                                 CODE OF VIRGINIA

WARRANTY OBLIGATIONS (§ 46.2-1573.8)

A. Each recreational vehicle manufacturer, factory branch, distributor, or
distributor branch shall (i) specify in writing to each of its recreational
vehicle dealers licensed in the Commonwealth the dealer&#8217;s obligations for
preparation, delivery, and warranty service on its products and (ii) compensate
the dealer for warranty parts, service, and diagnostic work required of the
dealer by the manufacturer or distributor as follows:

   1. Compensation of a dealer for warranty parts, service, and diagnostic work
   shall not be less than the amounts charged by the dealer for the
   manufacturer&#8217;s or distributor&#8217;s original parts, service, and
   diagnostic work to retail customers for nonwarranty service, parts, and
   diagnostic work installed or performed in the dealer&#8217;s service
   department unless the amounts are not reasonable;

   2. For purposes of determining warranty parts and service compensation,
   menu-priced parts or services, group discounts, special event discounts, and
   special event promotions shall not be considered in determining amounts
   charged by the dealer to retail customers;

   3. Increases in dealer warranty parts and service compensation and diagnostic
   work compensation, pursuant to this section, shall be requested by the dealer
   in writing, shall be based on 100 consecutive repair orders or all repair
   orders over a 90-day period, whichever occurs first, and, in the case of
   parts, shall be stated as a percentage of markup that shall be uniformly
   applied to all the manufacturer&#8217;s or distributor&#8217;s parts;

   4. In the case of warranty parts compensation, the provisions of this
   subsection shall be effective only for model year 1992 and succeeding model
   years;

   5. If a manufacturer or distributor furnishes a part to a dealer at no cost
   for use by the dealer in performing work for which the manufacturer or
   distributor is required to compensate the dealer under this section, the
   manufacturer or distributor shall compensate the dealer for the part in the
   same manner as warranty parts compensation, less the wholesale costs, for such
   part as listed in the manufacturer&#8217;s current price schedules. A
   manufacturer or distributor may pay the dealer a reasonable handling fee
   instead of the compensation otherwise required by this subsection for special
   high-performance complete engine assemblies in limited production recreational
   vehicles that constitute less than five percent of model production furnished
   to the dealer at no cost, if the manufacturer or distributor excludes such
   special high-performance complete engine assemblies in determining whether the
   amounts requested by the dealer for warranty compensation are consistent with
   the amounts that the dealer charges its other retail service customers for
   parts used by the dealer to perform similar work; or

   6. In the case of service work, manufacturer original parts or parts otherwise
   specified by the manufacturer or distributor, and parts provided by a dealer
   either pursuant to an adjustment program as defined in &#xA7; 59.1-207.34 or
   as otherwise requested by the manufacturer or distributor, the dealer shall be
   compensated in the same manner as for warranty service or parts.
   				This section does not apply to compensation for parts such as components,
   systems, fixtures, appliances, furnishings, accessories, and features that are
   designed, used, and maintained primarily for nonvehicular, residential
   purposes. Warranty audits of dealer records may be conducted by the
   manufacturer, factory branch, distributor, or distributor branch on a
   reasonable basis, and dealer claims for warranty compensation shall not be
   denied except for good cause, such as performance of nonwarranty repairs, lack
   of material documentation, fraud, or misrepresentation. Claims for dealer
   compensation shall be paid within 30 days of dealer submission or within 30
   days of the end of an incentive program or rejected in writing for stated
   reasons. The manufacturer, factory branch, distributor, or distributor branch
   shall reserve the right to reasonable periodic audits to determine the
   validity of all such paid claims for dealer compensation. Any chargebacks for
   warranty parts or service compensation and service incentives shall only be
   for the 12-month period immediately following the date of the claim and, in
   the case of chargebacks for sales compensation only, for the 18-month period
   immediately following the date of claim. However, such limitations shall not
   be effective in the case of intentionally false or fraudulent claims.

B. It shall be unlawful for any recreational vehicle manufacturer, factory
branch, distributor, or distributor branch to:

   1. Fail to perform any of its warranty obligations, including tires, with
   respect to a recreational vehicle;

   2. Fail to assume all responsibility for any liability resulting from
   structural or production defects;

   3. Fail to include in written notices of factory recalls to recreational
   vehicle owners and dealers the expected date by which necessary parts and
   equipment will be available to dealers for the correction of defects;

   4. Fail to compensate any of the recreational vehicle dealers licensed in the
   Commonwealth for repairs effected by the dealer of merchandise damaged in
   manufacture or transit to the dealer where the carrier is designated by the
   manufacturer, factory branch, distributor, or distributor branch;

   5. Fail to compensate its recreational vehicle dealers licensed in the
   Commonwealth for warranty parts, work, and service pursuant to subsection A or
   for legal costs and expenses incurred by such dealers in connection with
   warranty obligations for which the manufacturer, factory branch, distributor,
   or distributor branch is legally responsible or that the manufacturer, factory
   branch, distributor, or distributor branch imposes upon the dealer;

   6. Misrepresent in any way to purchasers of recreational vehicles that
   warranties with respect to the manufacture, performance, or design of the
   recreational vehicle are made by the dealer, either as warrantor or
   co-warrantor;

   7. Require the dealer to make warranties to customers in any manner related to
   the manufacture, performance, or design of the recreational vehicle; or

   8. Shift or attempt to shift to the recreational vehicle dealer, directly or
   indirectly, any liabilities of the manufacturer, factory branch, distributor,
   or distributor branch under the Virginia Motor Vehicle Warranty Enforcement
   Act (&#xA7; 59.1-207.9 et seq.), unless such liability results from the act or
   omission by the dealer.

C. Notwithstanding the terms of any franchise, it shall be unlawful for any
recreational vehicle manufacturer, factory branch, distributor, or distributor
branch to fail to indemnify and hold harmless its recreational vehicle dealers
against any losses or damages arising out of complaints, claims, or suits
relating to the manufacture, assembly, or design of recreational vehicles,
parts, or accessories, or other functions by the manufacturer, factory branch,
distributor, or distributor branch beyond the control of the dealer, including,
without limitation, the selection by the manufacturer, factory branch,
distributor, or distributor branch of parts or components for the recreational
vehicle or any damages to merchandise occurring in transit to the dealer where
the carrier is designated by the manufacturer, factory branch, distributor, or
distributor branch. The dealer shall notify the manufacturer of pending suits in
which allegations are made that come within this subsection whenever reasonably
practicable to do so. Every recreational vehicle dealer franchise issued to,
amended, or renewed for recreational vehicle dealers in the Commonwealth shall
be construed to incorporate provisions consistent with the requirements of this
subsection.

D. On any new recreational vehicle, any uncorrected damage or any corrected
damage exceeding three percent of the manufacturer&#8217;s or
distributor&#8217;s suggested retail price as defined in 15 U.S.C. §§
1231-1233, as measured by retail repair costs, must be disclosed to the dealer
in writing prior to delivery. Factory mechanical repair and damage to glass,
tires, and bumpers are excluded from the three percent rule when properly
replaced by identical manufacturer&#8217;s or distributor&#8217;s original
equipment or parts. Whenever a new recreational vehicle is damaged in transit,
when the carrier or means of transportation is determined by the manufacturer or
distributor, or whenever a recreational vehicle is otherwise damaged prior to
delivery to the new recreational vehicle dealer, the new recreational vehicle
dealer shall:

   1. Notify the manufacturer or distributor of the damage within three business
   days from the date of delivery of the new recreational vehicle to the new
   recreational vehicle dealership or within the additional time specified in the
   franchise; and

   2. Request from the manufacturer or distributor authorization to replace the
   components, parts, and accessories damaged or otherwise correct the damage,
   unless the damage to the recreational vehicle exceeds the three percent rule,
   in which case the dealer may reject the vehicle within three business days.

E. If the manufacturer or distributor refuses or fails to authorize correction
of such damage within 10 days after receipt of notification, or if the dealer
rejects the recreational vehicle because damage exceeds the three percent rule,
ownership of the new recreational vehicle shall revert to the manufacturer or
distributor, and the new recreational vehicle dealer shall have no obligation,
financial or otherwise, with respect to such recreational vehicle. Should either
the manufacturer, distributor, or the dealer elect to correct the damage or any
other damage exceeding the three percent rule, full disclosure shall be made by
the dealer in writing to the buyer and an acknowledgment by the buyer is
required. If there is less than three percent damage, no disclosure is required,
provided that the damage has been corrected. Predelivery mechanical work shall
not require a disclosure. Failure to disclose any corrected damage within the
knowledge of the selling dealer to a new recreational vehicle in excess of the
three percent rule shall constitute grounds for revocation of the buyer order,
provided that, within 30 days of purchase, the recreational vehicle is returned
to the dealer with an accompanying written notice of the grounds for revocation.
In case of revocation pursuant to this section, the dealer shall accept the
recreational vehicle and refund any payments made to the dealer in connection
with the transaction, less a reasonable allowance for the consumer&#8217;s use
of the vehicle as defined in &#xA7; 59.1-207.11.

F. If there is a dispute between the manufacturer, factory branch, distributor,
or distributor branch and the dealer with respect to any matter referred to in
subsection A, B, or C, either party may petition the Commissioner in writing,
within 30 days after either party has given written notice of the dispute to the
other, for a hearing. The decision of the Commissioner shall be binding on the
parties, subject to rights of judicial review and appeal as provided in the
Administrative Process Act (&#xA7; 2.2-4000 et seq.). However, nothing contained
in this section shall give the Commissioner any authority as to the content or
interpretation of any manufacturer&#8217;s or distributor&#8217;s warranty.

HISTORY: 1995, cc. 767, 816, § 46.2-1979; 1996, cc. 453, 1043, 1052; 2015, c.
615.