The Vermont Statutes Online

Title 9: Commerce and Trade

Chapter 115: New Motor Vehicle Arbitration

• § 4170. Legislative intent

  The Legislature finds and declares that manufacturers, distributors, and importers of new motor vehicles should be obligated to provide speedy and less costly resolution of automobile warranty problems. Manufacturers should be required to provide in as expeditious a manner as possible a refund of the consumer’s purchase price or payments to a lessor and lessee or a replacement vehicle that is acceptable to the consumer whenever the manufacturer is unable to make the vehicle conform with its applicable warranty. New motor vehicle dealers and used motor vehicle dealers cannot be sued under this chapter. (Added 1983, No. 211 (Adj. Sess.), § 1; amended 1987, No. 242 (Adj. Sess.), § 1.)

• § 4171. Definitions

  As used in this chapter:

  (1) “Board” means, unless otherwise indicated, the Vermont Motor Vehicle Arbitration Board.

  (2) “Consumer” means the purchaser, other than for purposes of resale, of a new motor vehicle or lessee of a new motor vehicle, other than for the purposes of sub-lease, that has not been previously leased by another person, any person to whom such motor vehicle is transferred during the duration of an express warranty applicable to the motor vehicle, and any other person entitled by the terms of the warranty to enforce the obligations of the warranty, but “consumer” shall not include any governmental entity or any business or commercial enterprise that registers or leases three or more motor vehicles.

  (3) “Early termination costs” mean expenses and obligations incurred by a motor vehicle lessee as a result of an early termination of a written lease agreement and surrender of a motor vehicle to a manufacturer under the provisions of subsection 4172(e) of this title, including penalties for prepayment of finance arrangements.

  (4) “Lease or leased” means a written agreement with a lessee as defined in subdivision (5) of this section, which shall be for the use of a motor vehicle for consideration for a term of two or more years.

  (5) “Lessee” means any consumer who leases a motor vehicle pursuant to a written lease agreement for a term of two or more years.

  (6) “Motor vehicle” means a passenger motor vehicle that is purchased, leased, or registered in the State of Vermont, and shall not include tractors, motorized highway building equipment, road-making appliances, snowmobiles, motorcycles, motor-driven cycles, or the living portion of recreation vehicles, or trucks with a gross vehicle weight rating over 12,000 pounds.

  (7) “Manufacturer” means any person, resident or nonresident, that manufactures or assembles new motor vehicles or imports for distribution through distributors of motor vehicles or any partnership, firm, association, joint venture, corporation, or trust, resident or nonresident, that is controlled by a manufacturer. In the case of the portion of a recreation vehicle subject to this chapter, and except as otherwise provided in subdivision 4172(e)(2) of this title, “manufacturer” means the final stage assembler of the completed recreation vehicle. Additionally, the term “manufacturer” shall include:

  (A) “distributor,” meaning any person, resident or nonresident, that in whole or in part offers for sale, sells, or distributes any new motor vehicle to new motor vehicle dealers or new motor vehicle lessors or maintains factory representatives or that controls any person, firm, association, corporation, or trust, resident or nonresident, that in whole or in part offers for sale, sells, or distributes any new motor vehicle to new motor vehicle dealers or new motor vehicle lessors; and

  (B) “factory branch,” meaning any branch office maintained by a manufacturer for the purpose of selling, leasing, or offering for sale or lease, vehicles to a distributor or new motor vehicle dealer or for directing or supervising, in whole or in part, factory distributor representatives.

  (8) “Motor vehicle lessor” means a person who holds title to a motor vehicle leased to a lessee under a written lease agreement for a term of two or more years, or who holds the lessor’s rights under such an agreement.

  (9) A “new motor vehicle” means a motor vehicle that is still under the manufacturer’s express warranty or, in the case of the portion of a recreation vehicle that is subject to this chapter, that is still under an express warranty for the relevant component.

  (10) Warranty shall be defined as including the following:

  “Express warranty” means express warranties as defined in the Uniform Commercial Code, 9A V.S.A. § 2—313, plus any written warranty of the manufacturer. (Added 1983, No. 211 (Adj. Sess.), § 1; amended 1985, No. 260 (Adj. Sess.), § 1; 1987, No. 242 (Adj. Sess.), § 2; 1999, No. 18, § 27, eff. May 13, 1999; 2009, No. 152 (Adj. Sess.), § 19l, eff. Sept. 1, 2010; 2011, No. 164 (Adj. Sess.), § 6; 2017, No. 206 (Adj. Sess.), § 14.)

• § 4172. Enforcement of warranties

  (a) Every new motor vehicle as defined in section 4171 of this title sold in this State must conform to all applicable warranties.

  (b) It shall be the manufacturer’s obligation under this chapter to ensure that all new motor vehicles sold, leased, or registered in this State conform with manufacturer’s express warranties. The manufacturer may delegate responsibility to its agents or authorized dealers; provided, however, in the event the manufacturer delegates its responsibility under this chapter to its agents or authorized dealers, it shall compensate the dealer for all work performed by the dealer in satisfaction of the manufacturer’s responsibility under this chapter in the manner set forth in chapter 108 of this title known as the “Motor Vehicle Manufacturers, Distributors, and Dealers’ Franchising Practices Act” as that act may be from time to time amended.

  (c) If a new motor vehicle does not conform to all applicable express warranties and the consumer reports the nonconformity to the manufacturer, its agent, or authorized dealer during the term of the warranty, the manufacturer shall cause whatever repairs are necessary to conform the vehicle to the warranties, notwithstanding the fact that the repairs are made after the expiration of a warranty term.

  (d) A manufacturer, its agent, or authorized dealer shall not refuse to provide a consumer with a written repair order and shall provide to the consumer each time the consumer’s vehicle is brought in for examination or repair of a defect a written summary of the complaint and a fully itemized statement indicating all work performed on the vehicle including examination of the vehicle, parts, and labor.

  (e)(1) If, after a reasonable number of attempts, the manufacturer, its agent, or authorized dealer or its delegate is unable to conform the motor vehicle to any express warranty by repairing or correcting any defect or condition covered by the warranty that substantially impairs the use, market value, or safety of the motor vehicle to the consumer, the manufacturer shall, at the option of the consumer within 30 days of the effective date of the Board’s order, either:

  (A) Replace the motor vehicle with a new motor vehicle from the same manufacturer, if available, of comparable worth to the same make and model with all options and accessories with appropriate adjustments being allowed for any model year differences.

  (B) Accept return of the vehicle from the consumer and refund to the consumer the full purchase price or to the lessee in the case of leased vehicles, as provided in subsection (i) of this section. In those instances in which a refund is tendered, the manufacturer shall refund to the consumer the full purchase price as indicated in the purchase contract and all credits and allowances for any trade-in or downpayment, finance charges, credit charges, registration fees, and any similar charges and incidental and consequential damages or, in the case of leased vehicles, as provided in subsection (i) of this section. Refunds shall be made to the consumer and lien holder, if any, as their interests may appear or to the motor vehicle lessor and lessee as provided in subsection (i) of this section. A reasonable allowance for use shall be that amount directly attributable to use by the consumer prior to his or her first repair attempt and shall be calculated by multiplying the full purchase price of the vehicle by a fraction having as its denominator 100,000 and having as its numerator the number of miles that the vehicle traveled prior to the first attempt at repairing the vehicle. If the manufacturer refunds the purchase price or a portion of the price to the consumer, any Vermont motor vehicle purchase and use tax paid shall be refunded by the State to the consumer in the proportionate amount. To receive a refund, the consumer must file a claim with the Commissioner of Motor Vehicles within 90 days of the effective date of the order.

  (2) In the case of a recreation vehicle, the warrantor of the chassis shall be responsible for any refund under subdivision (1)(B) of this subsection or under subsection (i) of this section, even if the consumer’s or lessee’s right to the refund results from a nonconformity caused by the final stage assembler of the completed recreation vehicle or by another warranted component subject to this chapter.

  (f) It shall be an affirmative defense to any claim under this chapter that an alleged nonconformity does not substantially impair the use, market value, or safety, or that the nonconformity is the result of abuse, neglect, or unauthorized modifications or alterations of a motor vehicle by a consumer.

  (g) It shall be presumed that a reasonable number of attempts have been undertaken to conform a motor vehicle to the applicable warranties if:

  (1) the same nonconformity as identified in any written examination or repair order has been subject to repair at least three times by the manufacturer, its agent, or authorized dealer and at least the first repair attempt occurs within the express warranty term and the same nonconformity continues to exist; or

  (2) the vehicle is out of service by reason of repair of one or more nonconformities, defects, or conditions for a cumulative total of 30 or more calendar days during the term of the express warranty. The term of any warranty and the 30-day period shall be extended by any period of time during which repair services were not available to the consumer because of war, invasion, strike, fire, flood, or other natural disaster. If an extension of time is necessitated due to these conditions, the manufacturer shall cause provision for the free use of a vehicle to the consumer whose vehicle is out of service. A vehicle shall not be deemed out of service if it is available to the consumer for a major part of the day.

  (h) In order for an attempt at repair to qualify for the presumptions of this section, the attempt at repair must be evidenced by a written examination or repair order issued by the manufacturer, its agent, or its authorized dealer. The presumptions of this section shall only apply to three attempts at repair evidenced by written examination or repair orders undertaken by the same agent or authorized dealer, unless the consumer shows good cause for taking the vehicle to a different agent or authorized dealer.

  (i) In cases in which the lessee elects a replacement vehicle, a collateral change with appropriate adjustments for any model year difference or excess mileage, or both, shall be incorporated into an amended lease agreement. In cases in which a refund is tendered by a manufacturer for a leased motor vehicle under subsection (e) of this section, the refund and rights of the motor vehicle lessor, lessee, and manufacturer shall be in accordance with the following:

  (1) The manufacturer shall provide to the lessee the aggregate deposit and rental payments previously paid to the motor vehicle lessor by the lessee, and incidental and consequential damages, if applicable, minus a reasonable allowance for use and allocated payments for purchase and use tax. The aggregate deposit shall include all cash payments and trade-in allowances tendered by the lessee to the motor vehicle lessor under the lease agreement. The reasonable allowance for use shall be calculated by multiplying the aggregate deposit and rental payments made by the lessee on the motor vehicle by a fraction having as its denominator the number of miles allowed in the lease contract and having as its numerator the number of miles that the vehicle traveled prior to the first attempt at repairing the vehicle. Any miles in excess of those allowed in the lease contract shall be added to the mileage at the first repair attempt or first day out of service prior to calculating the reasonable allowance for use.

  (2) The manufacturer shall provide to the motor vehicle lessor the aggregate of the following:

  (A) the lessor’s actual purchase cost, less payments made by the lessee;

  (B) the freight cost, if applicable;

  (C) the cost for dealer or manufacturer-installed accessories, if applicable;

  (D) any fee paid to another to obtain the lease; and

  (E) an amount equal to five percent of the lessor’s actual purchase cost. The amount in this subdivision shall be instead of any early termination costs as defined in subdivision 4171(3) of this chapter or as described in the lease agreement.

  (3) Vermont motor vehicle purchase and use tax shall be refunded by the State to whomever paid the tax. The party must file a claim with the Commissioner of Motor Vehicles within 90 days of the effective date of the order.

  (4) The lessee’s lease agreement with the motor vehicle lessor and all contractual obligations shall be terminated upon a decision of the Board in favor of the lessee as of the effective date of the order. The lessee shall not be liable for any further costs or charges to the manufacturer or motor vehicle lessor under the lease agreement.

  (5) The motor vehicle lessor shall release the motor vehicle title to the manufacturer upon payment by the manufacturer under the provisions of this subsection.

  (6) The Board shall give notice to the motor vehicle lessor of the lessee’s filing of a request for arbitration under this chapter and shall notify the motor vehicle lessor of the date, time, and place scheduled for a hearing before the Board. The motor vehicle lessor shall provide testimony and evidence necessary to the arbitration proceedings. Any decision of the Board shall be binding upon the motor vehicle lessor. (Added 1983, No. 211 (Adj. Sess.), § 1; amended 1985, No. 260 (Adj. Sess.), § 2; 1987, No. 242 (Adj. Sess.),§§ 3, 4; 1989, No. 157 (Adj. Sess.), § 1, eff. April 30, 1990; 1999, No. 18, § 28, eff. May 13, 1999; 2017, No. 206 (Adj. Sess.), § 15.)

• § 4173. Procedure to obtain refund or replacement; waiver of rights void

  (a)(1) After reasonable attempt at repair or correction of the nonconformity, defect, or condition, or after the vehicle is out of service by reason of repair of one or more nonconformities, defects, or conditions for a cumulative total of 30 or more calendar days as provided in this chapter, the consumer shall notify the manufacturer and lessor in writing, on forms to be provided by the manufacturer at the time the new motor vehicle is delivered, of the nonconformity, defect, or condition and the consumer’s election to proceed under this chapter. The forms shall be made available by the manufacturer to any public or nonprofit agencies that shall request them. Notice of consumer rights under this chapter shall be conspicuously displayed by all authorized dealers and agents of the manufacturer.

  (2) The consumer shall in the notice elect whether to use the dispute settlement mechanism or the arbitration provisions established by the manufacturer or to proceed under the Vermont Motor Vehicle Arbitration Board as established under this chapter. Except in the case of a settlement agreement between a consumer and manufacturer, and unless federal law otherwise requires, any provision or agreement that purports to waive, limit, or disclaim the rights set forth in this chapter or that purports to require a consumer not to disclose the terms of the provision or agreement is void as contrary to public policy.

  (3) The consumer’s election of whether to proceed before the Board or the manufacturer’s mechanism shall preclude his or her recourse to the method not selected.

  (b) A consumer cannot pursue a remedy under this chapter if he or she has discontinued financing or lease payments.

  (c)(1) Arbitration of the consumer’s complaint, either through the manufacturer’s dispute settlement mechanism or the Board, must be held within 45 days of receipt by the manufacturer or the Board of the consumer’s notice electing the remedy of arbitration unless:

  (A) the consumer or the manufacturer shows good cause for an extension of time, not to exceed an additional 30-day period; or

  (B) the manufacturer does not contest the consumer’s complaint, in which case an arbitration hearing is not required.

  (2) If an extension of time is requested by the manufacturer, the manufacturer shall provide free use of a vehicle to the consumer if the consumer’s vehicle is out of service.

  (3) If the consumer elects to proceed in accordance with the manufacturer’s dispute settlement mechanism, the matter is contested, and the arbitration of the dispute is not held within 45 days of the manufacturer’s receipt of the consumer’s notice and the manufacturer is not able to establish good cause for the delay, the consumer shall be entitled to receive the relief requested under this chapter.

  (d) Within the 45-day period set forth in subsection (c) of this section but at least five days prior to hearing, the manufacturer shall have one final opportunity to correct and repair the defect that the consumer claims entitles the consumer to a refund or replacement vehicle. Any right to a final repair attempt is waived if the manufacturer does not complete it at least five days prior to hearing. If the consumer is satisfied with the corrective work done by the manufacturer or the manufacturer’s delegate, the arbitration proceedings shall be terminated without prejudice to the consumer’s right to request arbitration be recommenced within one year following the expiration of the express warranty term in accordance with subsection 4179(a) of this title.

  (e) If an arbitration hearing is required under this section, the vehicle must be presented at the hearing site for an inspection or test drive, or both, by members of the Board.

  (f) The manufacturer shall refund the amounts provided for in subsection 4172(e) or (i) of this chapter within 30 days of the facsimile transmission confirmation receipt of a decision of the Board or within 15 days of final adjudication. The consumer shall receive an additional 10 percent of the total award if the manufacturer fails to complete the transaction by the effective date of the order. (Added 1983, No. 211 (Adj. Sess.), § 1; amended 1985, No. 260 (Adj. Sess.), § 3; 1987, No. 242 (Adj. Sess.), §§ 5, 6; 1999, No. 18, § 29, eff. May 13, 1999; 2015, No. 50, § 31, eff. June 3, 2015; 2017, No. 206 (Adj. Sess.), § 16, eff. May 30, 2018; 2023, No. 41, § 1, eff. June 1, 2023.)

• § 4174. Vermont Motor Vehicle Arbitration Board

  (a) There is created a Vermont Motor Vehicle Arbitration Board consisting of five members and three alternate members to be appointed by the Governor for terms of three years. Board members may be appointed for two additional three-year terms. One member of the Board and one alternate shall be new car dealers in Vermont, one member and one alternate shall be persons active as automobile technicians, and three members and one alternate shall be persons having no direct involvement in the design, manufacture, distribution, sales, or service of motor vehicles or their parts. Board members shall be compensated in accordance with the provisions of 32 V.S.A. § 1010. Administrative support for the Board shall be provided as determined by the Secretary of Transportation.

  (b) The Board shall adopt rules under the provisions of 3 V.S.A. chapter 25 to implement the provisions of this chapter.

  (c) The Board may issue subpoenas to compel the attendance of witnesses to testify under oath and to produce documents.

  (d) The Board shall render a decision within 30 days of the conclusion of a hearing in a contested matter, and within 30 days of the manufacturer’s answer in an uncontested matter. The Board has authority to issue any and all damages as are provided by this chapter. (Added 1983, No. 211 (Adj. Sess.), § 1; amended 1985, No. 260 (Adj. Sess.), § 4; 1987, No. 123 (Adj. Sess.), eff. Jan. 29, 1988; 1989, No. 157 (Adj. Sess.), § 2, eff. April 30, 1990; 1999, No. 18, § 30, eff. May 13, 1999; 2007, No. 19, § 1; 2013, No. 57, § 22, eff. May 30, 2013; 2015, No. 23, § 95; 2015, No. 50, § 32, eff. June 3, 2015.)

• § 4175. Fees and costs

  There shall be no filing fee or costs assessed against the consumer for using the Vermont Motor Vehicle Arbitration Board or the manufacturer’s dispute settlement mechanism. In the event an authorized franchise dealer or any of its employees, including technicians or service personnel, are called upon to testify or produce documents, repair orders, or other materials in any arbitration held before the Vermont Motor Vehicle Arbitration Board or the manufacturer’s dispute settlement mechanism, the person who requests the participation of the authorized franchise dealer or requests the production of documents must make arrangements in advance to reasonably compensate the dealer for the actual expense involved. Where a conflict arises as to actual expenses, the Board shall make that determination. In the event the consumer prevails, these costs shall be reimbursed to the consumer by the manufacturer. (Added 1983, No. 211 (Adj. Sess.), § 1; amended 1999, No. 18, § 31, eff. May 13, 1999.)

• § 4176. Appeal from Board

  (a)(1) The decision of the Board shall be final unless a motion for reconsideration is filed within 30 days of the consumer’s receipt of decision accompanied by new evidence. The Board shall allow the opposing party to respond and may reconvene the hearing if deemed necessary. The decision shall then be final and shall not be modified or vacated unless, on appeal to the Superior Court a party to the arbitration proceeding proves, by clear and convincing evidence, that:

  (A) the decision was procured by corruption, fraud, or other undue means;

  (B) there was evident partiality by the Board or corruption or misconduct prejudicing the rights of any party by the Board;

  (C) the Board exceeded its powers; or

  (D) the Board refused to postpone a hearing after being shown sufficient cause to do so or refused to hear evidence material to the controversy or otherwise conducted the hearing contrary to the rules promulgated by the Board so as to prejudice substantially the rights of a party.

  (2) An application to vacate or modify a decision shall be made within 30 days after delivery of a copy of the final decision to the applicant except that if predicated upon corruption, fraud, or other undue means, it may be made within 30 days after such grounds are known or should have been known. In the event a decision is confirmed, the party who prevails shall be awarded the attorney’s fees incurred in obtaining confirmation of the decision together with all costs.

  (b) When a judgment of the Superior Court affirms a decision of the Board, permission of the presiding judge shall be required for review. Review may be conditioned upon the appellant paying appellee’s appellate attorney’s fees, giving security for costs, expenses, and financial loss resulting from the passage of time for review. (Added 1983, No. 211 (Adj. Sess.), § 1; amended 1985, No. 260 (Adj. Sess.), § 5; 1999, No. 18, § 32, eff. May 13, 1999.)

• § 4177. Unfair and deceptive acts and practices

  Failure of the manufacturer, its agents, authorized dealers, or motor vehicle lessors to comply with a decision of the Board shall constitute an unfair or deceptive act or practice under chapter 63 of this title. (Added 1983, No. 211 (Adj. Sess.), § 1; amended 1987, No. 242 (Adj. Sess.), § 7.)

• § 4178. Limitations

  Nothing in this chapter shall be construed as imposing any liability on a manufacturer’s authorized dealers or creating a cause of action by a manufacturer against its authorized agents or dealers. It shall be a violation of chapter 108 of this title for a manufacturer to engage in reprisals or threats of reprisals, directly or indirectly, against any authorized dealer arising out of the dealer’s efforts to repair a motor vehicle under the provisions of this chapter. (Added 1983, No. 211 (Adj. Sess.), § 1.)

• § 4179. Effective date; limitations

  (a) This chapter shall apply to motor vehicles beginning with the model year following July 1, 1984. Any proceedings initiated under this chapter shall be commenced within one year following the expiration of the express warranty term.

  (b) Nothing in this chapter shall in any way limit the rights or remedies that are otherwise available to a consumer under any other law. (Added 1983, No. 211 (Adj. Sess.), § 1; amended 1999, No. 18, § 33, eff. May 13, 1999.)

• § 4180. Notification to consumers

  The manufacturer of every motor vehicle sold in this State beginning with the model year following July 1, 1984 shall provide a clear and conspicuous written notice of the consumer’s rights under this chapter and at the time of the delivery of every new motor vehicle in this State beginning with the model year following July 1, 1984 shall provide the consumer with a stamped self-addressed notice in a form satisfactory to the Vermont Motor Vehicle Arbitration Board sufficient to notify the manufacturer of the consumer’s election to proceed under this chapter. The manufacturer shall not delegate this responsibility to its authorized dealers. The manufacturer of every new motor vehicle sold in this State beginning July 1, 1984 shall also provide a clear and conspicuous notice that informs consumers of their rights under this chapter. (Added 1983, No. 211 (Adj. Sess.), § 1.)

• § 4181. Notice of return, title branding required; sale of defective motor vehicles prohibited; defense

  (a) Any manufacturer or its agent or any dealer registered in this State who attempts to resell a motor vehicle after a final determination, adjudication, or settlement resulting in the vehicle being returned pursuant to the provisions of this chapter, or under similar laws of any other state, shall apprise prospective buyers in Vermont of such return by means of a clearly visible window sticker. Manufacturers, agents, and dealers are prohibited from reselling in Vermont any vehicle determined or adjudicated as having a serious safety defect. Notice that a vehicle has been returned pursuant to such law shall also be conspicuously printed on the motor vehicle certificate of title.

  (b) A person who demonstrates both of the following shall not be subject to liability or a penalty for a violation of this section:

  (1) the person acquired a motor vehicle without actual knowledge that it was returned pursuant to the provisions of this chapter or under similar laws of another state; and

  (2) at the time of acquisition, the title of the motor vehicle did not bear notice of such return. (Added 1983, No. 211 (Adj. Sess.), § 1; amended 2011, No. 164 (Adj. Sess.), § 7; 2021, No. 20, § 41.)