Lemon Law Reform

Senate Bill 26 “Clean-Up” of Assembly Bill 1755

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Contributors

When Assembly Bill 1755 (AB 1755) was signed into law, on September 29, 2024, it marked a major shift in how California handles lemon law disputes—streamlining the resolution processes between consumers and manufacturers, including a consumer notice to a manufacturer 30 days before filing suit. But as with any major change, a few loose ends remained.

Enter Senate Bill 26 (SB 26), the promised “clean-up” bill which was signed into law on April 2, 2025, and designed to bring clarity and structure to the new landscape AB 1755 created.

SB 26 introduces an opt-in framework for vehicle manufacturers who wish to participate in this new, streamlined process. To opt in, a manufacturer must submit written notice 30 days from April 2. Once in, manufacturers commit to AB 1755 procedures for five years, with the option to re-enroll thereafter. Those who don’t opt in remain subject to the pre-AB 1755 rules.

Recognizing the need for more preparation time, SB 26 also pushes back the effective date for AB 1755’s pre-dispute notice requirement to a manufacturer —from April 1 to July 1, 2025, and includes a sunset review provision, allowing lawmakers to revisit the policy in 2029.

SB 26 further streamlines the lemon law process in the following ways:

  • A standardized settlement agreement aims to reduce disputes over legal language.
  • Consumers must own the vehicle at the time of filing a lemon law claim.
  • Some used vehicle claims may be excluded, following the Rodriguez decision. You can read more about this decision here (insert link)
  • Consumers are now encouraged to disclose any active lemon law claims before selling a used vehicle.

For dealers, the action items are clear:

  • Identify which manufacturers have opted into AB 1755.
  • Prepare for potential new documentation deadlines.
  • When acquiring used vehicles or accepting trade-ins, you may want the seller to disclose the car is not part of a lemon lawsuit or pre-suit resolution process.
  • Still, some big questions remain: Will dealerships be included in manufacturer-consumer settlement agreements? What happens to claims brought solely against dealerships? How will indemnification and third-party disputes be handled?

SB 26 tied up some of AB 1755’s loose ends—and together they open the door to the next phase of California’s evolving lemon law landscape. We’ll continue monitoring and keep you informed, with our next issue of Ahead of the Curve - coming out at the end of April.