At the arbitration hearing you will have to make a final decision whether you want the motor home replaced or repurchased. Under the law, if your motor home is determined to be a “lemon” by the arbitrator, you will be awarded your choice of repurchase or replacement of the vehicle. Once an arbitration hearing is over, your choice or repurchase or replacement cannot be changed by the arbitrator. If there is an award and you have changed your mind, you will need to negotiate directly with the manufacturer(s) as there is no authority for anyone to change the terms of the award.
You will be sent a financial information form which you should complete and bring with you to the hearing along with supporting documents. You must be prepared to present verification of all financial information at the hearing necessary to complete the calculation of an award. Failure to provide this information can result in a reduced award.
Note: A manufacturer will not be required to refund, replace or reinstall an item that you added to the defective vehicle after you purchased/leased it. You and the manufacturer(s) are encouraged to negotiate how ‘after market’ add-ons will be dealt with which might include the manufacturer agreeing to buy them from you. Items like a sun canopy added after purchase or lease may be removed. You will not be required to return the vehicle to original condition when the items are removed. You will be required to return or replace any original equipment that was removed from the vehicle for the after-market add-on (e.g. the manufacturer stock radio) if you are removing the aftermarket item.
A consumer is required to repair the motor home or transfer an insurance claim or settlement to the manufacturer when there is damage that is not reasonable for the amount of use and type of vehicle.
If you are awarded a replacement motor home, it must be new and “identical or reasonably equivalent” to your vehicle as it existed at the time of original purchase or lease including any service contract, undercoating, rustproofing and other factory/dealer options. The manufacturer is also responsible for any sales tax, license, registration fees and refunding to you any incidental costs awarded by the arbitrator.
Before receiving the new vehicle you will be obligated to pay the manufacturer an “offset for use” based on the attributable use mileage at the time of first repair of the ‘lemon’ defect and original “purchase price” regardless of whether you are the original or a subsequent owner. You must contact your lender early in the process about how they would deal with your existing loan or lease and a replacement vehicle as you may have to make a new loan at very different terms. If the manufacturer originally offered a special financing deal like a low interest rate the manufacturer is not required to offer those terms for a replacement vehicle.
If you are awarded a repurchase of the vehicle, the arbitrator will determine your refund based on the following:
- If you purchased the vehicle: you will be refunded the cash price of the vehicle in the sales agreement (minus any manufacturer rebate) - if you have a loan balance, the lender will be paid from your refund;
- If you leased the vehicle: you will be refunded the total of all lease payments that you made, including inception and security deposit payments (not including any manufacturer rebate) - the manufacturer will be responsible for any remaining lease obligations.
Note: if you are a second or subsequent owner, a repurchase award will be based on your purchase price - not the original owner’s purchase price.
The following will included in a refund award for repurchase of leased or purchased vehicles:
- “collateral charges” - sales or lease related charges including sales and use tax, finance charges (interest on a loan), dealer preparation and transportation costs, prorated license, registration and title fees, prorated insurance costs based on days out-of-service, nonrefundable portions of credit life and disability insurance, service contracts, undercoating, rustproofing and other factory or dealer installed options purchased when you bought/leased the vehicle.
Note: The following types of items will be refunded in awards of repurchase or replacement:
- “incidental costs” — reasonable expenses paid by you related to repairs including costs of towing and obtaining alternate transportation
- legal fees — if the manufacturer was represented by counsel, the arbitrator will also award reasonable costs and attorney’s fees if you were represented by an attorney. If the manufacturer is not represented by an attorney at some point in your contacts with the manufacturer, you cannot be awarded costs and attorney’s fees.
Your refund will be the total of the award less an “offset for use” and less any lienholder interests in the vehicle. If your vehicle is leased, your refund will be the award total less an “offset for use” and the manufacturer will be responsible for paying off your lease obligation.
Note: The arbitrator may allocate liability among manufacturers that contributed to building the motor home based on days ‘out of service’ attributed to the manufacturers. This will determine which manufacturers are responsible for compliance with an arbitration award and what financial portion each manufacturer must contribute to compliance.
Offset For Use
When a manufacturer replaces or repurchases a motor home, they have a right under Lemon Law to be reimbursed for use of the vehicle which is called the “offset for use.”
A motor home’s reasonable offset for use will be computed by multiplying the number of miles attributable to use by the consumer times the purchase price, and dividing the product by ninety thousand. The offset total may be increased or decreased by the arbitrator up to one-third where wear and tear (as opposed to actual damage e.g. collision) to the dwelling portion is significantly less or greater could be reasonably expected based on the mileage.
“Mileage attributable to consumer use” accumulates between the retail delivery date and:
- the date of the first attempt to diagnose or repair a defect that causes a manufacturer to be required to repurchase or replace a vehicle; or
- the 30th “day out of service” where a manufacturer(s) 1s required to repurchase or replace a vehicle solelybecause of accumulated “days out of service” due to diagnosis or repair of one or more substantial defects.
There are equivalent provisions relating to consumers who are not the original purchasers.
Note: in the instance of a lease the “purchase price” is the vehicle’s capitalized cost disclosed in the lease.
Example: Based on a purchase price of $90,000 and 1,000 miles attributable to a consumer’s use, the “reasonable offset for use” would be:
($90,000) x (1,000 miles) = $1,000
The final “offset for use” would be $1,000 but could be as low as $667 (minus a third) or as high as $1,333 (plus a third) if the arbitrator finds the wear and tear from use of the motor home to be significantly less or greater than could be reasonably expected for the accumulated mileage.
Note: if you are a second or subsequent owner, a repurchase offset is based on your purchase price and a replacement offset is based on the originalpurchase price of the vehicle (as you will receive a new motor home for the used vehicle you purchased).
IMPORTANT: Be certain that you understand how your “offset for use” will be calculated. If you are awarded a replacement vehicle, you must pay the “offset for use” before receiving the new motor home. Most consumers are able to add this into the financing for the replacement vehicle – talk to your lender as soon as possible. This may affect your decision whether to choose repurchase rather than a replacement.
If you are awarded repurchase, the “offset for use” will be deducted from your refund before
any existing loan obligations are paid. It is possible in situations of large loan balances and high mileage that a refund will not be enough to pay off the loan; the remaining balance would still be your responsibility.