Massachusetts New Car Lemon Law: Refunds, Arbitration, and Fees

The Massachusetts new car lemon law, codified at M.G.L. c. 90, § 7N½, entitles you to a full refund or a replacement vehicle when a serious defect on a new car, van, truck, or motorcycle can’t be fixed by the manufacturer’s authorized service network.¹ The protection runs for one year or 15,000 miles from delivery, whichever comes first, and reaching a buyback or replacement means clearing a defined set of steps in a defined order. Miss one, and the manufacturer can walk away.

Which Vehicles the Law Covers

The statute applies to new cars, motorcycles, vans, and trucks bought or leased from a licensed Massachusetts dealer for personal, family, or household use.² The vehicle has to still be inside its “term of protection,” meaning the first year or 15,000 miles from the original delivery date.¹ A replacement vehicle you receive under the law gets its own fresh term of protection starting the day it’s delivered.

Auto homes, off-road vehicles, and vehicles used primarily for business are excluded.¹ Used vehicles are covered by a completely separate statute, addressed at the end of this article.

What Counts as a Lemon

The defect has to substantially impair the vehicle’s use, market value, or safety.¹ A slipping transmission, brakes that pull hard to one side, an engine that stalls without warning: those clear the bar. A dashboard rattle or a cosmetic flaw usually does not. Market value counts too, so a defect that isn’t dangerous but would push a reasonable buyer to pay significantly less can still qualify.

On top of the defect itself, you have to satisfy one of two repair-history triggers before the law’s remedies open up:

The dealer or a manufacturer-authorized service center has tried at least three times to fix the same defect and it still isn’t right.²
The vehicle has been out of service for warranty repairs, in any combination, for a cumulative total of 15 or more business days.²

Business days are Monday through Friday, excluding state and federal holidays, and they don’t have to be consecutive. Five separate three-day repair visits add up. Keep every repair order and check that each shows the drop-off date, pick-up date, and mileage.

The Final Repair Notice

Hitting a threshold does not let you demand a refund straight away. You have to give the manufacturer one final chance to fix the vehicle, and you have to do it in writing sent directly to the manufacturer, not just to the dealership.² Use certified mail so you have proof of delivery.

The manufacturer then has seven business days from receipt to complete that final repair.² Once the seven days are up, you can pick up the vehicle whether it’s fixed or not. If the defect is still there, you now have the right to demand a refund or replacement. Skipping the written notice is the single most common procedural mistake, and it can block you from the state arbitration process entirely.

How the Refund Is Calculated

On a purchased vehicle, the manufacturer must return the full contract price, including any credit or allowance from a trade-in. Added to that: sales tax, registration fees, finance charges, the cost of dealer-installed options, and reasonable towing and rental car expenses tied to the defect.¹

Two things reduce the refund: any cash settlement you previously accepted from the manufacturer, and a “reasonable allowance for use” based on the miles you drove. For cars, vans, and trucks:

(Contract price × miles driven) ÷ 100,000

For motorcycles, the divisor is 25,000.¹ So on a $35,000 car driven 5,000 miles, the deduction is $1,750, leaving a base refund of $33,250 before your incidental costs are added back.

On a lease, the manufacturer refunds every lease payment you made, minus the same usage deduction and any prior cash settlement. Towing and rental costs are covered if they weren’t already provided free during repairs.

Choosing a Replacement Instead of a Refund

You are not required to accept a replacement. The manufacturer may offer one, but you have an unqualified right to reject that offer and take the money instead.¹ If you accept, the manufacturer pays for the registration transfer and any sales tax triggered by the swap, and a fresh one-year or 15,000-mile term of protection begins.

For a leased vehicle, the replacement has to be an identical model provided for the remaining term of your original lease, and the manufacturer cannot add any financial obligation beyond what your original lease already required.¹ The same rule applies to financed vehicles: no refinancing that reaches beyond your original loan terms.

Filing for State Arbitration

When the manufacturer refuses to provide a refund or replacement after the final repair attempt fails, the next step is state-certified arbitration through the Office of Consumer Affairs and Business Regulation. You submit the official application by mail to OCABR’s Boston office. There is no online submission option.³

The deadline is strict: your application must be received within 18 months of the vehicle’s original delivery date.³ Miss it and the manufacturer no longer has to participate. Because the term of protection itself is only a year or 15,000 miles, you have a short buffer after the protection period ends, but waiting eats it fast.

Submitting the application is free. Once a hearing is scheduled, you pay $300 directly to the state-certified arbitrator.⁴

What to Include in Your Application

The application asks for your VIN, a detailed chronology of every repair attempt, and an explanation of how the defect impairs safety, use, or value. Pull these together before you start:

Your purchase or lease agreement, which fixes the delivery date, contract price, and dealer.
Every repair order, showing dates in and out, mileage at each visit, and the work performed.
The certified mail receipt proving the manufacturer got your final repair notice.
Any correspondence with the manufacturer, including case numbers from prior complaints.

Be specific about the defect. “Car shakes violently above 50 mph” gives an arbitrator something to work with. “Driving issues” does not. Include dates, service advisor names, and whether the dealer was able to reproduce the problem.

The Hearing and the Decision

The arbitrator must issue a written decision within 45 days of OCABR’s receipt of your request.³ Both sides present evidence, testimony, and arguments. Bringing an independent mechanic’s written assessment or a witness who has ridden in the vehicle helps most when the defect is intermittent or the dealer keeps writing “could not replicate” on the repair orders.

What Happens After the Decision

If you win, the manufacturer has 21 days to deliver your refund or replacement.³ Its only alternative within that same 21-day window is to appeal in Superior Court, and to do that it must post a bond equal to the full award plus $2,500 for your anticipated attorney fees.¹ The bond requirement discourages frivolous appeals.

If the court upholds the decision, you get an added $25 per day for every day the vehicle was out of use after you returned it to the manufacturer. If the court finds the appeal had no reasonable basis or was frivolous, the total award is doubled.¹

Losing at arbitration is not the end of the road. You still have the option of filing under Chapter 93A, the state consumer protection statute, or under the federal Magnuson-Moss Warranty Act. Arbitration does not close the courthouse door.

Attorney Fees

Any consumer who prevails is entitled to reasonable attorney fees and court costs under the statute.¹ That provision is why many Massachusetts lemon law attorneys work on contingency or take cases expecting the manufacturer to pay their fees at the end.

The Federal Backup Under Magnuson-Moss

The federal Magnuson-Moss Warranty Act sits alongside the state law and covers breaches of both express written warranties and implied warranties on consumer products. When a manufacturer fails to honor a warranty after a reasonable number of repair attempts, you can sue in state or federal court for a refund, replacement, or damages. A prevailing consumer can recover attorney fees and litigation costs under this statute as well.⁵ It is a practical route when state arbitration doesn’t go your way, or when a defect falls outside the state law’s 1-year/15,000-mile term but is still inside the manufacturer’s warranty.

Used Cars Fall Under a Different Statute

If you bought a used vehicle, the new car law does not apply. Used vehicles are covered by M.G.L. c. 90, § 7N¼, which requires dealers to provide an express written warranty tied to mileage at the time of sale:⁶

Under 40,000 miles: 90 days or 3,750 miles, whichever comes first.
40,000 to 79,999 miles: 60 days or 2,500 miles.
80,000 to 124,999 miles: 30 days or 1,250 miles.

Under the used car warranty, you can be asked to pay up to $100 toward the repair of a covered defect. The used car arbitration process has its own, shorter deadline: your application must be received within six months of delivery.³ Vehicles with 125,000 miles or more at sale, motorcycles, and vehicles used primarily for business fall outside used car coverage entirely.

1
General Court of Massachusetts. Massachusetts Code Chapter 90 Section 7N1/2 – Defective or Malfunctioning New Motor Vehicles; Sale and Repair or Replacement
2
Mass.gov. Guide to New and Leased Car Lemon Law
3
Mass.gov. Apply for Lemon Law Arbitration
4
Mass.gov. Massachusetts New Vehicle Arbitration Program – Consumer Request for Arbitration
5
Office of the Law Revision Counsel. 15 USC 2310 – Remedies in Consumer Disputes
6
General Court of Massachusetts. Massachusetts Code Chapter 90 Section 7N1/4 – Used Motor Vehicles; Warranties