California lemon law primarily protects individual consumers. Businesses with 5 or fewer California-registered vehicles may qualify for some Song-Beverly protections.
California lemon law is primarily designed to protect individual consumers — people who buy or lease new vehicles for personal, family, or household use. If you purchased a vehicle for your business, you may be wondering whether your company has lemon law rights. The answer is: sometimes yes, with important limitations.
The Song-Beverly Consumer Warranty Act’s full protections — including the Tanner Act presumptions and the mandatory attorney fee provision — apply to consumers who purchase or lease vehicles primarily for personal, family, or household use. A vehicle purchased by a business and used exclusively for commercial purposes generally does not qualify for individual consumer protections under the Act.
California law includes a limited exception for small businesses. Cal. Civ. Code § 1793.22(e)(1) defines “buyer” to include a business entity that: (1) is not engaged in the business of selling or leasing motor vehicles; and (2) purchases not more than five new motor vehicles per year. Small businesses that purchase within these limits may have some Song-Beverly rights, though the scope of protection and the available remedies may differ from individual consumer protections.
In practice, small business claims under Song-Beverly are more complex than individual consumer claims, and the attorney fee provision may apply differently. If your small business has a defective vehicle, consulting an attorney is particularly important — the analysis is fact-specific and depends on how the vehicle was purchased, titled, and used.
Many vehicles are used for both personal and business purposes. A pickup truck that the owner drives to work, uses on job sites, and also uses on weekends for personal trips is a mixed-use vehicle. Courts generally look at the primary purpose of the purchase and use. If personal use is primary, the vehicle likely qualifies for full Song-Beverly protection. If business use is primary and personal use is incidental, the analysis is less favorable.
Factors courts consider include: how the vehicle is registered (in the owner’s personal name or a business entity), how the vehicle is insured, how it is treated for tax purposes (personal or business asset), and what percentage of actual use is personal versus business.
Even if a vehicle does not qualify for Song-Beverly protections, a business with a defective vehicle may have other claims: breach of express warranty under the Uniform Commercial Code (UCC), Magnuson-Moss Warranty Act claims, fraud or misrepresentation claims, and in some cases, implied warranty of merchantability claims. The remedies available under these theories may differ from Song-Beverly, but legal recourse is not necessarily unavailable.