§ 31-5.4-3. Failure to honor warranty. (a) If the dealer or his or her agent fails to correct a malfunction or defect as required by the warranty specified in this section which substantially impairs the value of the used motor vehicle to the consumer after a reasonable period of time, the dealer shall accept the return of the used motor vehicle from the consumer and refund to the consumer the full purchase price including sales or compensating use tax, less a reasonable allowance for any damage not attributable to normal wear or usage, and an adjustment for any modifications which either increase or decrease the market value of the vehicle. In determining the purchase price to be refunded, the purchase price shall be deemed equal to the sum of the actual cash difference paid for the used motor vehicle plus, if the dealer elects to not return any vehicles traded-in by the consumer, the wholesale value of those traded-in vehicles as listed in the National Auto Dealers' Association Used Car Guide, or any other guide that may be specified in regulations promulgated by the administrator of the division of motor vehicles, as adjusted for mileage, improvements, and any major physical or mechanical defects in the traded-in vehicle at the time of trade-in. The contract of sale for the used motor vehicle shall include conspicuous language indicating that if the consumer should be entitled to a refund pursuant to this section, the value of any vehicle traded-in by the consumer, if the dealer elects to not return it to the consumer, for purposes of determining the amount of the refund will be determined by reference to the National Auto Dealers' Association Used Car Guide wholesale value, or any other guide that may be approved by the administrator of the division of motor vehicles, as adjusted for mileage, improvements, and any major physical or mechanical defects, rather than the value listed in the sales contract. Refunds shall be made to the consumer and lienholder, if any, as their interests may appear on the records of ownership kept by the division of motor vehicles. If the amount to be refunded to the lienholder will be insufficient to discharge the lien, the dealer shall notify the consumer in writing by registered or certified mail that the consumer has thirty (30) days to pay the lienholder the amount which, together with the amount to be refunded by the dealer, will be sufficient to discharge the lien. The notice to the consumer shall contain conspicuous language warning the consumer that failure to pay those funds to the lienholder within thirty (30) days will terminate the dealer's obligation to provide a refund. If the consumer fails to make the payment within thirty (30) days, the dealer shall have no further responsibility to provide a refund under this section. Alternatively, the dealer may elect to offer to replace the used motor vehicle with a comparably priced vehicle, with any adjustment in price that the parties may agree to. The consumer shall not be obligated to accept a replacement vehicle, but may instead elect to receive the refund provided under this section. It shall be an affirmative defense to any claim under this section that:

(1) The malfunction or defect does not substantially impair the used motor vehicle's value; or

(2) The malfunction or defect is the result of abuse, neglect, or unreasonable modifications or alterations of the used motor vehicle.

(b) It shall be presumed that a dealer has had a reasonable opportunity to correct a malfunction or defect in a used motor vehicle, if:

(1) The same malfunction or defect has been subject to repair three (3) or more times by the selling dealer or his or her agent within the warranty period, but the same malfunction or defect continues to exist; or

(2) The vehicle is out of service by reason of repair or malfunction or defect for a cumulative total of fifteen (15) or more days during the warranty period. That period shall not include days when the dealer is unable to complete the repair because of the unavailability of necessary repair parts. The dealer shall be required to exercise due diligence in attempting to obtain necessary repair parts. If, however, a vehicle has been out of service for a cumulative total of forty-five (45) days, even if a portion of that time is attributable to the unavailability of replacement parts, the consumer shall be entitled to the replacement or refund remedies provided in this section.

(c) The term of any warranty, service contract, or repair insurance shall be extended by any time period during which the used motor vehicle is in the possession of the dealer or his or her duly authorized agent for the purpose of repairing the used motor vehicle under the terms and obligations of the warranty, service contract, or repair insurance.

(d) The term of any warranty, service contract, or repair insurance, and the fifteen (15) days out-of-service period, shall be extended by any time during which repair services are not available to the consumer because of a war, invasion or strike, fire, flood, or other natural disaster.

History of Section. (P.L. 1985, ch. 342, § 1.)