There is a common misconception that a consumer has three days to change his or her mind and back out of a contract after signing on the dotted line. This is not universally true. There are some specific instances where the law does give you the right to change your mind, but you must act QUICKLY.
Usually, a contract is binding once you sign it. If there is something you do not understand you should bring the contract to an attorney to clarify your legal rights and obligations BEFORE signing it. If the other party will not agree to attorney review, be suspicious of the terms of the contract. The contract is the final agreement, so if there are terms that are important to you, you need to double check that they are included in the written contract before signing it. Do not rely on the other party to make sure the terms you want are in the contract…
There are many high-pressure sales people out there whose job it is to close the deal. They are sometimes willing to stay on the phone with you or in your home for long periods of time to get you to sign. They may try and make you believe you will lose the deal if you take time to think about it. Do not be fooled by their sales pitch. You are perfectly entitled to walk away from any deal. There is no need to be polite to someone who is trying to pressure you to sign something you are not sure about.
High pressure sales people often target the most vulnerable consumers. This includes senior citizens, the disabled, persons recently discharged from the hospital, those without close family ties, and those who recently lost a loved one.
Back Out of the Signed Contract Legally
If you sign a contract and then change your mind and wish to back out, you need immediate legal advice to determine if you have a three-day rescission period available to you. Both state and federal law provide you with the right to back out within three business days after signing a contract in some situations.
The following are the major types of contracts where you have a three day right to back out, often called a “Cooling-Off Period”:
- Contracts where you use your principal residence (real estate) as collateral for a loan;
- Sales outside the home where the contract is entered into at a location other that the seller’s place of business (for example contracts signed by you with a door-to-door sales person in your home);
- Contracts to buy or sell real estate, which are subject to an “attorney review period” of three business days during which an attorney can reject the contract on your behalf;
- Health club membership contracts; and
- Contracts which include language allowing you a three-day right to back out.
If you take out a loan using your home as collateral, there is a three-day right to change your mind and back out. Likewise, if a home repair contractor knocks on your door and sells you home repairs, you have a three day right to back out.
Another example would be the situation where you go to a shopping mall and here is an automobile show and you buy a car. You have a three -day right to back out because you may not have intended to buy a car when going to the mall and got caught up in the car show and you need a cooling off period to reflect on that purchase. However, you do not get a three- day right to back out if you go into a car dealership to buy a car, because it is assumed that is what you intended to do when you knowingly entered.
In order to back out, you must sign and send back the rescission form provided by the seller, to the address on the form as instructed. Three business days do not include weekends or holidays. You should send it certified mail, return receipt so you can have proof that you sent it within the three-day period. Save a dated copy for your records. If you did not get a cancellation form, write a letter saying “I cancel the contract I signed with you on [date]” and mail it to the seller’s address on the contract.
Always be careful to read what you sign. Learn your legal rights and obligations before signing your name to any legal document.
