Boat Lemon Law Protection

Section 1. The article heading of article 11-A of the general business law, as added by chapter 900 of the laws of 1956, is amended to read as follows:

MOTOR VEHICLE AND VESSEL MANUFACTURERS AND SELLERS

§ 2. The general business law is amended by adding two new sections 198-d and 198-e to read as follows:

§ 198-d. Vessel warranties. (a) As used in this section:

(1) "Consumer" means the purchaser, lessee or transferee, other than for purposes of resale, of a vessel which is used primarily for personal, family or household purposes and any other person entitled by the terms of the manufacturer's warranty to enforce the obligations of such warranty.

(2) "Vessel" means a new vessel, propelled by power other than muscular power, which is sold in this state to transport persons or property, and includes a vessel used as a demonstrator or leased vessel if a manufacturer's warranty was issued as a condition of sale, or the lessee is responsible for repairs. The term "vessel" includes the engine which powers the vessel. The term "vessel" also includes personal watercraft and specialty prop-craft as defined in the navigation law.

(3) "Manufacturer's express warranty" or "warranty" means the written warranty, so labeled, of the manufacturer of a vessel, including any terms or conditions precedent to the enforcement of obligations under that warranty.

EXPLANATION--Matter in italics (underscored) is new; matter in brackets

[ ] is old law to be omitted.

LBD03239-01-7

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(4) "Hours of use deduction formula" means the hours of use amount which is in excess of fifty hours times the purchase price or the lease price, if applicable, of the vessel divided by five hundred hours.

(5) "Lessee" means any consumer who leases a vessel pursuant to a written lease agreement which provides that the lessee is responsible for repairs to such vessel.

(6) "Lease price" means the aggregate of:

(i) the lessor's actual purchase cost;

(ii) the freight cost, if applicable;

(iii) the cost for accessories, if applicable;

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

(v) an amount equal to five percent of the lessor's actual purchase cost as prescribed in subparagraph (i) of this paragraph.

(7) "Service fees" means the portion of a lease payment attributable to:

(i) an amount for earned interest calculated on the rental payments previously paid to the lessor for the leased vessel at an annual rate equal to two points above the prime rate in effect on the date of the execution of the lease; and

(ii) any insurance or other costs expended by the lessor for the benefit of the lessee.

(8) "Capitalized cost" means the aggregate deposit and rental payments previously paid to the lessor for the leased vessel less service fees.

(b) (1) If a vessel which is sold in this state does not conform to all express warranties during the first seventy-five hours of operation or during the period of two years following the date of original delivery of the vessel to such consumer, whichever is the earlier date, the consumer shall during such period report the nonconformity, defect or condition to the manufacturer, its agent or its authorized dealer. If the notification is received by the manufacturer's agent or authorized dealer, the agent or dealer shall within seven days forward written notice thereof to the manufacturer by certified mail, return receipt requested, and shall include in such notice a statement indicating whether or not such repairs have been undertaken. The manufacturer, its agent or its authorized dealer shall correct such nonconformity, defect or condition at no charge to the consumer, notwithstanding the fact that such repairs are made after the expiration of such period of operation or such two year period.

(2) If a manufacturer's agent or authorized dealer refuses to undertake repairs within seven days of receipt of the notice by a consumer of a nonconformity, defect or condition pursuant to paragraph one of this subdivision, the consumer may immediately forward written notice of such refusal to the manufacturer by certified mail, return receipt requested. The manufacturer or its authorized agent shall have twenty days from receipt of such notice of refusal to commence such repairs. If within such twenty day period, the manufacturer or its authorized agent fails to commence such repairs, the manufacturer, at the option of the consumer, shall replace the vessel with a comparable vessel or accept return of the vessel from the consumer and refund to the consumer the full purchase price or, if applicable, the lease price and any trade-in allowance plus fees and charges. Such fees and charges shall include but not be limited to all license fees, registration fees and any similar governmental charges, less an allowance for the consumer's use of the vessel in excess of the first fifty hours of operation pursuant to the hours of use deduction formula and a reasonable allowance for any damage not attributable to normal wear or improvements.

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(c) (1) If, within the period specified in subdivision (b) of this section, the manufacturer or its agents or authorized dealers are unable to repair or correct any defect or condition which substantially impairs the value of the vessel to the consumer after a reasonable number of attempts, the manufacturer, at the option of the consumer, shall replace the vessel with a comparable vessel or accept return of the vessel from the consumer and refund to the consumer the full purchase price or, if applicable, the lease price and any trade-in allowance plus fees and charges. Any return of a vessel may, at the option of the consumer, be made to the dealer or other authorized agent of the manufacturer who sold such vessel to the consumer or to the dealer or other authorized agent who attempted to repair or correct the defect or condition which necessitated the return and shall not be subject to any further shipping charges. Such fees and charges shall include but not be limited to all license fees, registration fees and any similar governmental charges, less an allowance for the consumer's use of the vessel in excess of the first fifty hours of operation pursuant to the hours of use deduction formula and a reasonable allowance for any damage not attributable to normal wear or improvements.

(2) A manufacturer which accepts return of the vessel because the vessel does not conform to its warranty shall notify the commissioner of motor vehicles that the vessel was returned to the manufacturer for nonconformity to its warranty and shall disclose, in accordance with the provisions of section one hundred ninety-eight-e of this article, prior to resale either at wholesale or retail that it was previously returned to the manufacturer for nonconformity to its warranty. Refunds shall be made to the consumer and lienholder, if any, as their interests may appear on the records of ownership kept by the department of motor vehicles. Refunds shall be accompanied by the proper application for credit or refund of state and local sales taxes as published by the department of taxation and finance and by a notice that the sales tax paid on the purchase price, lease price or portion thereof being refunded is refundable by the commissioner of taxation and finance in accordance with the provisions of subdivision (f) of section eleven hundred thirty-nine of the tax law. If applicable, refunds shall be made to the lessor and lessee as their interests may appear on the records of ownership kept by the department of motor vehicles, as follows: the lessee shall receive the capitalized cost and the lessor shall receive the lease price less the aggregate deposit and rental payments previously paid to the lessor for the leased vessel. The terms of the lease shall be deemed terminated contemporaneously with the date of the arbitrator's decision and award and no penalty for early termination shall be assessed as a result thereof. Refunds shall be accompanied by the proper application form for credit or refund of state and local sales tax as published by the department of taxation and finance and a notice that the sales tax paid on the lease price or portion thereof being refunded is refundable by the commissioner of taxation and finance in accordance with the provisions of subdivision (f) of section eleven hundred thirty-nine of the tax law.

(3) It shall be an affirmative defense to any claim under this section that:

(i) the nonconformity, defect or condition does not substantially impair such value; or

(ii) the nonconformity, defect or condition is the result of abuse, neglect or unauthorized modifications or alterations of the vessel.

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(d) It shall be presumed that a reasonable number of attempts have been undertaken to conform a vessel to the applicable express warranties, if:

(1) the same nonconformity, defect or condition has been subject to repair four or more times by the manufacturer or its agents or authorized dealers within the first seventy-five hours of operation or during the period of two years following the date of original delivery of the vessel to a consumer, whichever is the earlier date, but such nonconformity, defect or condition continues to exist; or

(2) the vessel is out of service by reason of repair of one or more nonconformities, defects or conditions for a cumulative total of thirty or more calendar days during either period, whichever is the earlier date.

(e) The term of an express warranty, the two year warranty period and the thirty day 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, strike, fire, flood or other natural disaster.

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

(g) If a manufacturer has established an informal dispute settlement mechanism, such mechanism shall comply in all respects with the provisions of this section and the provisions of subdivision (c) of this section concerning refunds or replacement shall not apply to any consumer who has not first resorted to such mechanism. In the event that an arbitrator in such an informal dispute mechanism awards a refund or replacement vessel, he or she shall not reduce the award to an amount less than the full purchase price or the lease price, if applicable, or a vessel of equal value, plus all fees and charges except to the extent such reductions are specifically permitted under subdivision (c) of this section.

(h) A manufacturer shall have up to thirty days from the date the consumer notifies the manufacturer of his or her acceptance of the arbitrator's decision to comply with the terms of that decision. Failure to comply with the thirty day limitation shall also entitle the consumer to recover a fee of twenty-five dollars for each business day of noncompliance up to five hundred dollars. Provided, however, that nothing contained in this subdivision shall impose any liability on a manufacturer where a delay beyond the thirty day period is attributable to a consumer who has requested a replacement vessel built to order or with options that are not comparable to the vessel being replaced or otherwise made compliance impossible within said period. In no event shall a consumer who has resorted to an informal dispute settlement mechanism be precluded from seeking the rights or remedies available by law.

(i) Any agreement entered into by a consumer for the purchase of a new vessel which waives, limits or disclaims the rights set forth in this section shall be void as contrary to public policy. Such rights shall inure to a subsequent transferee of such vessel.

Any provision of any agreement entered into by a consumer for the purchase of a vessel which includes as an additional cost for such vessel an expense identified as being for the purpose of affording such consumer his or her rights under this section, shall be void as contrary to public policy.

(j) Any action brought pursuant to this section shall be commenced within four years of the date of original delivery of the vessel to the consumer.

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(k) Each consumer shall have the option of submitting any dispute arising under this section upon the payment of a prescribed filing fee to an alternate arbitration mechanism established pursuant to regulations promulgated pursuant to this section by the attorney general. Upon application of the consumer and payment of the filing fee, all manufacturers shall submit to such alternate arbitration.

Such alternate arbitration shall be conducted by a professional arbitrator or arbitration firm appointed by and under regulations established by the attorney general. Such mechanism shall insure the personal objectivity of its arbitrators and the right of each party to present its case, to be in attendance during any presentation made by the other party and to rebut or refute such presentation. In all other respects, such alternate arbitration mechanism shall be governed by article seventy-five of the civil practice law and rules.