New Jersey-2012-A1733-Introduced

An Act concerning refunds to customers for certain nonconforming new motor vehicles and amending P.L.1988, c.123.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 2 of P.L.1988, c.123 (C.56:12-30) is amended to read as follows:

2. As used in this act:

"Consumer" means a buyer or lessee, other than for purposes of resale or sublease, of a motor vehicle; a person to whom a motor vehicle is transferred during the duration of a warranty applicable to the motor vehicle; or any other person entitled by the terms of the warranty to enforce the obligations of the warranty.

"Dealer" means a person who is actively engaged in the business of buying, selling or exchanging motor vehicles at retail and who has an established place of business.

"Director" means the Director of the Division of Consumer Affairs in the Department of Law and Public Safety, or his designee.

"Division" means the Division of Consumer Affairs in the Department of Law and Public Safety.

"Lease agreement" means a contract or other written agreement in the form of a lease for the use of a motor vehicle by a person for a period of time exceeding 60 days, whether or not the lessee has the option to purchase or otherwise become the owner of the motor vehicle at the expiration of the lease.

"Lessee" means a person who leases a motor vehicle pursuant to a lease agreement.

"Lessor" means a person who holds title to a motor vehicle leased to a lessee under a lease agreement or who holds the lessor's rights under such an agreement.

"Lien" means a security interest in a motor vehicle.

"Lienholder" means a person with a security interest in a motor vehicle pursuant to a lien.

"Manufacturer" means a person engaged in the business of manufacturing, assembling or distributing motor vehicles, who will, under normal business conditions during the year, manufacture, assemble or distribute to dealers at least 10 new motor vehicles.

"Manufacturer's informal dispute settlement procedure" means an arbitration process or procedure by which the manufacturer attempts to resolve disputes with consumers regarding motor vehicle nonconformities and repairs that arise during the vehicle's warranty period.

"Manufacturer's warranty" or "warranty" means any warranty, whether express or implied of the manufacturer, of a new motor vehicle of its condition and fitness for use, including any terms or conditions precedent to the enforcement of obligations under the warranty.

"Motor vehicle" means a passenger automobile or motorcycle as defined in R.S.39:1-1 which is purchased or leased in the State of New Jersey or which is registered by the Division of Motor Vehicles in the Department of Law and Public Safety, except the living facilities of motor homes.

"Nonconformity" means a defect or condition which substantially impairs the use, value or safety of a motor vehicle.

["Reasonable allowance for vehicle use" means the mileage at the time the consumer first presents the motor vehicle to the dealer or manufacturer for correction of a nonconformity times the purchase price, or the lease price if applicable, of the vehicle, divided by one hundred thousand miles.]

(cf: P.L.1993, c.21, s.3)

2. Section 4 of P.L.1988, c.123 (C.56:12-32) is amended to read as follows:

4. a. If, during the period specified in section 3 of this act, the manufacturer or its dealer is unable to repair or correct a nonconformity within a reasonable time, the manufacturer shall accept return of the motor vehicle from the consumer. The manufacturer shall provide the consumer with a full refund of the purchase price of the original motor vehicle including any stated credit or allowance for the consumer's used motor vehicle, the cost of any options or other modifications arranged, installed, or made by the manufacturer or its dealer within 30 days after the date of original delivery, and any other charges or fees including, but not limited to, sales tax, license and registration fees, finance charges, reimbursement for towing and reimbursement for actual expenses incurred by the consumer for the rental of a motor vehicle equivalent to the consumer's motor vehicle and limited to the period during which the consumer's motor vehicle was out of service due to a nonconformity [, less a reasonable allowance for vehicle use]. Nothing herein shall be construed to preclude a manufacturer from making an offer to replace the vehicle in lieu of a refund; except that the consumer may, in any case, reject a manufacturer's offer of replacement and demand a refund. Refunds shall be made to the consumer and lienholder, if any, as their interests appear on the records of ownership maintained by the Director of the Division of Motor Vehicles. In the event that the consumer accepts an offer to replace the motor vehicle in lieu of a refund, it shall be the manufacturer's responsibility to insure that any lien on the returned motor vehicle is transferred to the replacement vehicle.

b. A consumer who leases a new motor vehicle shall have the same remedies against a manufacturer under this section as a consumer who purchases a new motor vehicle. If it is determined that the lessee is entitled to a refund pursuant to subsection a. of this section, the consumer shall return the leased vehicle to the lessor or manufacturer and the consumer's lease agreement with the motor vehicle lessor shall be terminated and no penalty for early termination shall be assessed. The manufacturer shall provide the consumer with a full refund of the amount actually paid by the consumer under the lease agreement, including any additional charges as set forth in subsection a. of this section if actually paid by the consumer [, less a reasonable allowance for vehicle use]. The manufacturer shall provide the motor vehicle lessor with a full refund of the vehicle's original purchase price plus any unrecovered interest expense, less the amount actually paid by the consumer under the agreement. Refunds shall be made to the lessor and lienholder, if any, as their interests appear on the records of ownership maintained by the Director of the Division of Motor Vehicles.

(cf: P.L.1988, c.123, s.4)

3. This act shall take effect immediately.

STATEMENT

This bill amends P.L.1988, c.123 (C.56:12-29 et seq.), the State's "lemon law" for new automobiles and motorcycles, to provide that if a manufacturer or dealer is unable to repair a defect within a reasonable period of time, the owner is to receive a full refund for that "lemon" automobile or motorcycle.

Under the current provisions of the "lemon law" for new automobiles and motorcycles, if a manufacturer or its dealer is unable to repair a defect within a reasonable period of time, the manufacturer is required to refund the full purchase price and other charges and fees specified in the law, less an allowance for the buyer's or lessee's use of the returned vehicle. This bill requires the manufacturer to refund the full purchase price, without deducting any allowance for use of the vehicle.