Used auto dealers in New York must purchase and file a surety bond for licensure. The required surety bond coverage amount depends on the type of dealership and certain business circumstances but can be up to $75,000 after a 2017 legal change. Follow this comprehensive guide to learn more about New York’s auto dealer laws and ensure your business is compliant.
Licensing
Becoming licensed as a New York used auto dealer requires the purchase of a surety bond and the submission of an application to the Department of Motor Vehicles. In a previous post, we broke down the process in-depth—read up on how to get licensed! Notably, New York mandates very specific sign requirements for auto dealers.
In addition to the application, used auto dealer applicants must submit proof of business name, a copy of their New York State Department of Taxation and Finance Certificate of Authority or valid tax ID number and proof of Workers’ Compensation insurance. See our previous blog post for a detailed list of all required information to be submitted the DMV.
Lemon Law
Buying a used car generally carries more risks for consumers than buying new. The state of New York has implemented a Used Car Lemon Law aimed at consumer protection, unlike many states whose lemon laws cover only new cars. A “lemon” is a defective car that may have been improperly repaired or maintained. Lemons are often repaired multiple times but continue to have defects.
New York’s used car lemon law applies to vehicles purchased that are at least two years old or with mileage of 18,000 or more, whichever happens first. In addition, vehicles must meet the following requirements to be covered under the lemon law:
- Purchased or leased from a New York used auto dealer
- Driven 100,000 miles or less at time of purchase or lease
- Used primarily for personal purposes (i.e. not purchased for business use)
Dealers selling these vehicles are required to provide consumers with a written warranty under which the used auto dealer promises to fix any defects on covered parts. If the dealer is unable to fix the vehicle after a “reasonable number of attempts” during the vehicle’s warranty period, they must give the customer a full refund.
New York used auto dealers must offer warranties on vehicles based on their age and mileage. The warranty lengths required are as follows:
- 18,001-36,000 miles—the earlier of 90 days or 4,000 miles
- 36,001-79,999 miles—the earlier of 60 days or 3,000 miles
- 80,000-100,000 miles—the earlier of 30 days or 1,000 miles
The warranty is required to cover the following parts:
- Engine
- Transmission
- Drive axle
- Brakes
- Steering
- Radiator
- Alternator
- Generator
- Starter
- Ignition system (excluding battery)
A “reasonable number of attempts” is defined as three or more repair attempts without fixing the problem, or the car is out of service for repairs for more than 15 cumulative days. Used auto dealers are not liable for repairs if the problem is a result of abuse, neglect, or unauthorized alteration by the consumer, or if the problem does not substantially affect the car’s value.
Dealers must perform repairs regardless of the warranty’s expiration if the consumer notifies them of problems within the warranty period. The state of New York has compiled a Consumer Bill of Rights and a consumer guide to the lemon law, which can help dealers become familiar with the law.
Used motorcycles are covered under the Used Car Lemon Law, but motor homes, off-road vehicles and classic cars are not covered.
Little-known Regulations
In any law, some regulations can be easy to miss. New York used auto dealers have several specific regulations to comply with—here are a few that might be overlooked.
- Used auto dealers must provide customers with a written warranty. Even if a dealer fails to give a customer a written warranty, the warranty is implied per the Used Car Lemon Law.
- If a used car dealer does not honor the warranty, the customer is entitled to a full refund of the car’s purchase price or of all lease payments made on the car.
- If a used car is purchased for business use, it is not covered by the Lemon Law.
- Used car dealers must provide a copy of the Used Car Lemon Law Bill of Rights at the time of purchase or lease. The notice must match the Bill of Rights in subsection f of the Lemon Law.
- Both new and used cars must be inspected within 30 days of its sale. Dealers can charge the customer the inspection fee.
- A used car’s bill of sale must specify that it is used, and if it is a reconstructed or rebuilt salvage vehicle.
- Dealers must provide customers with odometer and damage disclosure statements.
- Sellers must complete the odometer disclosure statement on the back of the title for vehicles newer than ten years old. Vehicles older than ten years do not require odometer disclosure statements.
- Sellers must complete the damage disclosure statement on the back of the title for vehicles newer than eight years old. Vehicles older than eight years do not require damage disclosure statements.
- A dealer must disclose to the buyer if a car has been used as a police car, cab, rental, or driver education vehicle in the past.
The New York State DMV has compiled a list of regulations, including the items above, of which buyers should be aware. Used car dealers should also be familiar with those rules to prevent violations of the law.
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