Both federal and state laws apply to the sale of used cars in California. These laws are intended to ensure the rights of dealers while simultaneously protecting consumers. Warranties tend to cause the most friction between dealers and buyers. Below is a quick overview of important bodies of law that deal with used car sales in California.
- Uniform Commercial Code – while not technically federal law, all 50 states have adopted some form of the Uniform Commercial Code, making it a good first point of reference when discussing warranties. The UCC distinguishes between “express warranties” and “implied warranties.” With respect to car sellers, if warranties are going to be excluded, it must be conspicuous and draw the buyer’s attention to the fact that there are no implied or express warranties.
- Magnuson-Moss Warranty Act – The Magnuson-Moss Act was passed by Congress to prevent used car dealers from abusing warranty language. The Act provides that any dealer making a written warranty to a consumer must fully and obviously disclose, in simple and easily understood language, the terms and conditions of the warranty. If the dealer writes a warranty that is unclear, it will be interpreted against them if there is a later court action.
- Used Car Rule – the Federal Trade Commission (FTC) enacted this rule with the specific intent to discourage sellers of used cars from misrepresenting warranties or omitting material facts about the condition of used cars. This rule requires car dealers to display a window sticker, known as a Buyer’s Guide, on the used cars they offer to sell. This sticker is required to provide information such as:
- The existence of a warranty and its terms and conditions, including the duration of the coverage, the percentage of total repair costs the dealer will pay, and which vehicle systems the warranty covers.
- Vehicle Identification Number (VIN)
Furthermore, the vehicle must meet all safety requirements as set forth by the Department of Motor Vehicles. If a dealer fails to follow these guidelines, or misrepresents any of the information in the Buyer’s Guide, the buyer may be entitled to damages.
- Song-Beverly Consumer Warranty Act – Similar to the UCC, this Act requires that if dealers who are trying to waive implied warranties, they must do so with plain, simple and obvious language. In addition, Song-Beverly requires that these waivers also conspicuously state if the buyer, and not the seller, is responsible for repair costs.
- California Warranty Law: While some states require used cars to be sold with a warranty, California is not one of them. Generally, if a dealer provides that the vehicle is to be sold “as-is”, the buyer is on notice that the dealer is providing no warranties and the vehicle may have defects. However, there are two exceptions that require the dealer to provide a mandatory: 1) the dealer is a “buy-here-pay-here” dealership, or 2) the vehicle is a “certified” pre-owned vehicle.
- “Buy-Here-Pay-Here” Dealership Exception – Generally a “buy-here-pay-here” dealership is a dealer that you make payments to directly as opposed to a separate bank or lending company. “Buy-here-pay-here” warranties are required to last a minimum of 30 days or 1,000 miles (whichever comes first)
- “Certified” Pre-owned Vehicles Exception – in order for dealers to advertise that they are selling “certified” vehicles, California requires each vehicle come with a minimum of a 30 day implied warranty of merchantability. This is a basic warranty claiming that the vehicle is of adequate quality.
This area of the law is very dense and complicated. If you have questions about California’s used car laws, speaking with an experienced California attorney, with experiences with warranties, can help you understand how to proceed with the purchase or sale of a used car in California.