Cancel Your Contract in 3 Days

Hindsight is always 20-20. That new kitchen didn't seem so wonderful after you looked for a while at your signature on the $20,000 remodeling contract. What do you do when the thrill is gone and your worries balloon into major anxiety? Fortunately, if you act fast enough, you can cancel a contract signed in your home with no questions asked, thanks to the federal 3-Day Cooling Off rule.

In most situations, if you buy something at home, anything from a vacuum cleaner to major remodeling job, you're protected by the Federal Trade Commission's (FTC) Cooling-Off Rule. As long as the item costs $25 or more, the Cooling-Off Rule gives you three days to cancel the purchase. The Cooling-Off Rule applies to sales at the buyer's home, workplace or dormitory. It even applies to facilities rented by the seller on a temporary or short-term basis, such as hotel or motel rooms, convention centers, fairgrounds and restaurants.

Suppose the roofing company salesperson comes to your home, and says if you act now on the fall season special, he'll give you a special deal on a new roof. You sign the contract and put down a deposit. But a day later you wonder whether the deal is so special, after getting other estimates. Don't worry, your right to cancel for a full refund extends until midnight of the third business day after the sale. In fact, the salesperson is required to tell you about your cancellation rights and give you two copies of a cancellation form (one to keep and one to send) and a copy of your contract or receipt. The contract or receipt should be dated, show the name and address of the seller, and explain your right to cancel.

If the seller did not give you cancellation forms, you can write your own cancellation letter. It must be post-marked within three business days of the sale. (Saturday is considered a business day; Sundays and federal holidays are not.) You don't need to give a reason for canceling your purchase under the FTC rule. It's OK to change your mind. Because proof of the mailing date and proof of receipt are important, consider sending the cancellation form by certified mail so you can get a return receipt. Or, consider hand delivering the cancellation notice before midnight of the third business day. Keep the other copy of the cancellation form for your records.

Remember, the Cooling-Off Rule does NOT cover sales that are:

• under $25

• made entirely by mail or telephone

• for goods or services not primarily intended for personal, family or household purposes

• the result of prior negotiations at the sellers permanent business location where the goods are sold regularly

• needed to meet an emergency, for example, for treating a sudden bug infestation in your home, when you waive your right to cancel

• made as part of your request for the seller to do repairs or maintenance on your personal property (purchases made beyond the maintenance or repair request are covered)

• real estate, insurance, or securities sales

• automobiles, vans, trucks, or other motor vehicles sold at temporary locations, provided the seller has at least one permanent place of business