Texas Lemon Laws

Section 3.08(i). The owner of a motor vehicle or the owner's designated agent may make a complaint concerning defects in a motor vehicle which are covered by a manufacturer's, converter's, or distributor's warranty agreement applicable to the vehicle. Any such complaint must be made in writing to the applicable dealer, manufacturer, converter, or distributor and must specify the defects in the vehicle which are covered by the warranty. The owner may also invoke the Board's jurisdiction by sending the Board a copy of the complaint. A hearing may be scheduled on all complaints arising under this subsection which are not privately resolved between the owner and the dealer, manufacturer, converter, or distributor.

Warranty Performance Obligations

Section 6.07. (a) In addition to the other powers and duties provided for in this Act, the Board shall cause manufacturers, converters, and distributors to perform the obligations imposed by this section. In this section "owner" means a person who: (1) purchased a vehicle at retail from a licensee and is entitled to enforce the terms of a manufacturer's warranty with respect to the vehicle; (2) is a lessor or lesee, other than a sublessee, who purchased or leased the vehicle from a licensee; or (3) is the transferee or assignee of any of the persons described in Subdivisions (1) or (2) of this subsection if the transferee or assignee is a Texas resident and is entitled to enforce the terms of a manufacturer's warranty.

(b) If a new motor vehicle does not conform to all applicable manufacturer's, converter's, or distributor's express warranties, the manufacturer, converter, or distributor shall make the repairs necessary to conform the vehicle to the applicable express warranties, notwithstanding that the repairs are made after the expiration of the warranties, if: (1) the owner or the owner's designated agent reported the nonconformity to the manufacturer,converter, or distributor, its agent, or its franchised dealer during the term of such express warranties; or (2) a rebuttable presumption relating to the vehicle was created under Subsection (d) of this section. This section does not in any way limit the remedies available to an owner under a new motor vehicle warranty that extends beyond the provisions of this section.

(c) If the manufacturer, converter, or distributor is unable to conform the motor vehicle to an applicable express warranty by repairing or correcting any defect or condition which creates a serious safety hazard or substantially impairs the use or market value of the motor vehicle after a reasonable number of attempts, the manufacturer, converter, or distributor shall (1) replace the motor vehicle with a comparable motor vehicle; or (2) accept return of the vehicle from the owner and refund to the owner the full purchase price less a reasonable allowance for the owner's use of the vehicle and any other allowances or refunds payable to the owner. In this section, "impairment of market value" means a substantial loss in market value caused by a defect specific to the vehicle. In addition to replacing the vehicle or refunding the purchase price, the manufacturer, converter, or distributor shall reimburse the owner for reasonable incidental costs resulting from loss of use of the motor vehicle because of the nonconformity or defect. As necessary to promote the public interest, the Commission by rule shall define the incidental costs that are eligible for reimbursement, shall specify other requirements necessary to determine an eligible cost, and may set a maximum amount that is eligible for reimbursement, either by type of eligible cost or a total for all costs. Refunds shall be made to the owner and lienholder, if any, as their interests may appear. A reasonable allowance for use shall be that amount directly attributable to use of the motor vehicle when the vehicle is not out of service for repair. An order to refund or to replace may not be issued by the Executive Director against a manufacturer, converter, or distributor unless the manufacturer, converter, or distributor has been mailed prior written notification of the alleged nonconformity or defect from or on behalf of the owner and has been given an opportunity to cure the alleged defect or nonconformity. In any hearing before the Executive Director under this section, a manufacturer, converter, or distributor may plead and prove as an affirmative defense to the remedies provided hereunder that (1) the nonconformity is the result of abuse, neglect, or unauthorized modifications or alterations of the motor vehicle; or (2) the nonconformity does not substantially impair the use or market value of the motor vehicle. In this section, "serious safety hazard" means a life-threatening malfunction or nonconformity that substantially impedes a person's ability to control or operate a motor vehicle for ordinary use or intended purposes or that creates a substantial risk of fire or explosion.

(d) There is a rebuttable presumption that a reasonable number of attempts have been undertaken to conform a motor vehicle to the applicable express warranties if (1) the same nonconformity has been subject to repair four or more times by the manufacturer, converter,or distributor, its agent, or its franchised dealer and two of the repair attempts have been made within a period of 12 months following the date of original delivery to an owner, or 12,000 miles, whichever occurs first, and the other two repair attempts occur within the 12 months or 12,000 miles immediately following the date of the second repair attempt, whichever occurs first, but such nonconformity continues to exist; (2) the same nonconformity creates a serious safety hazard and has caused the vehicle to have been subject to repair two or more times by the manufacturer, converter, or distributor, or an authorized agent or franchised dealer, and at least one attempt to repair the nonconformity was made in the period of 12 months or 12,000 miles, whichever occurs first, and at least one other attempt made in the period of 12 months or 12,000 miles after the first repair attempt, whichever occurs first, but the nonconformity continues to exist; or (3) the vehicle is out of service for repair for a cumulative total of 30 or more days in the 24 months or 24,000 miles, whichever occurs first, and at least two repair attempts were made in the first 12 months or 12,000 miles immediately following the date of original delivery to an owner and a nonconformity still exists that substantially impairs the vehicle's use or market value. The initial 12-month period or 12,000 mile limit, the subsequent 12-month period or 12,000 mile limit, and the 30-day period shall be extended by any period of time during which repair services are not available to the owner because of a war, invasion, strike or fire, flood, or other natural disaster. During any period of time that the manufacturer or distributor lends a comparable motor vehicle to the owner during the time the vehicle is being repaired by a franchised dealer, the 30-day period provided for in this subsection is tolled.

(e)

(1) The Board shall adopt rules for the enforcement and implementation of this section.
(2) The Director shall, in accordance with rules adopted by the Board, conduct hearings and issue final orders for the enforcement and implementation of this section. Orders issued by the Director under this section are considered final orders of the Board.
(3) Except as provided by Subdivision (6) of this subsection, the provisions of this section are not available to an owner in an action seeking a refund or replacement based upon the alleged nonconformity of a motor vehicle to an express warranty applicable to the motor vehicle unless the owner has first exhausted the administrative remedies provided herein.
(4) The provisions of this section are not available to a party in an action against a seller under Chapter 2 or Chapter 17, Business & Commerce Code, as amended.
(5) Except as provided by Subdivision (6) of this subsection, the provisions of this section are available in an action against a manufacturer, converter, or distributor brought under Chapter 17, Business & Commerce Code, after the owner has exhausted the administrative remedies provided by this section.
(6) If, after a complaint has been filed under this section, the Hearing Examiner has not issued a proposal for decision and recommended to the Executive Director a final order before the expiration of the 150th day after the date the complaint was filed, the Executive Director shall, in writing sent by certified mail, so inform the complainant and the manufacturer, converter, or distributor of the expiration of the 150-day period and of the complainant's right to file a civil action. The Commission shall extend the 150-day period if a delay is requested or is caused by the complainant.
(7) After receipt of the notice of the right to file a civil action, the complainant may file a civil action against one or more of the persons complained of in the complaint.
(8) A failure by the Board to issue a notice of the right to file a civil action does not affect a complainant's right to bring an action under this Act.
(9) Any party to a proceeding under this section before the Director that is affected by a final order of the Director is entitled to judicial review of the order under the substantial evidence rule in a District Court of Travis County, Texas. The judicial review is subject to Chapter 2001, Government Code, except to the extent that that Act is inconsistent with this Act.

(f) This section does not limit the rights or remedies otherwise available to an owner under any other law.

(g) In a hearing under this section, the Executive Director shall make its order with respect to responsibility for payment of the cost of any refund or replacement and no manufacturer, converter, or distributor may cause any franchised dealer to pay directly or indirectly any sum not specifically so ordered by the Executive Director. If the Executive Director orders a manufacturer, converter, or distributor to refund or replace a motor vehicle because it meets the criteria set forth in this section, the Executive Director may order the franchised dealer to reimburse the owner, lienholder, manufacturer, converter, or distributor only for items or options added to the vehicle by the franchised dealer and only to the extent that one or more of such items or options contributed to the defect that served as the basis for the Executive Director's order of refund or replacement. In a case involving a leased vehicle,the Executive Director may terminate the lease and apportion the allowance for use and other allowances or refunds between the lessee and lessor of the vehicle.

(h) A proceeding brought under this section shall be commenced within six months following the earlier of (1) expiration of the express warranty term or (2) 24 months or 24,000 miles following the date of original delivery of the motor vehicle to an owner.

(i) A contractual provision that excludes or modifies the remedies provided for in this section is prohibited and shall be deemed null and void as against public policy unless the exclusion or modification is done with respect to a settlement agreement between the owner and the manufacturer, converter, or distributor.

(j)

(1) A manufacturer, distributor, or converter that has been ordered to repurchase or replace a vehicle shall, through its franchised dealer, issue a disclosure statement stating that the vehicle was repurchased or replaced by the manufacturer, distributor, or converter under this section. The disclosure statement must accompany the vehicle through the first retail purchase. The manufacturer, distributor, or converter must restore the cause of the repurchase or replacement to factory specifications and issue a new 12-month, 12,000-mile warranty on the vehicle. The disclosure statement must include a toll-free telephone number of the Commission that will enable a purchaser of a repurchased or replaced vehicle to obtain information about the condition or defect that was the basis of the order for repurchase or replacement. The Commission shall adopt rules for the enforcement of this subdivision.
(2) The Commission shall provide a toll-free telephone number for providing information to persons who request information about a condition or defect that was the basis for repurchase or replacement by an order of the Executive Director. The Commission shall maintain an effective method of providing information to persons who make the requests.

(k) The Commission shall publish an annual report on the motor vehicles ordered repurchased or replaced under this section. The report must list the number of vehicles by brand name and model and include a brief description of the conditions or defects that caused the repurchase or replacement. The Commission shall make the report available to the public. The Commission may charge a reasonable fee to recover the cost of the report.

(l) Information filed with the Board under this section is not a public record and is not subject to release under the open records law, Chapter 552, Government Code, until the complaint is finally resolved by order of the Board.

Judicial Review

Appeal

Section 7.01. (a) Any party to a proceeding before the Commission that is affected by a final order, rule, decision, or other final action of the Commission is entitled to judicial review of any such final Commission action, under the substantial evidence rule, in a District Court of Travis County, Texas, or in the Court of Appeals for the Third Court of Appeals District, and to the extent not in consistent herewith, pursuant to the Administrative Procedure and Texas Register Act (Article 6252-13a, Vernon's Texas Civil Statutes). Appeals initiated in the District Courts of Travis County shall be removable to the Court of Appeals upon notice of removal to any such district court by any party at any time prior to trial in the district court. Appeals initiated in or removed to the Court of Appeals shall be initiated under the Administrative Procedure and Texas Register Act as if initiated in a Travis County District Court and shall, upon the filing thereof, be thereafter governed by the Texas Rules of Appellate Procedure.

(b) A final action, ruling, order, or decision of the Motor Vehicle Board of the Texas Department of Transportation, or the Director of the Motor Vehicle Division of the Texas Department of Transportation, as appropriate under the terms of this Act or other law, is the final action with respect to a matter arising under this Act, and is subject to review only by judicial review as provided by this Act. The petition for judicial review must be filed within 30 days of the date on which an action, ruling, order, or decision of the Board or the director first becomes final and appealable.

(c) Citation must be served on the Director. Citation must also be served on all other parties of record before the Board. For appeals initiated in the Court of Appeals, the court shall cause citation to be issued.

(d) Appeals in which evidence outside the Board's record is to be taken under Section 19(d)(3), Administrative Procedure and Texas Register Act (Article 6252-13a,Version's Texas Civil Statutes), or otherwise, shall be initiated in a Travis County District Court, or having been initiated in the Court of Appeals, shall be subject to remand to a Travis County District Court for proceedings in accordance with instructions from the Court of Appeals.

(e) Appellants shall pursue appeals with reasonable diligence. If an appellant fails to prosecute an appeal within six months after the appeal is filed, the court shall presume that the appeal has been abandoned. The court shall dismiss any such appeal on a motion for dismissal made by the Attorney General or other party unless the appellant, after receiving due notice, demonstrates good cause for the delay.

(f) Appeal shall not affect the enforcement of a final Commission order unless its enforcement is enjoyable under Section 65.001 et seq., Civil Practice and Remedies Code,and under principles of primary jurisdiction.

Amended by Chapter 266, Acts of the 63rd Legislature, Regular Session, 1973, effective June 11, 1973; amended by Chapter 128, Acts of the 64th Legislature, Regular Session, 1975, effective May 6, 1975; amended by Chapter 357, Acts of the 65th Legislature, Regular Session, 1977, effective June 10, 1977; amended by Chapter 709, Acts of the 66th Legislature, Regular Session, 1979, effective September 1, 1979; amended by Chapter 235, Acts of the 67th Legislature, Regular Session, 1981, effective May 28, 1981; amended by Chapters 81 and 844, Acts of the 68th Legislature, Regular Session, 1983, effective June 19,1983; amended by Chapter 241, Acts of the 69th Legislature, Regular Session, 1985, effective June 4, 1985; amended by Chapter 357, Acts of the 70th Legislature, Regular Session, 1987, effective June 11, 1987; amended by Chapter 1130, Acts of the 71st Legislature, Regular Session, 1989, effective June 16, 1989; amended by House Bill 524, 72nd Legislature, Regular Session, 1991, effective June 13, 1991; amended by Chapter 61, Acts of the 73rd Legislature, Regular Session, 1993, effective April 19, 1993; amended by Chapters 345 and 357, Acts of the 74th Legislature, Regular Session, 1995, effective June 8, 1995; amended by House Bill 3092, Acts of the 76th Legislature, Regular Session, 1999, effective June 19, 1999; amended by House Bill 2537, Acts of the 76th Legislature, Regular Session, 1999, effective September 1, 1999.

TEXAS MOTOR VEHICLE BOARD LEMON LAW RULES

Part VI. TEXAS MOTOR VEHICLE COMMISSION

These Rules are promulgated under the authority of Texas Civil Statutes, Article 4413(36), §6.07(e).

Lemon Law rules originally adopted on October 20, 1986

Part VI. TEXAS MOTOR VEHICLE COMMISSION

Section 107.1. Objective.

It is the objective of these sections to implement the intent of the legislature as declared in the Texas Motor Vehicle Commission Code (TMVCC) §3.06 and §6.07(e), by prescribing rules to provide a simplified and fair procedure for the enforcement and implementation of the Texas lemon law (TMVCC, §6.07) and consumer complaints covered by general warranty agreements (TMVCC, §3.08(i)) including the processing of complaints, the conduct of hearings, and the disposition of complaints filed by owners of motor vehicles seeking relief under these provisions of the Code.

Source: The provisions of this §107.1 adopted to be effective October 20, 1986, 11 TexReg 4152; amended effective November 15, 1995, 20 TexReg 9003; reviewed pursuant to requirements of Section 167, Appropriations Act of 1997, HB 1, Article IX, effective 7/23/99, 24 TexReg 5759. Amended effective March 26, 2000, 25 TexReg 2337.

Section 107.2. Filing of Complaints.

(a) Complaints should state sufficient facts to enable the Board and the party complained against to know the nature of the complaint and the specific problems or circumstances which form the basis of the claim for relief under the lemon law.

(b) Complaints should state sufficient facts to enable the Board and the party complained against to know the nature of the complaint and the specific problems or circumstances which form the basis of the claim for relief under the lemon law.

(c) Complaints must provide the following information:

(1) name, address, and phone number of vehicle owner;

(2) identification of vehicle by make, model, and year, and manufacturer's vehicle identification number;

(3) type of warranty coverage;

(4) name and address of dealer, or other person, from whom vehicle was purchased or leased, including the name and address of the current lessor, if applicable;

(5) date of delivery of vehicle to original owner; and in the case of a demonstrator, the date the vehicle was placed into demonstrator service;

(6) vehicle mileage at time vehicle was purchased or leased, mileage when problems with vehicle were first reported, name of dealer or manufacturer's or distributor's agent to whom problems were first reported, and current mileage;

(7) identification of existing problems and brief description of history of problems and repairs on vehicle, including date and mileage of each repair, with copies of repair orders where possible;

(8) date on which written notification of complaint was given to the vehicle manufacturer or distributor, and if vehicle has been inspected by manufacturer, the date and results of such inspection;

(9) any other information which the complainant believes to be pertinent to the complaint.

(d) The Board's staff will provide information concerning the complaint procedure and complaint forms to any person requesting information or assistance.

(e) The Texas Motor Vehicle Commission Code (TMVCC) §6.07 complaint filing fee should be remitted with the complaint by check or money order. No filing fee is required for a TMVCC §3.08(i) complaint. The filing fee is nonrefundable, but a complainant who prevails in a case is entitled to reimbursement of the amount of the filing fee. Failure to remit the filing fee with the complaint will result in delaying the commencement of the 150-day requirement provided in §107.6(11) of this title (relating to Hearings) and may result in dismissal of the complaint.

Source: TThe provisions of this §107.2 adopted to be effective October 20, 1986, 11 TexReg 4152; amended to be effective December 24, 1987, 12 TexReg 4635; amended to be effective April 1, 1991, 16 TexReg 1631; amended to be effective October 16, 1991, 16 TexReg 5399; reviewed pursuant to requirements of Section 167, Appropriations Act of 1997, HB 1, Article IX, effective 7/23/99, 24 TexReg 5759. Amended effective March 26, 2000, 25 TexReg 2337.

Section 107.3. Review of Complaints.

AAll complaints will be reviewed promptly by the Board's staff to determine whether they satisfy the requirements of the Texas Motor Vehicle Commission Code §§3.08(i) or 6.07.

(1) If it cannot be determined whether a complaint satisfies the requirements of §§3.08(i) or 6.07, the complainant will be contacted for additional information.

(2) If it is determined that the complaint does not meet the requirements of §§3.08(i) or 6.07, the complainant will be notified of this fact.

(3) If it is determined that the complaint does meet the requirements of §§3.08(i) or 6.07, the complaint will be processed in accordance with the procedures set forth in this chapter

(4) For purposes of §6.07(h), the commencement of a proceeding means the filing of a complaint with the Board, and the date of filing is determined by the date of receipt by the Board.

Source: The provisions of this §107.3 adopted to be effective October 20, 1986, 11 TexReg 4152 reviewed pursuant to requirements of Section 167, Appropriations Act of 1997, HB 1, Article IX, effective 7/23/99, 24 TexReg 5759. Amended effective March 26, 2000, 25 TexReg 2337.

Section 107.4. Notification to Manufacturer and Distributor.

Upon receipt of a complaint for relief under the Texas Motor Vehicle Commission Code §§3.08(i) or 6.07, notification thereof, with a copy of the complaint, will be given to the appropriate manufacturer, converter, or distributor, and a response to the complaint will be requested. A copy of the complaint and notification thereof will also be provided to the selling dealer and any other dealers that have been involved with the complaint and a response may be requested.

Source: The provisions of this §107.4 adopted to be effective October 20, 1986, 11 TexReg 4152 reviewed pursuant to requirements of Section 167, Appropriations Act of 1997, HB 1, Article IX, effective 7/23/99, 24 TexReg 5759. Amended effective March 26, 2000, 25 TexReg 2337.

Cross References: This Section cited in 16 TAC §107.3, (relating to Review of Complaints).

Section 107.5. Mediation; Settlement.

If, from a review of the complaint and the responses received from the manufacturer, converter, distributor, or dealer, it appears to the Board staff that a settlement or resolution of the complaint may be possible without the necessity for a hearing, the Board staff will attempt to effect a settlement or resolution of the complaint.

Source: The provisions of this §107.5 adopted to be effective October 20, 1986, 11 TexReg 4152 reviewed pursuant to requirements of Section 167, Appropriations Act of 1997, HB 1, Article IX, effective 7/23/99, 24 TexReg 5759. Amended effective March 26, 2000, 25 TexReg 2337.

Cross References: This Section cited in 16 TAC §107.3, (relating to Review of Complaints).

Section 107.6. Hearings.

Complaints which satisfy the jurisdictional requirements of the Texas Motor Vehicle Commission Code, §3.08(i) and §6.07, will be set for hearing and notification of the date, time, and place of the hearing will be given to all parties by certified mail.

(1) Where possible, and subject to the availability of commission personnel and funds, hearings will be held in the city where the complainant resides or at a location reasonably convenient to the complainant.

(2) Hearings will be scheduled at the earliest date possible, provided that ten days prior notice, or as otherwise provided by law, must be given to all parties. A notice of hearing will also be provided to a dealer identified as a party who will be requested to have a representative appear at the hearing.

(3) Hearings will be conducted by Board staff hearing officers or by independent hearing officers designated by the executive director of the Board.

(4) Hearings will be informal in nature, it being the intent of the lemon law to provide a procedure and forum which does not necessitate the services of attorneys and which does not involve strict legal formalities applicable to trials in county or district court.

(5) The parties have the right to be represented by attorneys at a hearing, although attorneys are not necessary. Any party who intends to be represented by an attorney at a hearing must notify the Board and the other party at least five business days prior to the hearing and failure to do so will constitute grounds for postponement of the hearing if requested by the other party.

(6) The parties have the right to present their cases in full, including testimony from witnesses; documentary evidence such as repair orders, warranty documents, vehicle sales contract, etc., subject to the hearing officer's rulings.

(7) Each party will be subject to being questioned by the other party, within limits to be governed by the hearing officer.

(8) The complainant will be required to bring the vehicle in question to the hearing for the purpose of having the vehicle inspected and test driven, unless otherwise ordered by the hearing officer upon a showing of good cause as to why the complainant should not be required to bring the vehicle to the hearing.

(9) The Board may have the vehicle in question inspected prior to the hearing by an expert, where the opinion of such expert will be of assistance to the hearing officer and the Board in arriving at a decision. Any such inspection shall be made upon prior notice to all parties who shall have the right to be present at such inspection, and copies of any findings or report resulting from such inspection will be provided to all parties prior to, or at, the hearing.

(10) All hearings will be recorded on tape by the hearing officer. Copies of the tape recordings of a hearing will be provided to any party upon request and upon payment for the cost of the tapes.

(11) All hearings will be conducted expeditiously. However, if a Board hearing officer has not issued a decision within 150 days after the Texas Motor Vehicle Commission Code §6.07 complaint and filing-fee were received, Board staff shall notify the parties by certified mail that complainant has a right to file a civil action in state district court to pursue rights under §6.07. The 150-day period shall be extended upon request of the complainant or if a delay in the proceeding is caused by the complainant. The notice will inform the complainant of the right to elect to continue the lemon law complaint through the Board.

Source: The provisions of this §107.6 adopted to be effective October 20, 1986, 11 TexReg 4152; amended to be effective October 16, 1991, 16 TexReg 5399; amended to be effective November 15, 1995, 20 TexReg 9003.

Cross References: This Section cited in 16 TAC §101.45, (relating to Recording and Transcriptions of Hearing: Cost); 16 TAC §107.2, (relating to Filing of Complaints); 16 TAC §107.3, (relating to Review of Complaints).

Section 107.7. Contested Cases: Decisions and Final Orders.

To expedite the resolution of Texas Motor Vehicle Commission Code §§ 3.08(i) and 6.07 cases, the director is authorized to conduct hearings and issue final orders for the enforcement of these sections, including the delegation of this duty to hearing officers. Review of the hearing officers' decisions and final orders shall be according to the procedures set forth as follows.

(1) A hearings officer will prepare a written decision and final order as soon as possible but not later than 60 days after the hearing is closed. The decision and order will include the hearings officer's findings of fact and conclusions of law.

(2) The decision and final order shall be sent to all parties of record by certified mail.

(3) The decision and order is final and binding on the parties, in the absence of a timely motion for rehearing, on the expiration of the period for filing a motion for rehearing.

(4) A party who disagrees with the decision and final order may file a motion for rehearing within 20 days from the date of the notification of the final order. A motion for rehearing must include all the specific reasons, exceptions, or grounds that are asserted by a party as the basis of the request for a rehearing. It shall recite, if applicable, the specific findings of fact, conclusions of law, or any other portions of the decision to which the party objects. Replies to a motion for rehearing must be filed with the agency within 30 days after the date of the notification of the final order. A party or attorney of record notified by mail is presumed to have been notified on the third day after the date on which the order was mailed.

(5) A motion for rehearing may be directed either to the director or to the Board, as a body, at the election of the party filing the motion. If the party filing the motion does not include a specific request for a rehearing by the members of the Board, the motion shall be deemed to be a request for a rehearing by the director.

(6) The director or the Board, as appropriate, must act on the motion within 45 days after the date of notification of the final order, or as otherwise provided by law, or it is overruled by operation of law. The director or the Board, as appropriate, may, by written order, extend the period for filing, replying to, and taking action on a motion for rehearing, not to exceed 90 days after the date of notification of the final order. In the event of an extension of time, the motion for rehearing is overruled by operation of law on the date fixed by the written order of extension, or in the absence of a fixed date, 90 days after the date of notification of the final order.

(7) If the director or the Board grants a motion for rehearing, the parties will be notified by first class mail. A rehearing before the director will be scheduled as promptly as possible. A rehearing before the Board will be scheduled at the earliest possible meeting of the Board. After rehearing, the director or Board shall issue a final order and any additional findings of fact or conclusions of law necessary to support the decision or order. The director or the Board may also issue an order granting the relief requested in a motion for rehearing or replies thereto without the need for a rehearing. If a motion for rehearing and the relief requested is denied, an order so stating will be issued.

(8) A party who has exhausted all administrative remedies, and who is aggrieved by a final decision in a contested case from which appeal may be taken is entitled to judicial review pursuant to Section 7.01 of the Texas Motor Vehicle Commission Code, under the substantial evidence rule. The petition shall be filed in a district court of Travis County or in the Court of Appeals for the Third Court of Appeals District within 30 days after the decision or order of the agency is final and appealable. A copy of the petition must be served on the agency and any other parties of record. After service of the petition on the agency and within the time permitted for filing an answer, the agency shall transmit to the reviewing court the original or a certified copy of the entire record of the proceeding. If the court orders new evidence to be presented to the agency, the agency may modify its findings and decision or order by reason of the new evidence, and shall transmit the additional record to the court.

Source: The provisions of this §107.7 adopted to be effective November f27, 1991, 16 TexReg 6597 reviewed pursuant to requirements of Section 167, Appropriations Act of 1997, HB 1, Article IX, effective 7/23/99, 24 TexReg 5759. Amended effective March 26, 2000, 25 TexReg 2337.

Cross References: This Section cited in 16 TAC §107.3, (relating to Review of Complaints).

Section 107.8. Decisions.

Unless otherwise indicated, this section applies to decisions made pursuant to Texas Motor Vehicle Commission Code §6.07. Decisions shall give effect to the presumptions provided in the Texas Motor Vehicle Commission Code, §6.07(d), where applicable.

(1) If it is found that the manufacturer, distributor, or converter is not able to conform the vehicle to an applicable express warranty by repairing or correcting a defect in the complainant's vehicle which creates a serious safety hazard or substantially impairs the use or market value of the vehicle after a reasonable number of attempts, and that the affirmative defenses provided under the Texas Motor Vehicle Commission Code, §6.07(c), are not applicable, the Board shall order the manufacturer, distributor, or converter to replace the vehicle with a comparable vehicle, or accept the return of the vehicle from the owner and refund to the owner the full purchase price of the vehicle, less a reasonable allowance for the owner's use of the vehicle.

(2) In any decision in favor of the complainant, the Board will accommodate the complainant's request with respect to replacement or repurchase of the vehicle, to the extent possible.

(3) Where a refund of the purchase price of a vehicle is ordered, the purchase price shall be the amount of the total purchase price of the vehicle, but shall not include the amount of any interest or finance charge or insurance premiums. The award to the vehicle owner shall include reimbursement for the amount of the lemon law complaint filing fee paid by or on behalf of the vehicle owner. The refund shall be made payable to the vehicle owner and the lienholder, if any, as their interests require.

(4) Except in cases where clear and convincing evidence shows that the vehicle has a longer or shorter expected useful life than 100,000 miles, the reasonable allowance for the owner's use of the vehicle shall be that amount obtained by adding the following:

(B) 50% of the product obtained by multiplying the purchase price by a fraction having as its denominator 100,000 and having as its numerator the number of miles that the vehicle traveled after the first report of the defect or condition forming the basis of the repurchase order. The number of miles during the period covered in this paragraph shall be determined from the date of the first report of the defect or condition forming the basis of the repurchase order through the date of the TMVC hearing.

(5) Except in cases where clear and convincing evidence shows that the vehicle has a longer or shorter expected useful life than 120 months, the reasonable allowance for the owner's use of the towable recreational vehicle shall be the greater of 10% of the purchase price, as defined in paragraph (3) of this section, or that amount obtained by adding the following:

(A) The product obtained by multiplying the purchase price of the towable recreational vehicle, as defined in paragraph (3) of this section, by a fraction having as its denominator 120 months, except the denominator shall be 60 months, if the towable recreational vehicle is occupied on a full time basis, and having as its numerator the number of months from the time of delivery to the owner to the first report of the defect or condition forming the basis of the repurchase order; and

(B) 50% of the product obtained by multiplying the purchase price by a fraction having as its denominator 120 months, except the denominator shall be 60 months, if the towable recreational vehicle is occupied on a full time basis, and having as its numerator the number of months of ownership after the first report of the defect or condition forming the basis of the repurchase order. The number of months during the period covered in this paragraph shall be determined from the date of the first report of the defect or condition forming the basis of the repurchase order through the date of the Board hearing.

(6) Except in cases involving unusual and extenuating circumstances, supported by a preponderance of the evidence, where refund of the purchase price of a leased vehicle is ordered, the purchase price shall be allocated and paid to the lessee and the lessor, respectively as follows.

(A) The lessee shall receive the total of:

(i) all lease payments previously paid by him to the lessor under the terms of the lease; and

(ii) all sums previously paid by him to the lessor in connection with entering into the lease agreement, including, but not limited to, any capitalized cost reduction, down payment, trade-in, or similar cost, plus sales tax, license and registration fees, and other documentary fees, if applicable.

(B) The lessor shall receive the total of:

(i) the actual price paid by the lessor for the vehicle, including tax, title, license, and documentary fees, if paid by lessor, and as evidenced in a bill of sale, bank draft demand, tax collector's receipt, or similar instrument; plus

(ii) an additional 5.0% of such purchase price plus any amount or fee, if any, paid by lessor to secure the lease or interest in the lease;

(iii) provided, however, that a credit, reflecting all of the payments made by the lessee, shall be deducted from the actual purchase price which the manufacturer is required to pay the lessor, as specified in clauses (i) and (ii) of this subparagraph.

(C) When the Board orders a manufacturer to refund the purchase price in a lease vehicle transaction, the vehicle shall be returned to the manufacturer with clear title upon payment of the sums indicated in subparagraphs (A) and (B) of this paragraph. The lessor shall transfer title of the vehicle to the manufacturer, as necessary in order to effectuate the lessee's rights under this rule. In addition, the lease shall be terminated without any penalty to the lessee.

(D) Refunds shall be made to the lessee, lessor, and any lienholders as their interests may appear. The refund to the lessee under subparagraph (A) of this paragraph shall be reduced by a reasonable allowance for the lessee's use of the vehicle. A reasonable allowance for use shall be computed according to the formula in paragraph (4) of this section, using the amount in subparagraph (B)(i) of this paragraph as the applicable purchase price.

(7) In any award in favor of a complainant, the director may require the dealer involved to reimburse the complainant, manufacturer, converter, or distributor, for the cost of any items of options added to the vehicle but only to the extent that one or more of such items or options contributed to the defect that served as the basis for the order or repurchase or replacement. In no event shall this paragraph be interpreted to mean that a manufacturer, converter, or distributor, will be required to repurchase a vehicle due to a defect or condition that was solely caused by a dealer add-on item or option.

(8) If it is found by the Board that a complainant's vehicle does not qualify for replacement or repurchase, then the Board shall enter an order dismissing the complaint insofar as relief under the Texas Motor Vehicle Commission Code §6.07(c) is concerned. However, the Board may enter an order in any proceeding, where appropriate, requiring repair work to be performed or other action taken to obtain compliance with the manufacturer's, converter's, or distributor's, warranty obligations.

(9) If the vehicle is substantially damaged or there is an adverse change in its condition, beyond ordinary wear and tear, from the date of the hearing to the date of repurchase, and the parties are unable to agree on an amount of an allowance for such damage or condition, either party shall have the right to request reconsideration by the Board of the repurchase price contained in the final order.

(10) The Board will issue a written order in each Texas Motor Vehicle Commission Code §§ 3.08(i) or 6.07 case in which a hearing is held and a copy of the order will be sent to all parties.

Source: The provisions of this §107.8 adopted to be effective October 20, 1986, 11 TexReg 4152; amended to be effective December 24, 1987, 12 TexReg 4635; amended to be effective October 11, 1988, 13 TexReg 4778; amended to be effective April 1, 1991, 16 TexReg 1631; amended to be effective October 16, 1991, 16 TexReg 5399, amended to be effective January 8, 1998, 23 TexReg 132; amended to be effective August 17, 1998, 23 TexReg 8425 reviewed pursuant to requirements of Section 167, Appropriations Act of 1997, HB 1, Article IX, effective 7/23/99, 24 TexReg 5759. Amended effective March 26, 2000, 25 TexReg 2337.

Cross References: This Section cited in 16 TAC §107.3, (relating to Review of Complaints).

Section 107.9. Incidental Expenses.

(a) When a refund of the purchase price of a vehicle is ordered, the complainant shall be reimbursed for certain incidental expenses incurred by the complainant from loss of use of the motor vehicle because of the defect or nonconformity which is the basis of the complaint. The expenses must be reasonable and verified through receipts or similar written documents. Reimbursable incidental expenses include but are not limited to the following costs:

(1) alternate transportation;

(2) towing;

(3) costs of telephone calls or mail charges directly attributable to contacting the manufacturer, distributor, converter, or dealer regarding the vehicle; and

(4) meals and lodging necessitated by the vehicle's failure during out-of town trips.

(5) loss or damage to personal property;

(6) attorney fees if the complainant retains counsel after notification that the respondent is represented by counsel; and

(7) items or accessories added to the vehicle at or after purchase, less a reasonable allowance for use.

(b) Incidental expenses shall be reimbursed to a complainant. Incidental expenses shall be included in the final repurchase price required to be paid by a manufacturer, distributor, or converter to a prevailing complainant or in the case of a vehicle replacement, shall be tendered to the complainant at the time of replacement.

(c) In regards to the cost of items or accessories presented under subsection (a)(7) of this section, the hearing officer shall consider the permanent nature, functionality and value added by the items or accessories and whether the items or accessories are original equipment manufacturer parts (OEM) or non-OEM parts.

Source: The provisions of this §107.9 adopted to be effective October 1, 1991, 11 TexReg 5399 reviewed pursuant to requirements of Section 167, Appropriations Act of 1997, HB 1, Article IX, effective 7/23/99, 24 TexReg 5759. Amended effective March 26, 2000, 25 TexReg 2337.

Cross References: This Section cited in 16 TAC §107.3, (relating to Review of Complaints).

Section 107.10. Compliance with Order Granting Relief.

Compliance with the Board's order will be monitored by the Board.

(1) A complainant is not bound by the Board's decision and order and may either accept or reject the decision.

(2) If a complainant does not accept the Board's final decision, the proceeding before the Board will be deemed concluded and the complaint file closed.

(3) If the complainant accepts the Board's decision, then the manufacturer, distributor, or converter and the dealer to the extent of the dealer's responsibility, if any, shall immediately take such action as is necessary to implement the Board's decision and order.

(4) If a manufacturer, converter, or distributor replaces or repurchases a vehicle pursuant to a Board order, reacquires a vehicle to settle a Texas Motor Vehicle Commission Code §§3.08(i) or 6.07 complaint, or brings a vehicle into the state of Texas which has been reacquired to resolve a warranty claim in another jurisdiction, the manufacturer, converter, or distributor shall, prior to resale of such vehicle, issue a disclosure statement on a form provided by or approved by the Board through its director. In addition, the manufacturer, converter, or distributor reacquiring the vehicle shall affix a disclosure label provided by or approved by the Board through its director on an approved location in or on the vehicle. Both the disclosure statement and the disclosure label shall accompany the vehicle through the first retail purchase. Neither the manufacturer, converter, or distributor nor any person holding a license or general distinguishing number issued by the Board under the Code or Chapter 503, Transportation Code, shall remove or cause the removal of the disclosure label until delivery of the vehicle to the first retail purchaser. A manufacturer, converter, or distributor shall provide the Board, in writing, the name, address and telephone number of any transferee, regardless of residence, to whom the manufacturer, distributor or converter, as the case may be, transfers the vehicle within 60 days of each transfer. The selling dealer shall return the completed disclosure statement to the Board within 60 days of the retail sale of a reacquired vehicle. Any manufacturer, converter, or distributor or holder of a general distinguishing number who violates this section is liable for a civil penalty or other sanctions prescribed by the Code. In addition, the manufacturer, converter, or distributor must repair the defect or condition in the vehicle that resulted in the vehicle being reacquired and issue, at a minimum, a basic warranty (12 months/12,000 mile, whichever comes first), except for non-original equipment manufacturer items or accessories, on a form provided by or approved by the Board through its director, which warranty shall be provided to the first retail purchaser of the vehicle.

(5) In the event of any conflict between this rule and the terms contained in a cease and desist order, the terms of the cease and desist order shall prevail.

(6) The failure of any manufacturer, converter, distributor or dealer to comply with a decision and order of the Board within the time period prescribed in the order may subject the manufacturer, converter, or distributor, or dealer to formal action by the Board and the assessment of civil penalties or other sanctions prescribed by the Texas Motor Vehicle Commission Code for the failure to comply with an order of the Board.

Source: The provisions of this §107.10 adopted to be effective October 16, 1991, 16 TexReg 5399, amended to be effective January 8, 1998, 23 TexReg 133; reviewed pursuant to requirements of Section 167, Appropriations Act of 1997, HB 1, Article IX, effective 7/23/99, 24 TexReg 5759. Amended effective March 26, 2000, 25 TexReg 2337.

Section 107.11. Reports to Board.

The director shall inform the Board concerning the administration and enforcement of the lemon law. The director shall provide monthly reports to the Board which include data about the number of complaints received, number of complaints resolved before a hearing is set and after a hearing is set, pursuant to written orders, number of vehicles ordered repurchased, and any other information that may be requested by the Board.

Source: The provisions of this §107.11 adopted to be effective October 16, 1991, 16 TexReg 5399; reviewed pursuant to requirements of Section 167, Appropriations Act of 1997, HB 1, Article IX, effective 7/23/99, 24 TexReg 5759. Amended effective March 26, 2000, 25 TexReg 2337.

Source: The provisions of this §107.12 adopted to be effective November 15, 1995; 20 TexReg 9003; REPEALED effective March 26, 2000, 25 TexReg 2340.

^ TOP