Can I cancel a contract within three days of signing it?

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Question:

I've heard of a law that allows consumers to bail out of sales -- including cars and houses -- within 72 hours of the sale. What are the specifics?

Answer:

Bailing out of a purchase you've agreed to isn't quite that easy -- a contract is, after all, a contract. However, both federal and state laws contain some quick escape provisions, mostly designed to protect consumers from decisions they may have been pressured into.

For example, there is a federal law (and similar laws in every state) allowing consumers to cancel contracts made with a door-to-door salesperson within three days of signing. You might use that law after hastily agreeing to have someone repave your driveway, deliver lawn fertilizer, or put a new roof on your house.

Another federal law allows you to cancel most contracts for second mortgages or refinances of your home within three days of signing. But this law does not allow you to cancel a contract for a mortgage you got to purchase your home.

In addition, many states allow you to cancel written contracts covering the purchase of certain goods or services within a few days of signing. Examples include contracts for dance or martial arts lessons, health club memberships, dating services, weight loss programs, time share properties, and hearing aids.

No law gives you the right to cancel a contract to buy a car. But there is such widespread misunderstanding about this that some states require car dealers to specifically notify car buyers that they do not have the right to cancel the contract.

For more information on canceling contracts, see Nolo's article Canceling a Contract Within Three Days.

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