How Arbitration Awards Work in Lemon Law Cases

If your “new-to-you” car keeps spending more time at the dealership than in your driveway, you may be looking at Lemon Law options. One path many Californians consider is manufacturer-sponsored arbitration, a free process where a neutral arbitrator decides what relief—if any—you should receive. Below, ZapLemon explains how arbitration awards work under California law and what outcomes might include, in plain language you can use to understand your choices.

How arbitration awards work under California law

California’s Lemon Law (the Song-Beverly Consumer Warranty Act) allows consumers to seek relief for defects that substantially impair the use, value, or safety of their vehicles while under warranty. One way to pursue relief is through a state-certified manufacturer arbitration program, such as BBB AUTO LINE or NCDS, overseen by California’s Arbitration Certification Program. These programs are generally free for consumers, and using them is voluntary—you don’t have to arbitrate before considering other options.

Here’s how it usually works: you submit a claim to the manufacturer’s certified program, upload your repair orders and other documents, and request a hearing. The hearing may be by phone, video, or in person, and an inspection of your vehicle can be requested. An arbitrator reviews the evidence and issues a written decision (the “award”)—often within about 40 days of the program accepting your case. If you accept the award, it is binding on the manufacturer; if you reject it, you can typically move on to other avenues, including court. Program rules vary, so timelines and procedures can differ.

Arbitrators look at whether the defect is covered by warranty, whether the problem substantially impairs the vehicle, and whether there’s been a “reasonable number” of repair attempts or 30+ cumulative days out of service. Strong evidence helps: keep every repair order, note the dates and mileage, save photos or videos of the issue, and document communications with the dealer. Be clear about what you’re asking for—repair, replacement, or a refund/buyback—and double-check that your submission is complete and on time. This information is general, not legal advice, but it can help you prepare for the process.

What outcomes include: repairs, refunds, or buybacks

Some arbitration awards authorize further repairs. This may happen when the arbitrator believes the defect can be fixed or when a manufacturer has a new fix, such as a technical service bulletin or updated part. An award might also include steps like a specific repair timeline, reimbursement for prior out-of-pocket repair costs, or an extended warranty related to the issue. If you rely on your vehicle daily, ask the program about rental or loaner coverage while repairs are performed.

Awards can also require the manufacturer to repurchase (buy back) or refund the vehicle. In California, a buyback typically includes your down payment, monthly payments already made, taxes and registration, and sometimes finance charges paid to date, minus a mileage/usage offset. The offset is generally based on the miles driven before the first qualifying repair attempt, using a statutory formula. Keep in mind that certain items—like negative equity from a trade-in or some aftermarket add-ons—may not be reimbursed. If you have a loan, the manufacturer usually pays off the outstanding balance and you return the vehicle free of liens.

Replacement vehicles are another possible outcome. A replacement is generally a substantially identical new vehicle, with similar options and warranties, again subject to a mileage offset. Some awards may also include incidental expenses tied to the defect, such as towing, rideshare, rental cars, or diagnostic fees—so save your receipts. Civil penalties and attorney’s fees are typically not available through manufacturer-run arbitration. If you receive an award, read it carefully, confirm the dollar amounts and offset, and track any deadlines for the manufacturer to comply.