Does California’s Lemon Law Apply Where the Selling Dealer is Out of State?
California’s lemon law, the Song-Beverly Consumer Warranty Act, applies only to goods sold in California. But determining where the sale occurred can be more complicated than you might think. It depends on where “title passes.” This is a term of art. Unless the parties otherwise expressly agree, title passes to the buyer when and where the seller completes performance of the physical delivery of the vehicle. That, in turn, means 1) at the time and place of shipment if the sales contract requires or authorizes the seller to send the goods to the buyer but does not require delivery at the destination (“shipment contract”); or 2) on tender at the destination if the contract requires delivery there (“delivery contract”). (Cal.Com.Code Section 2401(2).) The presumptive form of contract in California is the “shipment contract.” ( Cal.Com.Code Section 2503.)
California Buyers Beware: if you are located in California, but buying a vehicle from a dealer that is out of state, be sure the contract language states it is a “delivery contract” or “destination contract” and that title is to pass in California. Make sure that the seller assumes all risks until delivery at your specific location in California and that you are to inspect and accept the vehicle in California. Even though the contract may be entered into out of state, if it requires delivery at a specific destination in California, title passes on tender at that destination. Cal. Comm.Code § 2401(2)(b). This is called a “delivery” or “destination” contract.
If, however, you are buying from a California dealer, but intend to take delivery out of state, you should make sure the contract is a “shipment contract.” Then title will still pass in California, and you will have California lemon law protection.
Important note: Provisions as to where it is to be registered or where taxes and fees are to be paid are not enough!
No other state’s laws are as good as the California lemon law, and often other state’s laws provide no, or virtually no protection, against a lemon. Make sure you keep California’s landmark consumer lemon-law protection!
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