From the CA Dept. of Consumer Affairs web site:
Read "E" Waiver of Cancellation Rights
CONTRACTING WITH A CONTRACTOR:
THE HOMEOWNER'S RIGHTS TO CANCEL
January 2010
Homeowners who enter into contracts with contractors to improve, remodel or repair their homes almost always have a right to cancel the contract, without any penalty or obligation, within three business days after signing the contract. A homeowner may also have a right to cancel a contract after three days in limited, extraordinary, situations.
The homeowner's cancellation rights are created by both state and federal laws. This Legal Guide explains the applicability and the procedural requirements of the following cancellation provisions:
California's Home Solicitation Sales Act – allows the buyer in almost any consumer transaction involving $25 or more, which takes place in the buyer's home or away from the seller's place of business, to cancel the transaction within three business days after signing the contract.1
California's post-disaster home repair provisions – automatically voids many contracts for the repair or restoration of a consumer's home signed in the aftermath of a disaster.2
The federal Truth in Lending Act – provides a three-business-day cancellation period to many buyers in situations where the home improvements are to be financed and involve a security interest in the buyer's home.3
California's Business and Professions Code section 7163 – adds to the federal Truth in Lending Act's consumer protections during the three-business-day cancellation period, and in situations where the contract is not enforceable.4
While the homeowner's cancellation rights under these provisions are broad, each law contains important exceptions and limitations. It is helpful for a homeowner to understand these rights and limits, before he or she enters into a contract with a contractor or attempts to cancel the contract.
The homeowner's rights to cancel under the California provisions are in addition to other rights the homeowner may have to cancel the transaction.(See part V, below)5
I.
HOME SOLICITATION SALES ACT
A home improvement contract, and almost any other consumer transaction involving $25 or more, which takes place in the buyer's home or away from "appropriate trade premises," can be canceled by the buyer, without giving a reason, and without penalty or obligation, within three business days after the buyer signs the contract.
A. Explanation of Terms
1. "Appropriate Trade Premises"
"Appropriate trade premises" means the place where the seller or owner normally carries on his or her business, or where goods normally are offered for sale in the course of a business that is carried on at those premises.6
The Home Solicitation Sales Act ("Act") most commonly applies to sales made in the consumer's home. However, the Act's right to cancel is present when the contract or offer is made anywhere other than the seller's place of business.7 The Act therefore applies to any place where the seller normally conducts business. 8 For example, one court has stated that the cancellation provisions would apply to sales made at a swap meet, or in an airplane.9
2. "Home Solicitation Contract"
Generally, a contract or offer in the amount of $25 or more for the sale, lease, or rental of consumer goods, services, or both, which is made at other than "appropriate trade premises," is a "home solicitation contract."10 The two most important exceptions to this general rule are:
Any transaction which is subject to rescission (cancellation) by the buyer under the federal Truth in Lending Act is not covered by the Act.11 This rescission right is discussed at III below.
Contracts with a licensed contractor for repair services are not covered if all of the following are true: (a) the contract price is $ 750 or less; (b) the buyer initiated the contract with the contractor to request the work; (c) the contractor does not sell the buyer goods or services beyond those reasonably necessary to take care of the particular problem that caused the buyer to contact the contractor and no payment is due or accepted by the contractor until the work is completed; and (d) the contract contains a written and dated statement, signed by the buyer, that he or she initiated the negotiations.12
B. Consumer's Right to Cancel
A buyer can cancel a home solicitation contract without giving a reason or showing any legal Acause,@ and, without penalty or obligation, by giving the seller written notice of cancellation within three business days after the buyer signs the contract.13
To cancel, the buyer need only give the seller a written statement (for example, a letter or e-mail message) stating the buyer's intent not to be bound by the contract.14 If the seller has not complied with certain notice requirements, the cancellation period begins when the seller has complied.15 If the buyer's signature was produced by fraud, the cancellation period may extend indefinitely.16
II.
HOME REPAIR OR RESTORATION CONTRACTS FOLLOWING A DISASTER
Subject to important qualifications and exceptions, a contract for the repair or restoration of a consumer's home signed in the aftermath of a disaster may automatically be void.
A. Explanation of Terms
1. "Appropriate Trade Premises" and "Home Solicitation Contract"
These terms have the same meaning as in the Home Solicitation Act. See I.A. above.
2. "Disaster"
"Disaster" means an earthquake, flood, fire, hurricane, riot, storm, tidal wave, or other similar catastrophic occurrence for which a state of emergency has been declared by the President of the United States, or the Governor, or for which a local emergency has been declared by the executive officer or governing body of any city, county, or city and county.17
3. "Solicitation"
Consumer "solicitation" following a disaster includes a telephone call from the consumer to the contractor's appropriate trade premises, regardless of whether the consumer's call responds to a prior home solicitation.18
B. General Rule – Contract Void; Exceptions
A home solicitation contract or offer for the repair or restoration of a consumer's home following a disaster is automatically void if both of the following are true:
The consumer signed the contract in his or her home or anywhere away from the contractor's appropriate trade premises; and
The consumer signed the contract or offer after the disaster caused damage to his or her residence, but before midnight of the seventh business day after the date the damage occurred.19
However, even if both of these criteria are met, the contract is not void under this law if one of the following is true:
The consumer, the consumer's agent, or the consumer's insurance representative solicited the contract or offer, regardless of where the contract was signed;20 or
The consumer has properly waived the automatic voiding of the contract (see E. below).21
*"Void" means that the contract has no effect and the consumer is not bound by it.
C. Consumer's Cancellation Rights Where Contract Not Automatically Void
If the contract or offer is not automatically void, the consumer may still cancel the contract until midnight of the seventh business day after the day on which the consumer signed and dated the contract.22
If the consumer decides to cancel the contract, the consumer must send the contractor a written notice of his or her decision. The consumer may use the Notice of Cancellation form that the contractor has provided (see D. below) but the consumer is not required to use this form. The consumer's notice need only be in writing and express the consumer's intent not to be bound by the contract or offer.23 For example, the notice may be handwritten (a note or a letter) or may be a telegram.
The consumer's written notice of cancellation must be sent to the contractor at the address specified in the contract or offer.24 If the notice is given by mail, it is effective when it is deposited in the mail, properly addressed, with postage prepaid.25 The consumer should take care to assure that notice given by any other means arrives at the address specified in the contract by the end of the seven-business-day period. See III.E. below for additional practical considerations regarding the consumer's notice of cancellation to the contractor.
D. Contract and Notice Provisions
The home solicitation contract or offer for repair or restoration of the consumer's residence must be in writing, and must be in the same language (for example, Spanish) as was principally used in the sales presentation. The contract must contain a statutorily-prescribed notice of the seven-business-day cancellation period.26 In addition, at the time the consumer signs the contract or offer, the contractor must orally inform the consumer of the consumer's right to cancel.27 These requirements seek to assure that the consumer is actually aware of his or her statutory right to cancel.
The contractor must give the consumer a copy of the contract when the consumer signs it.28 The contractor also must give the consumer duplicate, completed, "Notice of Cancellation" forms which contain a statutorily-prescribed notice which the consumer can use to notify the contractor of the consumer's decision to cancel the transaction. These forms must be in the same language as used in the contract. They also must be attached to the contract or offer, and must be easily detachable from it.29 This allows the consumer to cancel the contract by simply signing and dating the "Notice of Cancellation" form and then returning it to the contractor as described at C. above.
E. Waiver of Cancellation Rights
The consumer can waive the automatic voiding of the contract, and his or her right to cancel the contract if it is not automatically void, in a real emergency in which the consumer needs the goods or services immediately and cannot wait for the cancellation period to end. ("Waive" means to give up a right with knowledge of the right and the effect of the waiver.) All of the following must be true in order for the waiver to be valid:
The contract must be for emergency or immediate necessity repairs or services which are necessary for the immediate protection of people or property;
The consumer, the consumer's agent, or the consumer's insurance representative must have initiated the contract; and
The consumer must give the contractor a separate signed and dated personal statement which describes the situation, and which expressly acknowledges and waives the consumer's right to cancel.30 The consumer's personal statement must be in the consumer's own handwriting.31