Motor Vehicle Lemon Law

Current law commonly known as the "lemon law" requires a manufacturer, a manufacturer's agent, or a manufacturer's authorized dealer (dealer) to replace or buy back a motor vehicle if the consumer notified the dealer within the earlier of the warranty period or one year after original delivery of the motor vehicle (notification time) of the motor vehicle's nonconformity with the motor vehicle's warranty (nonconformity) and the motor vehicle underwent a reasonable number of attempts to repair. The number of repairs are considered reasonable if:

• The motor vehicle was out of service for repairs for a cumulative total of 30 or more business days; or
• The dealer tried unsuccessfully to repair the motor vehicle 4 or more times.

The act:

• Expands the lemon law to cover motor vehicles affected by safety-based nonconformities;
• Expands the notification time to include the earlier of the motor vehicle's first 24,000 miles or 2 years after original delivery of the motor vehicle;
• Lowers the number of out-of-service business days from 30 to 24; and
• Lowers the number of required attempts to repair from 4 to 3 generally and to 2 for a safety-based nonconformity.

Current law requires a manufacturer to be notified of a defect and be given an opportunity to cure the defect in order to be subject to the reasonable repairs presumption. The act adds a 10-business-day limit on the opportunity to cure the defect.

Current law allows a dealer, when buying back a motor vehicle, to deduct a reasonable allowance for use. The act sets a formula for determining the reasonable allowance for use.

Current law exempts from the lemon law motor vehicles that have a problem that does not affect the market value of the motor vehicle. The act provides that the problem must not affect the safety of the motor vehicle to qualify for the exemption.

The act changes the statute of limitations from the earlier of 6 months after the expiration of a warranty or within one year after the original delivery of the motor vehicle to 30 months after the original delivery.

The act requires a dealer to allow an agent of a purchaser to inspect a motor vehicle or provide a 7-day free-look period, during which the purchaser may return the motor vehicle and receive a refund of all money paid to purchase the motor vehicle. The dealer must notify purchasers of this inspection right. To make the inspection, an agent may have reasonable access to conduct the inspection, but the agent must be qualified to use or operate any equipment used to inspect the vehicle and must not interfere with normal business operations of the dealer.

A dealer is required to give certain notices that a motor vehicle was returned, including notifying the department of revenue (department). The department must put a brand on the title to notify subsequent purchasers.

Failing to comply with the act is grounds for discipline for a manufacturer or distributor of motor vehicles.

To implement the act, $19,605 is appropriated for the 2024-25 state fiscal year to the department from the Colorado DRIVES vehicle services account in the highway users tax fund.

APPROVED by Governor June 6, 2024

EFFECTIVE August 7, 2024
(Note: This summary applies to this bill as enacted.)