas dealer, and who is
entitled to enforce the terms of the manufacturer’s warranty;
2.   The lessor or lessee (other than a sublessee) who purchased or leased a motor vehicle
from a Texas dealer or lessor; and
3.   The transferee or assignee of a retail purchaser, lessor or lessee as described above,
as long as the transferee or assignee is a resident of Texas and is entitled to enforce
the terms of the manufacturer’s warranty.
VEHICLE CONVERTERS
The lemon law applies to vehicle converters.
PROBLEMS COVERED
The lemon law covers any defect or condition that creates a serious safety hazard or
substantially impairs the use or market value of the motor vehicle. This is referred to as
a nonconformity.  The Texas Department of Transportation has indicated that the
nonconformity must continue to exist.
“Serious safety hazard” is defined as a life-threatening malfunction or nonconformity
that substantially impedes a person’s ability to control or operate a motor vehicle for
ordinary use or intended purposes or that creates a substantial risk of fire or explosion.

“Impairment of market value” is defined as a substantial loss in market value caused by
a defect specific to the motor vehicle.
The lemon law provides manufacturers with an affirmative defense if it can be shown
that the nonconformity is the result of abuse, neglect, or unauthorized modifications or
alterations of the motor vehicle, or the nonconformity does not substantially impair the
use or market value of the motor vehicle.
MANUFACTURER’S DUTY TO REPAIR
If a new motor vehicle does not conform to the manufacturer’s, converter’s, or
distributor’s express warranty, then the manufacturer, converter or distributor must
make the necessary repairs if:
1.   The consumer or the consumer’s agent reports the nonconformity to the
manufacturer, converter, or distributor, or any of their agents or franchised dealers
during the term of the express warranty; or
2.   The terms of the presumption relating to the vehicle (see below) have been met.
The necessary repairs must be made regardless of whether the applicable warranty
period has expired.
MANUFACTURER’S DUTY TO REPURCHASE OR REPLACE A VEHICLE
If the manufacturer, converter, or distributor is unable to conform the motor vehicle to
the applicable express warranty by repairing or correcting a nonconformity after a
reasonable number of attempts, the manufacturer, converter, or distributor must either
replace or repurchase the motor vehicle.
REASONABLE NUMBER OF REPAIR ATTEMPTS
The Texas lemon law establishes a presumption that a reasonable number of attempts
have been undertaken to conform a motor vehicle to the applicable express warranties
if:
1.   The same nonconformity has been subject to repair four or more times by the
manufacturer, converter, or distributor, or any of their agents or franchised dealers,
but the nonconformity continues to exist. Two of the repair attempts must be made
within a period of 12 months following the date of original delivery to a consumer, or
12,000 miles, whichever occurs first, and the two other repair attempts must be
made within 12 months or 12,000 miles, whichever occurs first, immediately
following the date of the second repair attempt;
2.   The same nonconformity creates a serious safety hazard and has caused the vehicle
to have been subject to repair two or more times by the manufacturer, converter, or
distributor, or any of their agents or franchised dealers, but the nonconformity
continues to exist. At least one attempt to repair must be made in the period of 12
months or 12,000 miles, whichever occurs first, and at least one other attempt must

be made in the period of 12 months or 12,000 miles, whichever occurs first, after the
first repair attempt; or
3.   The vehicle is out of service for repair for a cumulative total of 30 or more days in the
24 months or 24,000 miles, whichever occurs first, and a nonconformity that
substantially impairs the use or market value of the motor vehicle still exists. At least
two repair attempts must be made in the first 12 months or 12,000 miles
immediately following the date of original deliv ery to a consumer.
The initial 12 month or 12,000 mile periods, the subsequent 12 month or 12,000 mile
periods, and the 30 day period are extended by any period during which repair services
are not available because of war, invasion, strike, fire, flood, or other natural disaster.
The 30 day period is tolled during any period of time that the manufacturer or
distributor lends a comparable motor vehicle to the consumer during the time of repairs
by a franchised dealer.
NOTICE AND OPPORTUNITY TO REPAIR
The manufacturer, converter, or distributor will not be required to replace or repurchase
a vehicle unless:
1.   The manufacturer, converter, or distributor has been mailed prior written
notification of the alleged nonconformity or defect from or on behalf of the
consumer; and
2.   The manufacturer, converter, or distributor has been given an opportunity to cure
the alleged defect or nonconformity.
DISPUTE RESOLUTION
A consumer may not file an action seeking refund or replacement unless the consumer
has first exhausted the administrative remedies through the state-operated arbitration
program.
TIME PERIOD FOR FILING CLAIMS
A proceeding must be commenced within six months following the earlier of (1)
expiration of the express warranty term, or (2) 24 months or 24,000 miles following the
date of the vehicle’s original delivery to a consumer.

REMEDIES UNDER THE TEXAS LEMON LAW

REPURCHASE OF OWNED VEHICLES
The Texas lemon law provides that a manufacturer must pay the following amounts
when it repurchases an owned vehicle under the lemon law:
1.   The full purchase price.  The Texas Motor Vehicle Commission has defined this to
mean the amount of the total purchase price of the vehicle, including sales taxes and
title, registration and documentary fees, but not including the amount of any interest
or finance charge or insurance premiums; and
2.   Reasonable incidental costs resulting from loss of use of the motor vehicle because of
the nonconformity or defect.  The Texas Motor Vehicle Commission has defined
reimbursable incidental expenses as including but not limited to:
(a)   alternate transportation;
(b)   towing;
(c)   telephone calls or mail charges directly attributable to contacting the
manufacturer, distributor, converter or dealer regarding the vehicle;
(d)   meals and lodging necessitated by the vehicle’s failure during out-of-town trips;
(e)   loss or damage to personal property;
(f)    attorney fees if the complainant retains counsel after notification that the
respondent is represented by counsel; and
(g)   items or accessories added to the vehicle at or after purchase, taking into
consideration the permanent nature, functionality and value added by the items
or accessories and whether the items or accessories are original equipment
manufacturer parts or non-OEM parts;
3.   Less a reasonable allowance for the consumer’s use of the vehicle.
Refunds must be made to the consumer and lienholder, if any, as their interests may
appear.
The reasonable allowance for use must be that amount directly attributable to use of the
motor vehicle when the vehicle is not out of service for repair.  The Texas Motor Vehicle
Commission has established a presumption that a motor vehicle has a useful life of
120,000 miles, and has defined reasonable allowance for use to be the following except
in cases where the preponderance of the evidence shows that the vehicle has a longer or
shorter expected useful life than 120,000 miles:
a) # miles vehicle traveled from delivery
to consumer until first report of defect
or condition leading to repurchase                Purchase
------------------------------------------      X   Price
120,000
plus

b) # miles vehicle traveled after
date of first report of defect or
condition leading to repurchase
through date of the hearing               Purchase
-----------------------------------    X    Price         X   50%
120,000
REPURCHASE OF LEASED VEHICLES
The Texas Motor Vehicle Commission has set out the following amounts that a
manufacturer must pay when it repurchases a leased vehicle under the lemon law:
To the lessee
1.   All lease payments previously paid by the lessee to the lessor under the terms of the
lease;
2.   All sums previously paid to the lessor in connection with entering into the lease,
including but not limited to any capitalized cost reduction, down payment, trade-in,
or similar cost; and
3.   Sales tax, license and registration fees, and other documentary fees, if applicable;
and
4.   Reasonable incidental costs resulting from loss of use of the motor vehicle because of
the nonconformity or defect.  The Texas Motor Vehicle Commission has defined
reimbursable incidental expenses as including but not limited to:
(a)  alternate transportation;
(b)  towing;
(c)   telephone calls or mail charges directly attributable to contacting the
manufacturer, distributor, converter or dealer regarding the vehicle;
(d)  meals and lodging necessitated by the vehicle’s failure during out-of-town trips;
(e)  loss or damage to personal property;
(f)   attorney fees if the complainant retains counsel after notification that the
respondent is represented by counsel; and
(g)  items or accessories added to the vehicle at or after purchase, taking into
consideration the permanent nature, functionality and value added by the items
or accessories and whether the items or accessories are original equipment
manufacturer parts or non-OEM parts;
5.   Less a reasonable allowance for the consumer’s use of the vehicle.
To the lessor
1.   105% of the actual price paid by the lessor for the vehicle
2.   Any tax, title, license and documentary fees paid by the lessor and as evidenced in a
bill of sale, bank draft demand, tax collector’s receipt, or similar instrument;
3.   Any amount or fee, if any, paid by the lessor to secure the lease or interest in the
lease;

4.   Less all payments made by the lessee.
Refunds must be made to the lessee, lessor, and any lienholder as their interests may
appear.  The motor vehicle must be returned to the manufacturer, converter or
distributor with clear title upon payment of these amounts.  The lessor must transfer
title of the motor vehicle to the manufacturer, converter or distributor as necessary to
effectuate the lessee’s rights under the lemon law.  The lease must be terminated
without any penalty to the lessee.
The reasonable allowance for use must be that amount directly attributable to use of the
motor vehicle when the vehicle is not out of service for repair.  The Texas Motor Vehicle
Commission has established a presumption that a motor vehicle has a useful life of
120,000 miles, and has defined reasonable allowance for use to be the following except
in cases where the preponderance of the evidence shows that the vehicle has a longer or
shorter expected useful life than 120,000 miles:
a) # miles vehicle traveled from delivery
to consumer until first report of defect
or condition leading to repurchase                 Actual price
-------------------------------------------    X    paid by the lessor
120,000                                     for the vehicle
plus

b) # miles vehicle traveled after
date of first report of defect or
condition leading to repurchase
through date of the hearing                 Actual price
-------------------------------------    X   paid by the lessor    X   50%
120,000                            for the vehicle
REPLACEMENT
When replacing a vehicle under the Texas lemon law, the manufacturer must replace the
motor vehicle with a comparable motor vehicle.  The Texas Department of
Transportation indicates on its web site that a replacement award will be reduced for
mileage used.
The manufacturer must also reimburse the consumer for reasonable incidental costs
resulting from loss of use of the motor vehicle because of the nonconformity or defect.
The Texas Motor Vehicle Commission has defined reimbursable incidental expenses as
including but not limited to:
(a)  alternate transportation;
(b)  towing;
(c)   telephone calls or mail charges directly attributable to contacting the
manufacturer, distributor, converter or dealer regarding the vehicle;
(d)  meals and lodging necessitated by the vehicle’s failure during out-of-town trips;
(e)  loss or damage to personal property;

(f)   attorney fees if the complainant retains counsel after notification that the
respondent is represented by counsel; and
(g)  items or accessories added to the vehicle at or after purchase, taking into
consideration the permanent nature, functionality and value added by the items
or accessories and whether the items or accessories are original equipment
manufacturer parts or non-OEM parts.