“If I give my state’s 3-day cancellation
notice, do I also have to give the federal 3-day notice?”
A simple question. And a good one. But
the answer gets complex.
Here’s the easy part. The federal 3-day
cancellation notice is always required when any improvement to a primary residence
will create a lien on that property. Since all states grant mechanics' lien rights
for improvements to private property, the federal cancellation notice is always
required. But note the word primary. The federal notice is not required on
a secondary residence, such as a vacation home.
Now, let’s talk about state cancellation
notices. Nearly all states require a 3-day cancellation notice when home improvement
services are sold at the project site. That’s a home solicitation sale. But
thirty-one states waive their state 3-day home solicitation
notice if the contract includes the federal 3-day home improvement notice. So,
in those thirty-one states, no state notice is required if you give the federal
notice.
Caution: Be careful in these 31 states
when work is not on the primary residence of your client. The state notice may be
required even if the federal notice is not. Note also that wording of the notice
varies from state to state.
Law is different in the remaining 20
states (including the District of Columbia):
Fourteen states (FL, GA, HI, IN, MI,
MO, NH, NJ, NY, ND, OK, VT, WV and WY) waive their 3-day home solicitation notice
if the deal is signed at the office of the seller or if the sale started with an
invitation from the owner. I call this the big box store exception. This is why
most Home Depot and Lowes home improvement contracts skip their state cancellation
notice but include the federal notice.
Rules vary in the other states:
- Alaska requires a 5-day notice unless the deal was initiated by the owner.
- Connecticut always requires the state notice.
- District of Columbia never requires a home solicitation sales notice.
- Texas waives the state notice if the contract includes the 3-day notice required by the Federal Door-to-Door Sales Act. Since the federal door-to-door notice isn’t required when a federal 3-day home improvement notice is in a contract, Texas home improvement contracts need both the Texas home solicitation notice and the federal home improvement notice.
- Washington requires a state cancellation notice only on roofing and siding jobs.
Now the fine points
Federal law considers Saturdays a business
day. So, an owner who signs a home improvement contract on Friday has until midnight
the following Tuesday to cancel. Most state laws don’t count either Saturday
or Sunday as business days. The same owner would have until midnight the following
Wednesday to cancel if the state notice is required. This is an important
distinction. Contractors have to write on the cancellation form the last day the
contract can be rescinded.
An entirely different set of rules apply
if you offer a credit term or recommend a lender. Better to leave the lending to
others.
Eighteen states (AL, AZ, GA, IL, IN,
KY, LA, MI, MO, MS, NE, OK, SC, SD, TN, UT, WI, WV) have different 3-day cancellation
rules if any part of the cost will be covered by insurance.
In an emergency, the owner can waive
the right to cancel under federal law. Some states offer the same option. But you
still have to deliver the 3-day cancellation notice.
Finally, be aware that the penalty for
a faulty 3-day notice is severe. Under federal law, the owner has three years to
bring suit for a refund. Many states label it “consumer fraud” when a contractor
omits the state cancellation notice.
If all this has your head swimming, don’t
worry. Construction Contract Writer sorts out all the details. With CCW, you’ll
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