If you are a contractor offering home improvement services, understanding laws surrounding consumers’ rights to cancel services is essential.
Below is an overview of what you need to know to make sure you handle cancellations according to legal requirements.
Home Solicitation Sales Act
The Home Solicitation Act protects consumers from having to make an immediate decision when a salesperson offers them services of $25 or more at their home or any other non-business location. Under the Act, once the buyer signs a contract, they have three days to cancel it without being penalized. In order to legally cancel, the buyer must provide the contractor with written notice (in the form of a letter or email) of their intention to cancel. They do not need to provide a reason.
As a part of the written, signed, and dated contract you sign with the buyer, you must provide a cancellation section that states that the buyer may cancel the transaction prior to midnight on the third business day after the date of the transaction.
Additionally, you must give the buyer a duplicate Notice of Cancellation form they can use to cancel the transaction. The buyer may use this form, or write a letter or email, notifying you of the cancellation.
If the contract was signed at the contractor’s usual place of business, the rules above do not apply under the Act and the buyer must adhere to the contract.
In addition, if all of the following are true, the contract is not covered under the Act:
- The dollar amount of the contract is $750 or less
- The buyer initiated the contract with the contractor
- The contractor does not sell the buyer services beyond those necessary to complete the services originally requested
- The contract includes a signed statement by the buyer that they initiated the negotiation of services
Other Reasons for Cancellation
Even if the buyer’s contract is not covered under the Act, they can still cancel services if their consent to the services was obtained through duress or fraud. They can also cancel if you make a mistake, or if the services you provided are deemed unfit by the buyer.
Your Duties as a Seller
After a buyer has provided notice of cancellation, you have 10 days to return any payments made. In addition, if you performed services prior to the cancellation, you are not entitled to compensation for them. In addition, if you have altered the buyer’s property, you must restore it to the condition it was in prior to delivering services.
There are many other laws that govern the provisions of a Home Improvement Sales Contract, ranging from the scope of work and mechanics liens notices, to the amount of money that can be received as a deposit. You should consult an attorney like Scott J. Harris, Esq., to ensure your contract comports with the law. Click to schedule a free, 30-minute consultation or call us at 323-794-0701 or at 877-865-6218.