56:8-67. Definitions relative to sale and warranty of certain used vehicles

1. As used in this act:

"As is" means a used motor vehicle sold by a dealer to a consumer without any warranty, either express or implied, and with the consumer being solely responsible for the cost of any repairs to that motor vehicle.

"Consumer" means the purchaser or prospective purchaser, other than for the purpose of resale, of a used motor vehicle normally used for personal, family or household purposes.

"Covered item" means and includes the following components of a used motor vehicle: Engine - all internal lubricated parts, timing chains, gears and cover, timing belt, pulleys and cover, oil pump and gears, water pump, valve covers, oil pan, manifolds, flywheel, harmonic balancer, engine mounts, seals and gaskets, and turbo-charger housing; however, housing, engine block and cylinder heads are covered items only if damaged by the failure of an internal lubricated part. Transmission Automatic/Transfer Case - all internal lubricated parts, torque converter, vacuum modulator, transmission mounts, seals and gaskets. Transmission Manual/Transfer Case - all internal lubricated parts, transmission mounts, seals and gaskets, but excluding a manual clutch, pressure plate, throw-out bearings, clutch master or slave cylinders. Front-Wheel Drive - all internal lubricated parts, axle shafts, constant velocity joints, front hub bearings, seals and gaskets, Rear-Wheel Drive - all internal lubricated parts, propeller shafts, supports and U-joints, axle shafts and bearings, seals and gaskets.

"Dealer" means any person or business which sells or offers for sale a used motor vehicle after selling or offering for sale three or more used motor vehicles in the previous 12-month period.

"Deduction for personal use" means the mileage allowance set by the federal Internal Revenue Service for business usage of a motor vehicle in effect on the date a used motor vehicle is repurchased by a dealer in accordance with section 5 of this act, multiplied by the total number of miles a used motor vehicle is driven by a consumer from the date of purchase of that vehicle until the time of its repurchase.

"Director" means the Director of the Division of Consumer Affairs in the Department of Law and Public Safety.

"Excessive wear and tear" means wear or damage to a used motor vehicle beyond that expected to be incurred in normal circumstances.

"Material defect" means a malfunction of a used motor vehicle, subject to a warranty, which substantially impairs its use, value or safety.

"Repair insurance" means a contract in writing to refund, repair, replace, maintain or take other action with respect to a used motor vehicle for any period of time or any specified mileage and provided at an extra charge beyond the price of the used motor vehicle.

"Service contract" means a contract in writing to refund, repair, replace, maintain or take other action with respect to a used motor vehicle for any period of time or any specific mileage or provided at an extra charge beyond the price of the used motor vehicle.

"Used motor vehicle" means a passenger motor vehicle, excluding motorcycles, motor homes and off-road vehicles, title to, or possession of which has been transferred from the person who first acquired it from the manufacturer or dealer, and so used as to become what is commonly known as "secondhand," within the ordinary meaning thereof but does not mean a passenger motor vehicle, subject to a motor vehicle lease agreement which was in effect for more than 90 days , which is sold by the lessor to the lessee, or to a family member or employee of the lessee upon the termination of the lease agreement.

"Warranty" means any undertaking, in writing and in connection with the sale by a dealer of a used motor vehicle, to refund, repair, replace, maintain or take other action with respect to the used motor vehicle, and which is provided at no extra charge beyond the price of the used motor vehicle.

L.1995,c.373,s.1; amended 1997,c.22,s.1.

56:8-67.1 Sale of used passenger motor vehicle, upon termination of lease agreement

2. A lessor who is a dealer and who sells or offers for sale a used passenger motor vehicle, subject to a motor vehicle lease agreement which was in effect for more than 90 days, to a consumer who is not the lessee, or a family member or employee of the lessee upon the termination of the lease agreement, shall be subject to the provisions of P.L.1995, c.373 (C.56:8-67 et seq.) including the bonding requirement of section 11 of that act (C.56:8-77).

L.1997,c.22,s.2.

56:8-68.Unlawful practices

2. It shall be an unlawful practice for a dealer:

a. To misrepresent the mechanical condition of a used motor vehicle;

b. To fail to disclose, prior to sale, any material defect in the mechanical condition of the used motor vehicle which is known to the dealer;

c. To represent that a used motor vehicle, or any component thereof, is free from material defects in mechanical condition at the time of sale, unless the dealer has a reasonable basis for this representation at the time it is made;

d. To fail to disclose, prior to sale, the existence and terms of any written warranty, service contract or repair insurance currently in effect on a used motor vehicle provided by a person other than the dealer, and subject to transfer to a consumer, if known to the dealer;

e. To misrepresent the terms of any written warranty, service contract or repair insurance currently in effect on a used motor vehicle provided by a person other than the dealer, and subject to transfer to a consumer;

f. To fail to disclose, prior to sale, the existence and terms of any written warranty, service contract or repair insurance offered by the dealer in connection with the sale of a used motor vehicle;

g. To misrepresent the terms of any warranty, service contract or repair insurance offered by the dealer in connection with the sale of a used motor vehicle;

h. To represent, prior to sale, that a used motor vehicle is sold with a warranty, service contract or repair insurance when the vehicle is sold without any warranty, service contract or repair insurance;

i. To fail to disclose, prior to sale, that a used motor vehicle is sold without any warranty, service contract, or repair insurance; and

j. To fail to provide a clear written explanation, prior to sale, of what is meant by the term "as is," if the used motor vehicle is sold "as is."

L.1995,c.373,s.2.

56:8-69.Written warranty required; minimum durations

3. It shall be an unlawful practice for a dealer to sell a used motor vehicle to a consumer without giving the consumer a written warranty which shall at least have the following minimum durations:

a. If the used motor vehicle has 24,000 miles or less, the warranty shall be, at a minimum, 90 days or 3,000 miles, whichever comes first;

b. If the used motor vehicle has more than 24,000 miles but less than 60,000 miles, the warranty shall be, at a minimum, 60 days or 2,000 miles, whichever comes first; or

c. If the used motor vehicle has 60,000 miles or more, the warranty shall be, at a minimum, 30 days or 1,000 miles, whichever comes first, except that a consumer may waive his right to a warranty as provided under section 7 of this act.

L.1995,c.373,s.3.

56:8-70.Written warranty; requirements of dealer

4. The written warranty shall require the dealer, upon failure or malfunction of a covered item during the term of the warranty, to correct the malfunction or defect, provided the used motor vehicle is delivered to the dealer, at his regular place of business, and subject to a deductible amount of $50 to be paid by the consumer for each repair of a covered item. This written warranty shall exclude repairs covered by any manufacturer's warranty, or recall program, as well as repairs of a covered item required because of collision, abuse, or the consumer's failure to properly maintain such used motor vehicle in accordance with the manufacturer's recommended maintenance schedule, or from damage of a covered item caused as a result of any commercial use of the used motor vehicle, or operation of such vehicle without proper lubrication or coolant, or as a result of any misuse, negligence or alteration of such vehicle by someone other than the dealer.

L.1995,c.373,s.4.

56:8-71.Dealer's failure to correct defect

5. a. If, within the periods specified in section 3 of this act, the dealer or his agent fails to correct a material defect of the used motor vehicle, after a reasonable opportunity to repair the used motor vehicle, the dealer shall repurchase the used motor vehicle and refund to the consumer the full purchase price, excluding all sales taxes, title and registration fees, or any similar governmental charges, and less a reasonable allowance for excessive wear and tear and less a deduction for personal use of such vehicle. Refunds shall be made to the consumer and lienholder, if any, as their interests appear on the records of ownership kept by the Director of the Division of Motor Vehicles.

b. It shall be an affirmative defense to any claim under this section that:

(1)The alleged material defect does not substantially impair the use, value or safety of the used motor vehicle; or

(2)The material defect is the result of abuse, neglect or unauthorized modification or alteration of the used motor vehicle by anyone other than the dealer or his agent.

c. It shall be presumed that a dealer has a reasonable opportunity to correct or repair a material defect in a used motor vehicle, if:

(1)The same material defect has been subject to repair three or more times by the dealer or his agent within the warranty period, but the material defect continues to exist; or

(2)The used motor vehicle is out of service by reason of waiting for the dealer to begin or complete repair of the material defect for a cumulative total of 20 or more days during the warranty period.

L.1995,c.373,s.5.

56:8-72.Term of warranty extended for repairs

6. The term of any written warranty offered by a dealer in connection with the sale of a used motor vehicle shall be extended by any time period during which the used motor vehicle is waiting for the dealer or his agent to begin or complete repairs of a material defect of the used motor vehicle.

L.1995,c.373,s.6.

56:8-73.Waiver of dealer's obligation to provide warranty

7. Notwithstanding any provision of this act to the contrary, a consumer, as a result of a price negotiation for the purchase of a used motor vehicle with over 60,000 miles, may elect to waive the dealer's obligation to provide a warranty on the used motor vehicle. The waiver shall be in writing and separately stated in the agreement of retail sale or in an attachment thereto and separately signed by the consumer. The waiver shall state the dealer's obligation to provide a warranty on used motor vehicles offered for sale, as set forth in sections 3 and 4 of this act. The waiver shall indicate that the consumer, having negotiated the purchase price of the used motor vehicle and obtained a price adjustment, is electing to waive the dealer's obligation to provide a warranty on the used motor vehicle and is buying the used motor vehicle "as is."

L.1995,c.373,s.7.

56:8-74.Warranty given as a matter of law

8. If a dealer fails to give a written warranty required by this act, the dealer nevertheless shall be deemed to have given the warranty as a matter of law, unless a waiver has been signed by the consumer in accordance with section 7 of this act.

L.1995,c.373,s.8.

56:8-75.Remedies, rights preserved

9. Nothing in this act shall in any way limit the rights or remedies which are otherwise available to a consumer under any other law.

L.1995,c.373,s.9.

56:8-76.Nonapplicability of act

10. The provisions of sections 3, 4, and 5 shall not apply to: any used motor vehicle sold for less than $3,000; any used motor vehicle over seven or more model years old; any used motor vehicle which has been declared a total loss by an insurance company and with respect to which the consumer, at or prior to the time of sale, has been advised in writing that the used motor vehicle has been declared a total loss by an insurance company; or, any used motor vehicle with more than 100,000 miles.

L.1995,c.373,s.10.

56:8-77.Bond to assure compliance

11. To assure compliance with the requirements of this act, a dealer shall provide a bond in favor of the State of New Jersey in the amount of $10,000, executed by a surety company authorized to transact business in the State of New Jersey by the Department of Insurance and to be conditioned on the faithful performance of the provisions of this act. This bond shall be for the term of 12 months and shall be renewed at each expiration for a similar period. The Director of the Division of Motor Vehicles shall not issue a dealer's license and shall not renew a license of any dealer who has not furnished proof of the existence of the bond required by this act.

L.1995,c.373,s.11.

56:8-78.Rules, regulations

12. The Director shall adopt rules and regulations pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.) to effectuate the purposes of this act.

L.1995,c.373,s.12.

56:8-79.Consumer awareness program required

13. The director shall implement a consumer awareness program which shall advise consumers of the requirements, protections and benefits provided by this act, within 120 days following enactment of this act.

L.1995,c.373,s.13.

56:8-80.Administrative fee established

14. The director may establish an administrative fee, to be paid by the consumer, in order to implement the provisions of this act, which fee shall be fixed at a level not to exceed the cost for the administration and enforcement of this act.

L.1995,c.373,s.14.

(1)ÊParticipating arbitrators shall be trained in arbitration and familiar with the provisions of this act.

(2) Documents shall not be submitted to any dispute settlement body unless the documents have been provided to each of the parties in the dispute at least seven days prior to commencement of the dispute settlement hearing. The parties shall be given the opportunity to comment on the documents in writing or with oral presentation.

(3) No party shall participate in the informal dispute settlement procedure unless all other parties are also present and given an opportunity to be heard, or unless the other parties consent to proceeding without their presence and participation.

(4) A consumer shall be given an adequate opportunity to contest a manufacturer's assertion that a nonconformity falls within intended specifications for the vehicle by having the basis of the manufacturer's claim appraised by a technical expert selected and paid for by the consumer prior to the manufacturer's informal dispute settlement procedure. If the dispute settlement body rules in favor of the consumer, his costs and reasonable attorney's fees shall also be awarded.

(5) A dispute shall not be heard if there has been a recent attempt by the manufacturer to repair a consumer's vehicle, but no response has yet been received by the dispute settlement body from the consumer as to whether the repairs were successfully completed. This provision shall not prejudice a consumer's right under this section.

(6) The manufacturer shall provide, and the dispute settlement body shall consider, any relevant technical service bulletins which have been issued by the manufacturer regarding motor vehicles of the same make and model as the vehicle that is the subject of the dispute.

e.ÊAny manufacturer who establishes, or participates in, an informal dispute settlement procedure, whether it meets the requirements of this section or not, shall maintain, and forward to the director at six month intervals, the following records:

(1) The number of purchase price and lease price refunds requested, the number awarded by the dispute settlement body, the amount of each award and the number of awards satisfied in a timely manner;

(2) The number of awards in which additional repairs or a warranty extension was the most prominent remedy, the amount or value of each award, and the number of awards satisfied in a timely manner;

(3) The number and total dollar amount of awards in which some form of reimbursement for expenses or compensation for losses was the most prominent remedy, the amount or value of each award and the number of awards satisfied in a timely manner; and

(4) The average number of days from the date of a consumer's initial request to use the manufacturer's informal dispute settlement procedure until the date of the decision and the average number of days from the date of the decision to the date on which performance of the award was satisfied.

L. 1988, c. 123, s. 8.

56:12-37. Dispute resolution

9. a. A consumer shall have the option of submitting any dispute arising under section 4 of this act to the division for resolution. The director may establish a filing fee, to be paid by the consumer, fixed at a level not to exceed the cost for the proper administration and enforcement of this act. This fee shall be recoverable as a cost under section 14 of this act. Upon application by the consumer and payment of any filing fee, the manufacturer shall submit to the State hearing procedure. The filing of the notice in subsection b. of section 5 of P.L.1988, c.123 (C.56:12-33) shall be a prerequisite to the filing of an application under this section.

b. The director shall review a consumer's application for dispute resolution and accept eligible disputes for referral to the Office of Administrative Law for a summary hearing to be conducted in accordance with special rules adopted pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.), by the Office of Administrative Law in consultation with the director. Immediately upon acceptance of a consumer's application for dispute resolution, the director shall contact the parties and arrange for a hearing date with the Clerk of the Office of Administrative Law. The hearing date shall, to the greatest extent possible, be convenient to all parties, but shall be no later than 20 days from the date the consumer's application is accepted, unless a later date is agreed upon by the consumer. The Office of Administrative Law shall render a decision, in writing, to the director within 20 days of the conclusion of the summary hearing. The decision shall provide a brief summary of the findings of fact, appropriate remedies pursuant to this act, and a specific date for completion of all awarded remedies. The director, upon a review of the proposed decision submitted by the administrative law judge, shall adopt, reject, or modify the decision no later than 15 days after receipt of the decision. Unless the director modifies or rejects the decision within the 15-day period, the decision of the administrative law judge shall be deemed adopted as the final decision of the director. If the manufacturer unreasonably fails to comply with the decision within the specified time period, the manufacturer shall be liable for penalties in the amount of $5,000.00 for each day the manufacturer unreasonably fails to comply, commencing on the day after the specified date for completion of all awarded remedies.

c. The Office of Administrative Law is authorized to issue subpoenas to compel the attendance of witnesses and the production of documents, papers and records relevant to the dispute.

d. A manufacturer or consumer may appeal a final decision to the Appellate Division of the Superior Court. An appeal by a manufacturer shall not be heard unless the petition for the appeal is accompanied by a bond in a principal sum equal to the money award made by the administrative law judge plus $2,500.00 for anticipated attorney's fees and other costs, secured by cash or its equivalent, payable to the consumer. The liability of the surety of any bond filed pursuant to this section shall be limited to the indemnification of the consumer in the action. The bond shall not limit or impair any right of recovery otherwise available pursuant to law, nor shall the amount of the bond be relevant in determining the amount of recovery to which the consumer shall be entitled. If a final decision resulting in a refund to the consumer is upheld by the court, recovery by the consumer shall include reimbursement for actual expenses incurred by the consumer for the rental of a motor vehicle equivalent to the consumer's motor vehicle and limited to the period of time after which the consumer's motor vehicle was offered to the manufacturer for return under this act, except in those cases in which the manufacturer made a comparable vehicle available to the consumer free of charge during that period. If the court finds that the manufacturer had no reasonable basis for its appeal or that the appeal was frivolous, the court shall award treble damages to the consumer. Failure of the Office of Administrative Law to render a written decision within 20 days of the conclusion of the summary hearing as required by subsection b. of this section shall not be a basis for appeal.

e. The Attorney General shall monitor the implementation and effectiveness of this act and report to the Legislature after three years of operation, at which time a recommendation shall be made either to continue under the procedures set forth in this act or to make such modifications as may be necessary to effectuate the purposes of this act.

L.1988,c.123,s.9; amended 1993,c.21,s.4.

56:12-38. Statistics

10. a. The Division of Consumer Affairs shall maintain an index of all motor vehicle disputes by make and model. The division shall, at six-month intervals, compile and maintain statistics indicating the record of manufacturer compliance with any settlement procedure decisions. The statistics shall be public record.

b. A manufacturer shall provide to the division all information on private arbitration or private buy-back programs maintained or instituted by the manufacturer. The information shall include the type and number of vehicles to which these programs apply and the reasons for establishing and maintaining the programs. The manufacturer shall provide the division with updated information at six month intervals.

L.1988,c.123,s.10; amended 1993,c.21,s.5.

56:12-39. Decision binding

A consumer shall not be required to participate in a manufacturer's informal dispute settlement procedure or the division's summary hearing procedure before filing an action in the Superior Court. However, a decision rendered in a proceeding brought pursuant to the division's summary hearing procedure shall be binding on the consumer and the manufacturer, subject to the right of appeal as set forth in subsection d. of section 9 of this act, and shall preclude the institution of any other action in the Superior Court under this act.

L. 1988, c. 123, s. 11.

56:12-40. Affirmative defense

It shall be an affirmative defense to a claim under this act that the alleged nonconformity does not substantially impair the use, value, or safety of the new motor vehicle or that the nonconformity is the result of abuse, neglect, or unauthorized modifications or alterations of the motor vehicle by anyone other than the manufacturer or its dealer.

L. 1988, c. 123, s. 12.

56:12-41. Pleading

Any party to an action in the Superior Court of this State asserting a claim, counterclaim or defense based upon violations of this act shall mail a copy of the initial or responsive pleading containing the claim, counterclaim or defense to the Attorney General within 10 days after filing the pleading with the court. Upon application to the court in which the matter is pending, the Attorney General may intervene or appear in any status appropriate to this matter.

L. 1988, c. 123, s. 13.

56:12-42. Attorney, expert fees; costs

14. In any action by a consumer against a manufacturer brought in Superior Court or in the division pursuant to the provisions of this act, a prevailing consumer shall be awarded reasonable attorney's fees, fees for expert witnesses and costs.

L.1988,c.123,s.14; amended 1993,c.21,s.6.

56:12-43. Use of funds

All fees, penalties and costs collected by the division pursuant to this act shall be appropriated for purposes of offsetting costs associated with the handling and resolution of consumer automotive complaints.

L. 1988, c. 123, s. 15.

56:12-44. Inherent design defect

A manufacturer shall certify to the division, within one year of discovery, the existence of any inherent design defect common to all motor vehicles of a particular model or make. Failure to comply with this constitutes an unlawful practice pursuant to section 2 of P.L. 1960, c. 39 (C. 56:8-2).

L. 1988, c. 123, s. 16.

56:12-45. Proceedings

The director may institute proceedings against any manufacturer who fails to comply with any of the provisions of this act.

L. 1988, c. 123, s. 17.

56:12-46. No liability, cause of action

Nothing in this act shall be construed as imposing any liability on a dealer, or creating a cause of action by a manufacturer against a dealer, and nothing shall be construed as imposing any liability on a dealer, or creating a cause of action by a consumer against a dealer under section 4 of this act.

L. 1988, c. 123, s. 18.

56:12-47. No limitation on rights

Nothing in this act shall in any way limit the rights or remedies which are otherwise available to a consumer under any other law.

L. 1988, c. 123, s. 19..

56:12-48. Agreements void

Any agreement entered into by a consumer for the purchase or lease of a new motor vehicle which waives, limits or disclaims the rights set forth in this act shall be void as contrary to public policy.

L. 1988, c. 123, s. 20.

56:12-49. Rules, regulations

Within 120 days following enactment, the director shall, subject to approval by the Attorney General and pursuant to the provisions of the "Administrative Procedure Act," P.L. 1968, c. 410 (C. 52:14B-1 et seq.), adopt rules and regulations necessary to effectuate the purposes of this act.

L. 1988, c. 123, s. 21.