Iowa Lemon Laws

322G.1 - Legislative Intent

It is duly recognized by the legislature that a motor vehicle can be the foremost attainment of a consumer, if it doesn’t have any nonconformity that impairs the use and safety of such vehicle. It’s the intent of the general assembly that a duly franchised dealer is an authorized service agent of the manufacturer who should resolve the complaints within the specified period of time. If the dealer fails in removing the defects, then it becomes a liability of a manufacturer either to replace the vehicle or to refund the amount to the consumer. However, this chapter does not limit the rights or remedies which are otherwise available to a consumer under any other law.

91 Acts, ch 153, §1

322G.2 - Definitions

  1. "Collateral charges" means the additional amount paid by a consumer against the acquisition of a vehicle. Collateral charges include charges manufacturer-installed or agent-installed items, earned finance charges, use taxes, and title charges.
  2. "Condition" means a problem that may be imputable to a defect in more than one part.
  3. "Consumer" is,
    • A person who pays a handsome amount to acquire a vehicle for personal, family, or household use
    • A person to whom the ownership of the car or any other vehicle is transferred
    • Who is entitled to enforce the obligations of the warranty
  4. "Days" means calendar days.
  5. "Department" means the attorney general.
  6. "Incidental charges" are the charges incurred by a consumer for towing or obtaining alternative transportation. Incidental charges do not include loss of use, loss of income, or personal injury claims.
  7. "Lease price" is the aggregate of the following:
    • Actual purchase price
    • Collateral charges, if any
    • Any fee paid to another to obtain the lease
    • Any insurance or other costs
    • An amount equal to state and local use taxes, not otherwise included as collateral charges, paid by the lessor at the time of purchase
    • An amount equal to five percent of the lessor's actual purchase cost
  8. "Lemon law rights period" is the time period,
    • In which the written warranty can be claimed
    • Ending 2 years after the date of delivery of a motor vehicle
    • In which the first twenty-four thousand miles of a vehicle is completed
  9. "Lessee" means any consumer who leases a motor vehicle for 1 year or more pursuant to a written lease agreement which provides that the lessee is responsible for repairs to such motor vehicle or any consumer who leases a motor vehicle pursuant to a lease-purchase agreement.
  10. "Lessee cost" is the aggregate of the down payment and installments paid to the lessor against a leased vehicle.
  11. "Lessor" is,
    • A person who grants a lease
    • A person holds the title to a motor vehicle leased to a lessee under a written lease agreement
  12. "Manufacturer" is
    • A person engaged in the business of manufacturing, assembling or distributing automobiles, who under normal business conditions during the year, manufacture at least 10 new automobiles
    • A person or firm engaged in the business of transforming raw material into motor vehicle for sale
  13. "Motor vehicle" means
    • A self-propelled private passenger vehicle, including pickup trucks and vans, used to travel from one destination to another on the public highways and used to carry not more than ten persons
    • A 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
  14. "Nonconformity" means any defect or condition that impairs the use, value, or safety of a motor vehicle but does not include a defect that is an outcome of an accident, abuse, neglect and illegal modification or alteration.
  15. "Person" means person as defined in section 714.16.
  16. "Program" is an informal dispute settlement procedure which is established to resolve motor vehicle warranty issues between the consumer and manufacturer.
  17. "Purchase price" means the cash paid to acquire an asset inclusive of any allowance for a trade-in vehicle, but excludes debt from any other transaction.
  18. "Reasonable offset for use" means the number of miles attributable to a consumer up to the date of a settlement agreement or arbitration hearing, whichever occurs first.
  19. "Replacement motor vehicle" means a motor vehicle which is of equal value and is of same capacity to be replaced, as the motor vehicle replaced existed at the time of the original acquisition.
  20. "Substantially impair" means which affects reliability of a new vehicle, or to diminish the resale value of the new motor vehicle.
  21. "Warranty" is the warranty specified by the manufacturer or dealer assuring that the vehicle doesn’t have any defect or in case any defect arises, the manufacturer would be responsible for its repair.

91 Acts, ch 153, §2; 95 Acts, ch 45, §6

322G.3 - Duties of Manufacturer

  1. The manufacturer or dealer must provide a written statement of the rights and obligations of a consumer at the time of the sale to the consumer. The written statement shall be prepared by the attorney general and shall contain telephone number of the attorney general to get information regarding lemon laws.
  2. The address and the contact number must be given to the consumer where s/he can file a claim. It is also required by the manufacturer to provide the copy of owner’s manual and warranties to the attorney general.
  3. Incase of any nonconformity, a manufacturer or repairing agent will be legally responsible for the removal of such defect, if the consumer reports the fault within the lemon law rights period.
  4. Each time a vehicle is brought for inspection or repairs, a manufacturer should give a written statement to the consumer which clearly indicates all the work performed or diagnosed on the vehicle alongwith the date and mileage.
  5. The manufacturer upon request from the consumer will provide a copy of:
    • The report showing diagnostic computer operation piled up by the manufacturer regarding an inspection or diagnosis of the motor vehicle.
    • Any technical service notice compiled by the manufacturer concerning the year and model of the vehicle as it refers to any material or component of the motor vehicle.

91 Acts, ch 153, §3

322G.4 - Nonconformity of Motor Vehicles

  1. If the nonconformity is of nature which is likely to cause death or serious bodily injury, and has not been cured by the manufacturer after one attempt or any nonconformity which still exists after three repair attempts, the consumer is allowed to send a written notification to the manufacturer allowing him a final attempt to remove such defect. After the receipt of notification, the manufacturer will reply and assure the consumer that the nonconformity will be repaired within ten days. If the manufacturer does not notify or delays in replying to the consumer, then the final repair attempt will not be granted to the manufacturer.

    The laws provide a manufacturer, ten days to keep the vehicle in custody for repair. The consumer may give written notification to the manufacturer, if the manufacturer holds the vehicle for a cumulative of twenty or more days.

  2. If, after a number of attempts, the manufacturer fails in conforming the vehicle to the express warranty, the manufacturer within forty days either refund the full purchase or lease price, less a reasonable offset for use or replace the vehicle with a replacement motor vehicle. The condition that the consumer will pay the amount of reasonable offset for use will not apply if the consumer chooses a refund rather than replacement, and the amount exceeds the amount of reasonable offset for use, and the manufacturer shall deduct that amount from the refund due to the consumer. Incase of replacement, the manufacturer will provide a substitute vehicle to use until the time as the replacement vehicle is delivered to the consumer.

    The Iowa lemon laws has defined a criteria of refund which is as follows,

    “The lessee shall receive the lessee's cost less a reasonable offset for use, and the lessor shall receive the lease price less the aggregate deposit and rental payments previously paid to the lessor for the leased vehicle. If it is determined that the lessee is entitled to a refund pursuant to this chapter, the consumer's lease agreement with the lessor is terminated upon payment of the refund and no penalty for early termination shall be assessed. The department of revenue and finance shall refund to the manufacturer any use tax which the manufacturer refunded to the consumer, lessee, or lessor under this section, if the manufacturer provides to the department of revenue and finance a written request for a refund and evidence that the use tax was paid when the vehicle was purchased and that the manufacturer refunded the use tax to the consumer, lessee, or lessor”.

  3. It is the presumption that a number of attempts have been carried out to correct the nonconformity of a motor vehicle if, during the lemon law rights period, any of the following occur:
    • The defect which substantially impairs the use and value of a motor vehicle is the result of inspection or repair at least three times by the manufacturer plus a final attempt offered under subsection 1, and the defect still exists.
    • The defect which can causes death or serious injury is the result of inspection or repair at least one time by the manufacturer plus a final attempt offered under subsection 1, and the defect still exist.
    • The vehicle is under custody of a manufacturer for the purpose of repairs for a cumulative of thirty or more days, exclusive of the time for routine maintenance. The period may be extended due to war, invasion, strike, fire, flood, or natural disaster.
    • The provisions of this subsection could be extended up to a period of 2 years or the first twenty-four thousand miles of operation, if the manufacturer delays the cure of the nonconformity and the consumer has informed the manufacturer about the nonconformity within the lemon law rights period.
  4. No manufacturer can refuse the repair of any nonconformity without any valid reason.

91 Acts, ch 153, §4

322G.5 - Affirmative Defenses

Following are the affirmative defenses to any claim:

  1. The nonconformity does not spoil the value and safety of a motor vehicle.
  2. The nonconformity is due to an accident, abuse, neglect, or unauthorized alteration of the motor vehicle.
  3. The claim by the consumer was not filed in good faith.
  4. Any other defense allowed by law which may be raised against the claim.

91 Acts, ch 153, §5

322G.6 - Informal Dispute Settlement Procedures---Operations and Certification

  1. At the time of consumer's purchase or lease of a vehicle, the manufacturer who has established a program certified pursuant to this section shall, at a minimum, clearly and conspicuously disclose to the consumer in written materials accompanying the vehicle how and where to file a claim with the program.
  2. A certified program shall comprise of experienced and trained staff to guarantee fair and prompt resolution of all disputes without any charges from the consumer.
  3. A certified program consents to an oral presentation by a party. The certified program will notify each party of their privileges to make an oral presentation within five days after receiving the consumer's notification.
  4. A certified program shall deliver a judgment within 60 days of the consumer's notification of the dispute, provided that a significant number of decisions are rendered within forty days. The notification will take place when a certified program has received,
    • The consumer's name and address
    • The current date and the date of the original delivery of the motor vehicle
    • The year, make and model
    • The identification number
    • A description of the nonconformity.

    Incase, if a consumer has not informed the manufacturer of the nonconformity, the sixty-day period will be extended for an additional seven days.

  5. A certified program shall, in making a decision, concentrate on the provisions and all legal and equitable factors connected to a fair and just decision. The consumer will be provided 25 days to accept the decision, if the decision is in favor of the consumer.

    If the manufacturer has attempted the repair three times as set forth in section 322G.4, subsection 3, along with a final attempt then the consumer is entitled to a replacement vehicle or a refund under section 322G.4, subsection 2.

  6. The operations of the certified program will be explained in writing and the copies of which shall be given to any person upon request.
  7. All the records are retained by the certified program for four years. The audit is conducted yearly to determine whether the manufacturer and its performance and the program and its execution are in agreement with this chapter.
  8. The manufacturers authorized to sell vehicles in this state may apply to the attorney general for certification of its program and those who are trying to get license of selling the vehicles within the state should submit an application to the attorney general.
  9. A program practiced in this state or a program began by a manufacturer pertaining for certification in this state shall present to the attorney general a copy of each settlement approved by the program within thirty days after the decision is rendered. The decision or settlement should be according to the instructions prescribed by the attorney general.
  10. The attorney general after reviewing the operations of any certified program, mostly once in a year, prepares annual and periodic reports. These reports specify whether certification should be approved, renewed, denied, or revoked.
  11. According to section 322G.6 of Iowa lemon laws, “if a manufacturer has established a program which the attorney general has certified as substantially complying with the provisions of and the rules adopted under this chapter, and has informed the consumer how and where to file a claim with the program pursuant to subsection 1, the provisions of section 322G.4, subsection 2, do not apply to any consumer who has not first resorted to the program”.

91 Acts, ch 153, §6

322G.7 - Informal Dispute Settlement Procedure---Certification Uniformity

To ease identical application, analysis, and enforcement of sections 322G.6 and 322G.7, and in practicing rules adopted consistent to section 322G.14, the attorney general may associate with agencies that carry out related functions in any other states that enact these or similar sections. The cooperation authorized by this subsection may include any of the following:

91 Acts, ch 153, §7

322G.8 - Consumer Remedies

  1. If a purchaser resorts to the manufacturer's certified program’s decision and the judgment is not rendered within the time period allowed, the consumer is eligible to file an action in the court within 1 year from the finishing of the lemon law rights period.
  2. The consumer is entitled to file an action in the court, if a manufacturer fails to act upon the decision of manufacturer's certified program within the specified time frame.
  3. In both the conditions explained in subsections 1 and 2, the court will grant a consumer, the amount of any financial losses, attorney's fees, and costs. In addition, if the court affirms the decision of the certified program, the court may award any additional amounts allowed under subsection 7.
  4. The judgment of certified program is absolute unless appealed by either party. A request to appeal a judgment must be made within fifty days after the receipt of the decision or within twenty-five days after the consumer’s acceptance of the decision to the manufacturer. The appealing party must send a copy of the petition to the attorney general within seven days. If the attorney general do not receive any notification within 60 days after the manufacturer's receipt of a decision supporting the consumer and the consumer has accepted the judgment within 25 days, but the manufacturer has neither complied with, nor petitioned to appeal. The attorney general will request the court to impose a fine of $1000/day not in favor of the manufacturer until the amount becomes twice the purchase price of the motor vehicle unless the manufacturer gives a proof that the delay or failure was not in its control.
  5. If the manufacturer or its agent remains unsuccessful to conform to a judgment which has been appropriately accepted by the consumer or fails to file a petition for appeal, the court shall verify the board's decision upon request by the consumer.
  6. A petition of a decision by a certified program to the court by a consumer or a manufacturer shall be tried from the beginning, and may be based upon predetermined facts. In a written request to appeal a judgment, the appealing party must state the act requested and the proofs relied upon for appeal.
  7. If the judgment of the court supports the consumer, recovery requested by the consumer may include the monetary value of the award plus attorney's fees
    and all costs and continuing damages in an amount of $25/day for all days further than the 25 days period following the manufacturer's receipt of the consumer's acceptance of the certified program's decision. But, if the court finds that a manufacturer is filing a petition in a bad faith to harass the consumer, the court may double or triple the amount awarded to the consumer as a penalty.
  8. The judgment in favor of a consumer may be appealed by the manufacturer, if the manufacturer ensues to pay the consumer's attorney's fees and costs and expenses resulting from the review period.
  9. This chapter does not prohibit a consumer from practicing other rights or remedies under any other law.

91 Acts, ch 153, §8

322G.9 - Compliance and Disciplinary Action

The attorney general may implement and guarantee conformity with the requirements of this chapter and policies adopted consistent to section 322G.14. The attorney general may issue a legal notification asking for the attendance of witnesses and the production of proofs. The attorney general is also entitled to impose an administrative fine of $1000 for each violation, against any manufacturer.

91 Acts, ch 153, §9

322G.10 - Unfair or Deceptive Trade Practice

A violation by a manufacturer of this chapter is an unfair or deceptive trade practice in violation of section 714.16, subsection 2, paragraph "a".

91 Acts, ch 153, §10

322G.11 - Dealer Liability

Section 322G.11 of Iowa lemon laws clearly states that, “this chapter, except for the requirements of section 322G.12, does not impose any liability on a franchised motor vehicle dealer or create a cause of action by a consumer against a dealer. A dealer shall not be made a party defendant in any action involving or relating to this chapter, except as provided in this section. The manufacturer shall not charge back or require reimbursement by the dealer for any costs, including but not limited to any refunds or vehicle replacements, incurred by the manufacturer pursuant to this chapter, in the absence of a finding by a court that the related repairs had been carried out by the dealer in a manner substantially inconsistent with the manufacturer's published instructions. A manufacturer who is found by a court to have improperly charged back a dealer because of a violation of this section is liable to the injured dealer for full reimbursement plus reasonable costs and any attorney's fees”.

91 Acts, ch 153, §11; 95 Acts, ch 45, §7

322G.12 - Resale of Returned Vehicles

If the court grants a manufacturer, the return of a motor vehicle, the very first thing a manufacturer should do within 10 days is to notify the vehicle identification number to the state department of transportation, and get a new title of the vehicle in the manufacturer’s name. The new title should contain a description signifying that the motor vehicle was returned to the manufacturer due to nonconformity. The department of transportation includes the "REBUILT" or "SALVAGE" terms on the registration receipt and certificate of title.

The Iowa lemon law doesn’t allow any person to either sell or transfer a motor vehicle returned after the settlement in the same state unless the reason of return is clearly designated on the registration book or certificate of transfer.

91 Acts, ch 153, §12; 95 Acts, ch 45, §8

322G.13 - Certain Agreements Void

Any concurrence entered into by a consumer that waives, limits, or disclaims the rights set forth in this chapter is void as contrary to public policy.

91 Acts, ch 153, §13

322G.14 - Rulemaking Authority

  1. The attorney general should follow the rules necessary to execute this chapter.
  2. To apply rules and forms under this chapter, the attorney general collaborates with agencies that carry out similar role in other states with a view to set up the policy of this chapter to achieve maximum consistency in the form and content of certification, regulation, and procedural evaluation of manufacturer-established programs, required recordkeeping, required reporting wherever practicable, and required notices to consumers.

91 Acts, ch 153, §14

322G.15 - Applicability

  1. This chapter applies to motor vehicles originally purchased or leased from July 1, 1991, and onwards.
  2. As stated in Iowa lemon laws, “this chapter applies to motor vehicles originally purchased or leased in this state and, except for section 322G.3, subsections 1 and 2, and section 322G.6, subsection 1, applies to motor vehicles originally purchased or leased in other states, if the consumer is a resident of this state at the time the consumer's rights are asserted under this chapter”.

91 Acts, ch 153, §15; 95 Acts, ch 45, §9; 96 Acts, ch 1079, § 10