Does California's Lemon Law Apply to a Car Bought From a Tow Company?

In California, the Car Buyer's Bill of Rights covers new and used vehicles purchased from car dealers in California on or after July 1, 2006. It does not cover transactions between private parties and does not cover off-road vehicles and motorcycles. Tow truck companies may have to comply with the Car Buyer's Bill of Rights, but must comply with the two-day sales contract rescission laws if they are covered by them.

California's Lemon Law

The California lemon law requires both new- and used-car dealers to provide disclosures to car buyers. They must provide itemized financing disclosures and whether their vehicles come with warranties and insurance. They must also provide financial disclosures. The state's lemon law, or the Song-Beverly Consumer Warranty Act, requires dealers to offer trade-ins or replacement vehicles to consumers who purchased defective cars and request repairs within 18,000 miles or within 18 months of purchase.

Tow Companies

Since tow companies generally sell used cars, they are required to comply with the state's new-car laws. Dealers that sell used cars must provide itemized price statements that disclose their true costs for purchasing their vehicles. Tow companies are covered by the state's two-day rescission or cancellation law if they sell more than five vehicles annually. They must offer all buyers a right to purchase a cancellation option limited to $75 for vehicles that cost $5,000 or less; $150 for a car that costs between $5,001 and $10,000; and $250 for a car that costs $10,001 to $30,000. After $30,000, tow truck companies and used-car dealers can charge one percent of the vehicle's purchase price for the portion over $30,000 and up to $39,999.99. All figures are as of May 2011.

Exceptions

The two-day cancellation requirement does not apply to cars that retail at $40,000 or more, new cars or vehicles used commercially. Furthermore, it does not apply to recreational vehicles, motorcycles and off-road utility vehicles. Buyers who do not purchase the two-day cooling-off option are not entitled to refunds.

Buyers' Rights and Duties

Buyers who are covered by the cancellation option can return their cars by the end of the second day for a full refund. If they exercise their option, dealers and tow truck companies must offer a refund of the used-car purchase price, any trade-ins, registration and title fees, and taxes. Dealers and tow truck companies do not have to provide refunds of the price buyers paid to purchase the option. Furthermore, they may charge a nominal fee for restocking, but must reduce it by the fee buyers paid to purchase the cancellation option.

To exercise their legal rights under the state's cancellation law, car buyers cannot return their cars if they exceeded the mileage and use allowance required under the contract of at least 250 miles. They must bring all of their cancellation-option receipts, vehicle purchase receipts and contracts. They are not entitled to exercise their option to cancel their contracts if they subsequently placed liens on their vehicles, except for original finance liens.

Considerations

Since state laws can frequently change, do not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your state.