Federal Trade Commission Cooling-Off Rule
The Federal Trade Commission (FTC) Cooling-Off Rule allows you to cancel a contract when you purchase something at your home or at a location that is not the permanent place of business for the seller. But not all sales can be canceled under this rule. Exemptions include sales that are under $25, goods or services that are not designed for use in the home, sales made by mail or over the phone, a sale that is arranged from prior discussions at the seller's permanent place of business, goods or services needed for an emergency, and repairs to personal property that are solicited by the buyer.
The Cooling-Off Rule does not cover transactions that involve real estate, securities or insurance, automobiles sold at a temporary location (as long as the seller has a permanent place of business) and arts and crafts sold at fairs.
Home Equity Loans
The Truth in Lending Act gives consumers the same 72-hour protection as the Cooling-Off Rule. This law gives you the right to cancel a home-improvement loan or a second mortgage. The law requires the lender to inform you of your right to cancel and to give you a cancellation form.
Most states give consumers 72 hours to cancel contracts for home repairs. The time is generally calculated in the same manner as the above laws.
Even when state law does not give you a 72-hour cancellation period, you may have this right because it is stated in the contract. If the right is not in your contract, negotiate with the seller for a provision giving you a right of cancellation.
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