Refund (Repurchase) Under Iowa Lemon Law

Under Iowa Code § 322G.4, when the manufacturer cannot conform the vehicle to the warranty after a reasonable number of attempts, the consumer is entitled to refund or replacement. IA’s mileage-offset formula is distinctively consumer-favorable — it caps the offset at the threshold-reaching date (rather than the refund or replacement date), and uses a 120,000-mile denominator.

The refund formula

§ 322G.4 sets out the refund components.

What’s included

• Full purchase price (cash plus trade-in value).
• Sales tax.
• License and registration fees.
• Title fees.
• Finance charges.
• Incidental damages — rental car, alternative transportation, towing.

What’s NOT included

• Insurance premiums.
• Damages from owner abuse, neglect, modification, accident.

The distinctive miles-capped-at-threshold-reaching-date mileage offset

§ 322G.4(1)(a)(2) provides:

“Reasonable offset for use means the number of miles attributable to a consumer up to the date of the third attempt to repair the same nonconformity which is the subject of the claim, or the first attempt to repair a nonconformity that is likely to cause death or serious bodily injury, or the twentieth cumulative day when the vehicle is out of service by reason of repair of one or more nonconformities, whichever occurs first, multiplied by the purchase price of the vehicle… and divided by one hundred twenty thousand.”

Formula: Reduction = Price × (Miles UP TO threshold-reaching date) ÷ 120,000

Why IA’s structure is distinctively consumer-favorable

The threshold-reaching-date cap is what makes IA’s formula distinctive. Most peer states count miles up to:

• Date of first repair report (Alabama § 8-20A-3(2)(d) — miles before first report ÷ 100,000).
• Date of refund / replacement (most other states).
• Threshold reached vs. delivery (Oklahoma — but with 15K-free-use baseline).

IA caps the count at the earliest of:

1. Date of third repair attempt (general defects).
2. Date of first repair attempt (death-or-serious-bodily-injury defects).
3. 20th cumulative OOS day (any defect).

This means additional consumer miles after the threshold is reached (e.g., during the manufacturer’s final-attempt process, IDS process, and litigation) don’t grow the offset. Particularly favorable for cases that ripen the presumption early.

Worked examples

Standard 3-attempt threshold case

• Purchase price: $40,000
• Mileage at third attempt date: 18,000

Mileage offset: $40,000 × 18,000 ÷ 120,000 = $6,000

Net refund: $40,000 − $6,000 + collateral + incidental = $34,000 + extras.

Safety-defect case (death-or-serious-bodily-injury)

• Purchase price: $40,000
• Defect classified as likely to cause death or serious bodily injury.
• Mileage at FIRST attempt date: 3,000.

Mileage offset: $40,000 × 3,000 ÷ 120,000 = $1,000

Net refund: $40,000 − $1,000 + collateral + incidental ≈ $39,000 + extras.

For safety-critical defects, the offset is minimal — near-full refund.

20-OOS-day case (faster than third attempt)

• Purchase price: $40,000
• 20th cumulative OOS day reached at mileage: 8,000.
• Third repair attempt would have been at mileage: 15,000.

Mileage offset: $40,000 × 8,000 ÷ 120,000 = $2,667 (using 20-OOS-day cap).

If using third-attempt date instead: $40,000 × 15,000 ÷ 120,000 = $5,000.

Threshold “whichever first” rule favors the consumer — 20-OOS-day cap is earlier and produces lower offset.

MANDATORY § 322G.6 attorney fees

§ 322G.6 makes attorney fees MANDATORY for prevailing consumers — “the court SHALL award…”

Lessee-specific refund mechanics

For leased vehicles (covered as “consumer” under § 322G.2), refund typically:

• Returns the vehicle to the lessor.
• Refunds the lessee’s down payment, monthly payments, sales tax, license fees, incidental damages.
• Pays off the residual / early-termination obligation to the lessor.
• Applies the threshold-reaching-date mileage offset proportionally.

The statute specifically addresses lessees: “in the event of a leased vehicle, the lessor’s actual lease price plus an amount equal to two percent of the purchase price…”

Title transfer

Upon refund:

• Consumer signs title transferring the vehicle back to the manufacturer.
• Vehicle picked up by manufacturer or returned to designated dealer.
• Consumer responsible for returning the vehicle in as-is condition (excepting underlying defect).

Refund vs. replacement — consumer’s choice

§ 322G.4 generally gives the consumer the choice between refund and replacement (unlike SC § 56-28-40 or OK § 901(C) which give the manufacturer the choice).

Bottom line

IA’s § 322G.4 refund framework is distinctively consumer-favorable due to the threshold-reaching-date mileage offset cap — additional consumer miles after presumption ripens don’t grow the offset. Particularly favorable for safety-defect cases (cap at first attempt) and 20-OOS-day cases. Combined with mandatory § 322G.6 attorney fees and § 714H damages, IA lemon-law refunds approach full economic recovery.

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