Lemon Law for Leased Vehicles: Are Lessees Protected?

If you’re making monthly payments on a leased vehicle that spends more time at the repair shop than in your driveway, you’ve probably asked yourself: does the lemon law even apply to my lease?

The short answer is yes. Lemon law protections extend to lessees in every state where Kahn & Associates practices — Ohio, Florida, Michigan, North Carolina, and Pennsylvania. The common misconception that lemon laws only cover purchased vehicles leaves thousands of frustrated lessees unaware of their legal rights every year.

In this guide, we’ll break down exactly how lemon law protections work for leased vehicles, what remedies are available, how they differ from purchased-vehicle claims, and what steps you should take if your leased car is a lemon.

Do Lemon Laws Apply to Leased Vehicles?

Absolutely. State lemon laws and the federal Magnuson-Moss Warranty Act protect consumers who lease new vehicles, not just those who purchase them. The key distinction these laws make isn’t between buying and leasing — it’s between vehicles covered by a manufacturer’s warranty and those that aren’t.

Since leased vehicles are almost always new and covered by the manufacturer’s full warranty, they fall squarely within lemon law protection in all five states where our firm practices.

Here’s how each state’s statute specifically defines a protected “consumer” to include lessees:

• Ohio (ORC §1345.71): Covers any “consumer” who purchases or leases a new motor vehicle. The statute’s refund provisions specifically address lessor charges and lease cancellation fees.
• Florida (§681.102): Explicitly defines “consumer” as “the purchaser… or the lessee, of a motor vehicle.” Florida law further defines “lessee” as someone who leases a motor vehicle for one year or more under a written lease agreement.
• Michigan (MCL §257.1401): Protects consumers who purchase or lease new motor vehicles. Section 257.1403 provides specific lease refund and replacement procedures.
• North Carolina (N.C.G.S. §20-351.1): Defines “consumer” as “the purchaser… or lessee from a commercial lender, lessor, or from a manufacturer or dealer, of a motor vehicle.” A separate subsection (§20-351.3(b)) details lessee-specific remedies.
• Pennsylvania (73 P.S. §1952): Defines “purchaser” to include anyone who has obtained possession of a new motor vehicle by lease, transfer, or purchase. The statute uses “lease price” alongside “purchase price” throughout its remedy provisions.

The bottom line: if you’re leasing a defective new vehicle in any of these states, the law is on your side.

What Makes a Leased Vehicle a “Lemon”?

The qualifying criteria for a lemon law claim are the same whether you purchased or leased the vehicle. Generally, your leased car may be a lemon if:

1. It has a substantial defect — a problem covered by the manufacturer’s warranty that significantly impairs the vehicle’s use, value, or safety.
2. The manufacturer or dealer has had a reasonable number of repair attempts — typically three or more attempts for the same defect, or the vehicle has been out of service for 30 or more cumulative days.
3. The defect occurred within the protection period — usually the first 12 to 24 months or 18,000 to 24,000 miles, depending on your state.

Common qualifying defects in leased vehicles include:

• Transmission failures — rough shifting, slipping gears, complete loss of power
• Engine problems — stalling, misfiring, oil consumption, overheating
• Electrical system malfunctions — dashboard warning lights, infotainment failures, power window or lock defects
• Safety system defects — brake failures, airbag warning lights, steering problems, advanced driver assistance system malfunctions

Cosmetic issues, normal wear and tear, and problems caused by accidents, neglect, or unauthorized modifications typically do not qualify.

Lemon Law Remedies for Lessees: State-by-State Breakdown

While the basic lemon law protections apply equally to buyers and lessees, the remedies work differently when you’re leasing. Instead of receiving a full purchase-price refund, your recovery is calculated based on your lease payments, down payment, and the lessor’s interest. Here’s how each state handles it.

Ohio

Ohio’s Lemon Law (ORC §1345.71–1345.77) provides lessees with two primary remedies:

• Replacement — The manufacturer replaces the defective vehicle with a comparable new vehicle.
• Full refund — The manufacturer refunds the full purchase or lease price, including incidental damages such as fees charged by the lessor for making or canceling the lease, towing costs, rental vehicle charges, and related expenses. A reasonable use allowance is deducted.

Ohio has one of the strongest lemon law frameworks in the country, thanks in part to the landmark Royster v. Toyota Motor Sales, U.S.A., Inc. case argued by our founder, Craig A. Kahn, before the Ohio Supreme Court. That decision established that 30 or more cumulative days out of service creates a presumption of lemon law relief — a standard that continues to benefit Ohio consumers, including lessees, today.

Protection period: First 12 months or 18,000 miles, whichever comes first.

Florida

Florida’s Lemon Law (Chapter 681) is one of the most detailed in the country when it comes to lessee protections. The statute provides specific formulas for dividing refunds between lessees and lessors:

• Lessee receives: All deposit and rental payments previously paid (the “lessee cost”).
• Lessor receives: The lease price minus the lessee cost.
• No early termination penalty: Florida law expressly prohibits assessing an early-termination penalty against a lessee who receives a replacement vehicle or refund.

Protection period: First 24 months after delivery (the “Lemon Law rights period”).

Michigan

Michigan’s Lemon Law (MCL §257.1401–1410) provides lessees with clear options under Section 257.1403:

• Refund of lease price paid — The consumer receives a refund of all lease payments already made, less a reasonable use allowance calculated using a 100,000-mile denominator.
• Replacement vehicle — The lessee may accept a comparable replacement vehicle. If a replacement is chosen, the lease agreement continues with only the vehicle identification changed.
• No early termination fee: Michigan law states that “a lessor shall not assess a fee for early termination of a lease” under the lemon law.

Protection period: Duration of the manufacturer’s express warranty or the first four years, whichever is shorter.

North Carolina

North Carolina’s New Motor Vehicles Warranties Act (N.C.G.S. §20-351 et seq.) has a dedicated subsection — §20-351.3(b) — that addresses lessee remedies specifically:

• To the lessee: Refund of all sums paid under the lease terms, all sums paid in connection with entering the lease (capitalized cost reduction, sales tax, license and registration fees), plus incidental and monetary consequential damages.
• To the lessor: Full refund of the lease price (the actual purchase cost to the lessor) plus an additional 5%, minus 85% of the amount the lessee already paid.
• Lease termination: The consumer’s written lease is terminated without any penalty.

Protection period: First 24 months or 24,000 miles following original delivery.

Pennsylvania

Pennsylvania’s Automobile Lemon Law (73 P.S. §1951–1960) is notable for how broadly it defines “purchaser” — the term includes anyone who has obtained a new motor vehicle by lease. This means all of Pennsylvania’s lemon law protections apply to lessees without requiring a separate section:

• Replacement — A comparable motor vehicle of equal value.
• Refund — The full lease price, including all collateral charges, less a reasonable use allowance not exceeding 10 cents per mile driven or 10% of the lease price, whichever is less.

Pennsylvania’s use-allowance cap (10 cents per mile or 10%) is one of the most consumer-friendly in the country.

Protection period: First 12 months, 12,000 miles, or the duration of the manufacturer’s express warranty term, whichever comes first.

Leased vs. Purchased Vehicles: Key Differences in Lemon Law Claims

While the types of defects covered and the qualification criteria are the same, there are important practical differences between lease and purchase lemon law claims:

The involvement of a third party (the lessor or leasing company) is the biggest procedural difference. In lease claims, the refund must be divided between the lessee and the lessor based on each party’s financial interest in the vehicle. This can make the calculation more complex, but it does not reduce the total amount the manufacturer must pay.

Real-World Scenarios: When Lessees Can File a Lemon Law Claim

To help illustrate how lemon law protections work for lessees in practice, here are common situations we encounter:

Scenario 1: Repeated Transmission Problems

You lease a new SUV in Ohio. Within the first six months, the transmission begins slipping. You take it to the dealer three times, but the problem keeps coming back. After the third failed repair, you may have a valid lemon law claim. Under Ohio law, three or more unsuccessful repair attempts for the same defect triggers the presumption of a lemon.

Scenario 2: Safety Defect After One Repair

You lease a sedan in Florida, and within weeks the steering wheel locks intermittently while driving — a clear safety hazard. You bring it in for repair, but the problem persists. In many states, a single failed repair attempt for a safety-related defect that could cause death or serious injury is enough to trigger lemon law protections.

Scenario 3: Extended Time in the Shop

You lease a truck in Michigan. Over the first year, various electrical issues keep it at the dealership for a combined total of 35 days. Even though the specific problems differ, 30-plus cumulative days out of service may qualify under Michigan’s lemon law — regardless of whether the same defect caused each visit.

Scenario 4: Dealer Says “That’s Normal”

You lease a vehicle in Pennsylvania, and a persistent engine vibration gets dismissed by the dealer as “normal operating characteristics.” If the vibration substantially impairs the vehicle’s use, value, or safety and is covered by the warranty, the dealer’s characterization doesn’t eliminate your rights. Document every visit, get written repair orders, and consult a lemon law attorney.

What About the Federal Magnuson-Moss Warranty Act?

Even if your leased vehicle doesn’t meet every requirement of your state’s lemon law — perhaps you’re slightly outside the mileage or time window — you may still have a claim under the federal Magnuson-Moss Warranty Act. This federal law protects anyone who purchases or leases a product with a written warranty, and it has broader coverage than most state lemon laws:

• No strict mileage or time limits (coverage lasts for the full duration of the warranty)
• Covers new and used vehicles with active warranties, including certified pre-owned vehicles
• Allows recovery of attorney’s fees in successful cases, so you pay nothing out of pocket

At Kahn & Associates, we evaluate every case under both state and federal law to determine which path offers the strongest protection.

Steps to Take If Your Leased Vehicle Is a Lemon

If you suspect your leased car qualifies as a lemon, follow these steps to protect your rights:

1. Document everything. Keep copies of all repair orders, invoices, and correspondence with the dealer and manufacturer. Note the dates your vehicle was dropped off and picked up from each repair visit.
2. Report defects in writing. In addition to verbal complaints at the dealership, send written notice to the manufacturer describing the defect. Some states require written notice before you can pursue a lemon law claim.
3. Give the dealer a reasonable chance to repair. Don’t skip repair visits — lemon law claims require proof that the manufacturer or dealer had a reasonable opportunity to fix the problem.
4. Don’t assume the lease limits your rights. Your lease agreement cannot override or waive your lemon law rights. Any clause in a lease that attempts to disclaim lemon law protections is void as a matter of public policy in most states.
5. Consult a lemon law attorney. Because lease claims involve three parties (you, the lessor, and the manufacturer), they can be more complex than purchase claims. An experienced attorney can navigate the refund calculation, coordinate with the leasing company, and handle all manufacturer negotiations — typically at no cost to you, since lemon law attorney fees are paid by the manufacturer.

Frequently Asked Questions

Can I file a lemon law claim if I’m still making lease payments?

Yes. You can and should file a claim while the vehicle is still under warranty, even if your lease is active. Continuing to make payments protects your credit and doesn’t waive your legal rights.

Will filing a lemon law claim affect my credit score?

No. A successful lemon law claim properly terminates the lease and ensures the lessor is made whole by the manufacturer. There should be no negative impact on your credit.

Do I need to go through the manufacturer’s arbitration program first?

It depends on the state. Ohio, for example, requires consumers to use an approved arbitration program if the manufacturer participates in one. Florida has its own New Motor Vehicle Arbitration Board. Your attorney can advise you on whether arbitration is required or optional and whether to pursue it in your situation.

What if my lease is almost over — is it too late?

Not necessarily. The relevant timeline is when the defect first appeared and when it was reported, not when your lease ends. If the defect arose within the protection period and was reported to the dealer, you may still have a claim even if your lease term is winding down.

Does the leasing company need to agree to my lemon law claim?

The leasing company doesn’t need to “agree” to your claim. The manufacturer’s obligation under lemon law exists independently. However, the lessor is involved in the refund process because they hold title to the vehicle and have a financial interest in it.

Get a Free Lemon Law Assessment for Your Leased Vehicle

At Kahn & Associates, we’ve represented over 13,000 consumers and recovered more than $65 million in lemon law settlements — including thousands of cases involving leased vehicles. With nearly 30 years of experience focused exclusively on lemon law, we understand the unique complexities of lease claims and how to maximize your recovery.

Our representation is on a contingency fee basis: No Recovery, No Fees or Costs — You Pay Nothing Unless We Win. The manufacturer pays our attorney fees in successful cases.

Take the Free 60-Second Lemon Law Assessment™ to find out if your leased vehicle qualifies, or call us at (866) 809-5155 for an immediate case evaluation.