If you think cancellation rights only apply to in-home sales, think again.
Most contractors know that if you are demonstrating and executing contracts in the consumer’s home, you must provide each buyer with two copies of a cancellation form. (That means four copies to a husband and wife, for those counting!) The cancellation form must contain — in immediate proximity to the buyer’s signature lines — a “notice of the right to rescind,” in at least 10-point bold typeface.
But what has been tripping up contractors over the past few years is thinking that they don’t have to provide a right of cancellation if they close the sale in a showroom. Generally, that’s true, but some states, such as New Jersey and Pennsylvania, have laws requiring the contractor to provide a right to cancel a sale of home improvement goods no matter where the sale takes place.Contractors need to take note, especially those working in big-box stores or relying in part on showroom closings.
Each state also has its own version of the door-to-door cancellation right — and on occasion state disclosures are more burdensome than the disclosure required by the Federal Trade Commission.
Some states consider compliance with the FTC rules to waive you out of having to comply with that state’s own rule. Pennsylvania, Ohio, and Colorado follow this concept, for example.
Other states have different disclosure requirements. In Delaware, for example, the notice must be printed in a different color from the rest of the contract. New Jersey and the District of Columbia require different language than the FTC, as does Michigan, which also requires the notice of the right to rescind and the rescission form to be at least two point sizes larger than the contract text.
Some states have more restrictive rights of rescission than the FTC’s: North Dakota requires a rescission period of 15 business days for buyers 65 or older, or a 30-day return guarantee.
—D.S. Berenson is the Washington, D.C., managing partner of Johanson Berenson LLP, specializing in the home improvement industry. 703.759.1055, email@example.com.
This article is for informational purposes only and should not be construed as legal advice.