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HB 4281

Trade: vehicles; used motor vehicle cancellation option agreement; provide for. Creates new act.

2025-2026 Regular Session Introduced by Noah Arbit and 7 co-sponsors

HB 4281: 2-day cancellation option for used vehicles <=$50k, 150-mile limit, inspection, and refund minus restocking fee; option fees may apply. Effective 9/1/2025.

bill electronically reproduced 03/20/2025
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Bill Summary · HB 4281

Summary — HB 4281: Used Motor Vehicle Warranty Act (Contract Cancellation Option)

Status: Enacted; signed by Governor 06/20/2025 — Effective 09/01/2025 (180 days after enactment)

Purpose

HB 4281 creates a statutory "contract cancellation option agreement" for consumers who purchase or lease used motor vehicles, giving buyers a short unconditional return period and related disclosures. The intent is to provide a limited "no-fault" cancellation right and set uniform rules for how dealers may offer and charge for that option.

Who is covered

  • Consumer: a person who purchases or leases a used motor vehicle for personal, family, or household use (not for resale or leasing to others).
  • Used motor vehicle dealer: a business engaged in buying, leasing, selling, or exchanging used motor vehicles (excludes new motor vehicle dealers acting only in the new-vehicle business).
  • Applies to used motor vehicles sold or leased in-state on or after the effective date, with purchase price up to $50,000.

Key provisions and requirements

  • Dealers must offer (but are not required to sell) a contract cancellation option to consumers buying/ leasing a used motor vehicle with a purchase price of $50,000 or less.
  • The option must be written into the consumer's order and must state:
    • The consumer has 2 days after purchase to cancel the sale/lease without cause.
    • The consumer may drive the vehicle up to 150 miles during that 2-day period.
    • The consumer may have the vehicle inspected by a mechanic of their choosing during the 2 days.
    • Cancellation entitles the consumer to a full refund of the purchase price minus a specified restocking fee.
    • The dollar amount of the restocking fee must be specified in the agreement.

Fees, refunds, and timeframes

  • Dealers may charge a nonrefundable fee to purchase the option. Maximums:
    • $75 for vehicle price ≤ $5,000
    • $150 for $5,001–$10,000
    • $250 for $10,001–$30,000
    • 1% of purchase price for $30,001–$50,000
  • If consumer cancels within the 2-day window, the dealer may assess a restocking fee up to:
    • $175 for vehicle price ≤ $5,000
    • $350 for $5,001–$10,000
    • $500 for $10,001–$50,000
  • Dealer must provide the refund (purchase price minus restocking fee) within 2 days after the consumer returns the vehicle and exercises cancellation.

Exceptions / Not covered

  • Dealers need not offer the option for motorcycles, off-highway vehicles, or used vehicles with purchase price over $50,000.
  • The act does not apply to private-party sales/leases between individuals.

Enforcement and remedies

  • Consumers may sue to recover actual damages from violations of the act.
  • A prevailing consumer may recover costs and attorney fees.

Practical impacts

  • Consumers gain a short, limited trial/inspection window and clearer disclosures at point of sale.
  • Dealers must add an option-product workflow and disclose restocking fee amounts and fee caps; they may collect modest fees for the option.
  • Administrative and cash-flow considerations for dealers include processing refunds within 2 days and handling returned vehicles.

This act takes effect for transactions on or after 09/01/2025.

Compiled from official sources — confirm details with the bill’s official record.

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