Leased vehicles are explicitly covered by the California Lemon Law under Civil Code § 1793.22. Lessees have the same rights as purchasers — including the lemon law presumption (four attempts, two attempts for safety, 30 days out of service within 18 months / 18,000 miles), the choice between buyback and replacement, the civil penalty, and attorney’s fees paid by the manufacturer. A lessee buyback returns the down payment (capitalized cost reduction), monthly lease payments, sales tax, and fees — less the statutory mileage offset.
What a Lessee Recovers in a Buyback
- Capitalized cost reduction (down payment)
- All lease payments made to date
- Sales tax paid on payments
- Vehicle registration and DMV fees
- Acquisition fee paid at lease origination
- Collateral charges — GAP insurance, extended service contracts, etc.
- Incidental damages — towing, rentals
- Less: statutory mileage offset
The manufacturer also pays off the residual obligation to the lessor (typically a captive finance company) so the lessee walks away from the lease without obligation.
Mileage Offset for Leased Vehicles
For leased vehicles, the offset formula in § 1793.2(d)(2)(C) uses the capitalized cost (cash value) of the leased vehicle as the “actual price paid or payable” — not the total of all scheduled lease payments. Pre-defect miles count as in purchase cases.
Replacement Vehicle for Lessees
A lessee can elect replacement instead of buyback. The manufacturer transitions the lease to a substantially identical new vehicle, paying the new sales tax, registration, and any required new lease origination fees. The original residual obligation is satisfied.
Lease-End vs. Mid-Lease Claims
- Mid-lease. Most lemon law claims arise mid-lease, while the manufacturer’s warranty is active. Strongest position.
- End-of-lease. Claims that arise as the lease expires can still be valid if the defect manifested and the manufacturer was given repair opportunities during the warranty period.
- Lease buyout in progress. If a lessee is converting the lease to a purchase (lease buyout), Song-Beverly continues to apply against the manufacturer regardless of the ownership structure.
Special Considerations
- Lessor (the captive finance company) is generally not a defendant; the claim is against the manufacturer.
- Lease payments continue during the claim — pre-litigation cases can be resolved before next month’s payment is due, but litigation cases often involve continued lease payments until settlement.
- The mileage offset is typically modest for leased vehicles because pre-defect mileage is usually low (most lemon defects manifest early in the lease).
Free Case Review
Leased vehicles get full Song-Beverly protection. McMillan Law Group will evaluate your repair history at no cost. No fee unless we win.