The Business Vehicle Loophole Every Business Owner Needs to Know
Lemon Law Loophole.
Who doesn’t love a good loophole every now and then? Especially if you’re eligible and there’s the possibility for your business to save you big bucks. This business vehicle loophole is for all of our business owners out there who own business vehicles.
California’s lemon law is more formally known as the Tanner Consumer Protection Act. More specifically, the law protects consumers when an authorized dealership/service department can’t service or repair “new” vehicle after a “reasonable” number of attempts. Often, we’re able to force the manufacturer to repurchase our client’s car, and repay them nearly all of their money. Some of our clients have recovered in excess of $100,000, and didn’t pay us a penny in legal fee. How’s that? The Tanner Consumer Protection Act allows for lemon law clients to recover their attorneys’ fees directly from the manufacturer.
Lemon Law Only Applies To New Vehicles Used Primarily For Personal, Family or Household Purposes
As the name implies, the Tanner Consumer Protection Act only applies to consumers and the goods they purchase. “Consumer goods” are defined as
any new product or part thereof that is used, bought, or leased for use primarily for personal, family, or household purposes, except for clothing and consumables. “Consumer goods” shall include new and used assistive devices sold at retail.
Therefore, goods purchased for business purposes would not qualify. The Tanner Consumer Protection Act, a “new motor vehicle” is considered a consumer good. The Act defines a “new motor vehicle” as a new motor vehicle that is bought or used primarily for personal, family, or household purposes.
The Business Vehicle Loophole Under California’s Lemon Law
If you read closely, the Act goes on to further include the following as “new motor vehicles”:
a new motor vehicle with a gross vehicle weight under 10,000 pounds that is bought or used primarily for business purposes by a person, including a partnership, limited liability company, corporation, association, or any other legal entity, to which not more than five motor vehicles are registered in this state.
Most small to mid-sized companies don’t have more than 5 vehicles registered in California. This, of course, depends on the type of business. However, it means most companies are still eligible for the benefits of California’s lemon law, which could do wonders for their balance sheet.
Lemon Law for Business Owners
If your business qualifies for the business vehicle loophole to California’s lemon law, that means your business may be able to recover nearly all of the money paid for a newer vehicle if one of the following criteria are met:
30+ total days in service at an authorized repair facility (dealership);
2 or more service attempts for the same safety related issue at an authorized repair facility (dealership); or
4 or more service attempts for the same non-safety related issue at an authorized repair facility (dealership).
