What is the three day right of rescission?

Question

What can you apply it to and does it only work in different states?

Answer 1

It's a state law (check with your state).

Essentially, any written contract can be rescinded within 3 days.   It is a consumer-protection law that protects people from fast-talking salesmen who get people to sign papers without them fully realizing what they were getting into.

If your state has the law on the books, it is "automatic"... there isn't anything to "sign up for".

Answer 2

Federal law gives you a cooling-off period when you get a home equity loan or line of credit, or when you refinance with another lender.

It is called the right of rescission. It allows you to rescind, or cancel, some types of home loans and walk away without losing money. The right of rescission provides a three-day period when you can back out of the loan before you get the borrowed money, no questions asked. Within 20 days, the lender must give up its claim to your property as collateral and must refund any fees you paid.

The text of the law is found here:

http://www4.law.cornell.edu/uscode/uscod...

Most states also have such laws which also apply to some (but not all) consumer purchase transactions.  These are typically sales that take place in your home, such as an in-home party purchase, etc.  

To find out how it works in your state, do an internet search for your state's Statutes and look at the Consumer protection laws.

Answer 3

This is for real estate closings and it is a three-day period where either party, buyer or seller, can back out of the deal most of the papers have been signed. It allows people some extra time to reconsider the transaction before it is finalized.

Answer 4

The three-day right of rescission applies ONLY to contracts signed IN YOUR HOME with a company with which you do not have a prior business relationship.

If you go to the car dealership and sign a contract, you're bound to it. If you go to a time-share sales meeting and buy a vacation timeshare, you're bound to it. If your alarm company salesman comes to your home and you sign a renewal, you're bound to it. If a door-to-door salesman talks you into signing up for an alarm system, you have three days in which you can change your mind.

In some States it applies only to 'cold calls' - ie if you call them and ask them to come and show you their alarm system, you're bound.

Richard

Answer 5

In real estate it allows you (if you are refinancing your home) to look at your closing docs for 3 days before the loan funds.  You may cancel during that time.  This is a federal law & is required in all 50 states.  It does not apply when you purchase a home & does not apply to the seller (as one of your answeres said).  Also it only applies to owner occupied property not rental or investment.