John Roska: When a 3-day right to cancel sale applies
Q: When is there a three-day right to cancel a sale? I tried to cancel a car sale within three days, and the dealer refused.
A: The idea that you can cancel any sale or contract within three days is a myth. Some sales can be canceled within three days, but not very many.
The two kinds of sales you can cancel within three days are: door-to-door sales; and when your house is collateral for the loan. Otherwise, without fraud or something else, you're at the mercy of the merchant's return or cancellation policy.
Many merchants have generous policies. Wal-Mart, for example, will refund your money within 90 days, even without a receipt. But their policy is voluntary, made out of the goodness of their heart — and a desire to cultivate loyal customers.
The legal right to cancel within three days permits people with "buyer's remorse" to get out of deals they regret. (On Bloomsday, it would be agenbite of inwit.) By allowing second thoughts, the three-day "cooling-off period" protects people in situations the law considers to be especially vulnerable.
Door-to-door sales can be canceled within three days because they're notoriously high-pressure — people say yes just to get the salesman to leave. The classic Fuller Brush Man type of door-to-door sale may be disappearing, but the basic federal rule extends from "sales made at home" to those "made at other locations."
The Federal Trade Commission rule about such "off-premises" sales specifically says it applies to sales at "facilities rented on a temporary or short-term basis, such as hotel or motel rooms, convention centers, fairgrounds and restaurants, or sales at the buyer's workplace or in dormitory rooms."
But the three-day right to cancel does not apply to automobile auctions or "tent sales" (as long as the dealer has a fixed place of business somewhere), or to arts and crafts fairs. Those both have special exemptions from the rule.
The other kind of deal you can cancel within three days, besides door-to-door and "off-premises" sales, is a sale or loan where your house is collateral for the loan. The federal Truth-in-Lending Act, calls it the "right of rescission."
NOTE: This particular right to cancel does not apply to loans used to buy your house. It only applies when you refinance a regular mortgage, to home equity loans, and when you finance something besides your house but use your house as collateral. A roof repair loan, secured by your house, is an example of that last kind of transaction.
Whenever a three-day cooling-off period applies, you get three business days to cancel, and must get two sets of forms you can use to cancel. If you don't get the forms, you have a "continuing right to cancel," beyond the three days.
You may also have a continuing right to cancel if the seller or lender misstates your right to cancel, or gives you the runaround, like Al Pacino did to the canceling buyer in "Glengarry Glen Ross."
John Roska is a lawyer with Land of Lincoln Legal Assistance Foundation. You can send your questions to The Law Q&A, 302 N. First St., Champaign, IL 61820. Questions may be edited for space.