Vehicle Industry Registration Procedures Manual

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Section 3 of 38

Chapter 2: General Information – Licensees

2.040 Lemon Law Buybacks and Warranty Returns

Chapter 2 General Information — Licensees

2.040 Lemon Law Buybacks and Warranty Returns (VC §§4453 and 11713.12, CCC §§1793.22-25)

California Civil Code (CCC) §1793.22 requires vehicle manufacturers to replace a new vehicle, or make restitution to the consumer if, after making a reasonable number of attempts to repair it, the vehicle does not conform to applicable warranties. This is commonly known as the “Lemon Law.”

DMV is required to identify these vehicles on the titling documents. This includes vehicles for which similarly marked nonresident titling documents are submitted.

DMV identifies these vehicles as:

  • Lemon Law Buyback—A vehicle reacquired by the manufacturer on or after January 1, 1996.
  • Warranty Return—A vehicle reacquired by the manufacturer on or prior to December 31, 1995. The registration certificate for some warranty return vehicles may reflect an abbreviated brand of “WARNTY RET.”

The certificate of title and registration card are branded. The brand serves as notification to subsequent buyers that the vehicle was previously returned to the manufacturer because it did not conform to applicable warranties.

Customers with questions regarding the process may obtain a copy of the Department of Consumer Affairs brochure, Lemon-aid For Consumers.

Lemon Law Buyback Vehicles Procedures

Vehicles reacquired by the manufacturer because of a specific warranty defect, on or after January 1, 1996, including vehicles registered in another state must be marked with the brand “LEMON LAW BUYBACK.”

Manufacturer Notification Requirements

The manufacturer of any vehicle reacquired on or after January 1, 1996, because of a specific warranty defect must:

  • Obtain a title and registration to the vehicle in the manufacturer’s name marked with the notation “LEMON LAW BUYBACK”.
  • Furnish and affix a decal to the vehicle which states that the title has been inscribed with the term “Lemon Law Buyback”.
    • The decal is affixed to the vehicle’s left-door frame; primary front entrance (right-door frame) on vehicles not having a left door, such as recreational vehicles; or in a prominent area on the left side of vehicles without doors, such as motorcycles.
  • Notify the transferee/buyer of the vehicle of the warranty defect(s) in writing.

Issuance of Title in Manufacturer’s Name

The basic requirements for the transaction type apply when a lemon law buyback vehicle is registered in the manufacturer’s name, except:

  • A document/statement indicating the vehicle is a lemon law buyback must be included with the application.
  • A smog certification is not required.
  • The vehicle license fee (VLF) is not reclassified.
  • A prior history fee is due to mark the record of the reacquired vehicle.
  • Use tax is not due.
  • Fees are due upon retail sale of the vehicle.

Disclosure Statement Requirement

  • After the manufacturer replaces the warranty return vehicle or reimburses the consumer, the vehicle can be resold as a used vehicle.
    • Generally, the vehicles are sold through a dealer. However, the manufacturer will always be reflected in the chain of ownership for the vehicle.
  • Any dealer selling a vehicle that is known to have been replaced or accepted for restitution under the consumer warranty laws of California, any other state, or federal law must include a disclosure statement signed by the new owner with the titling documents required to register the vehicle.
    • This includes vehicles with similarly branded out-of-state documents for which the dealer has knowledge of the vehicle’s return.
    • The disclosure statement may be on a Statement of Facts (REG 256) form, dealer’s letterhead, or manufacturer’s invoice.
    • The disclosure statement must identify the vehicle, be personally signed by the buyer (signatures by power of attorney are not acceptable) and include the following statement:
      “This motor vehicle has been returned to the dealer or manufacturer due to a defect in the vehicle pursuant to consumer warranty laws.”
  • All the following must be disclosed to a transferee:
    • The year, make, model, and vehicle identification number (VIN) of the vehicle.
    • Whether the title to the vehicle is marked “Lemon Law Buyback.”
    • The nature of each nonconformity reported by the original vehicle buyer or lessee.
    • Repairs, if any, made to the vehicle in an attempt to correct each nonconformity.
  • The notification must be on white (8.5 x 11 inch) letter-size paper in black print no smaller than 10-point.
    • The notification is not submitted as part of the registration application.

Warranty Returns

Vehicles reacquired prior to January 1, 1996, are referred to and branded as a “WARRANTY RETURN” on the California title (some may show “WARNTY RET”).

  • The registration application for a warranty return vehicle sold by a dealer must include the following disclosure statement:
    “This motor vehicle has been returned to the dealer or manufacturer due to a defect in the vehicle, pursuant to consumer warranty laws.”
  • The disclosure may be on a Statement of Facts (REG 256) form, dealer’s letterhead, or manufacturer’s invoice.
    • It must identify the vehicle and be personally signed by the buyer.
    • Signatures by power of attorney are not acceptable.
    • This includes vehicles with similarly branded out-of-state documents for which the dealer has knowledge of the vehicle’s return.