The 3-Day Notice of Cancellation
As most contractors know, the Federal Trade Commission (FTC) issued a “door-to-door” sales rule many years ago that was designed to protect unsuspecting homeowners from being victimized by door-to-door salespeople. (The ones who sold pots and pans, encyclopedias and vacuum cleaners, for example).
What often happened in these situations is the homeowner would sign a document to purchase an item which usually turned out to be more expensive than they thought or more than they could afford.
Ultimately, their house would be foreclosed on since they gave (usually unknowingly), the mortgage on their home as security, or, personal property. This would be taken away as part of a judgment for failing to pay or not paying on-time.
During the legislative hearings leading to passage of this rule, it was noted that salespeople for improvements of property were also guilty of such tactics. Roofing and siding contractors were specifically mentioned. So, Congress included all property improvement agreements.
Since passage into law, all property improvement contracts signed in the home and involving a cost of $25 or more, require that a bold faced three day cancellation notice be placed near the signature line on the actual contract. In addition, and this is what many contractors fail to understand, you must also give that customer a separate Notice of Cancellation.
This form completely explains the three-day cancellation law and the steps needed to cancel the contract. It must include a copy for the customer to return to the contractor to cancel and a copy for the customer to keep for their records. Of course, the contractor should also have a copy as proof the notice was provided.
What happens if you do not give this notice? Well, simply put, the customer then has no obligation, under law, to carry out their portion of the contract, namely, not paying you for the work done. Until you give them the notice, the customer does not have the mechanism, provided by law, to cancel.
If you for forget and give it to them late or at the end of the project, they can legally cancel the contract at whatever time you give it to them. They are under no legal obligation to pay for anything done prior to the time they were given their Notice of Cancellation. Even if you never give them notice and even if the work was done to everyone’s satisfaction, they are not required to pay.
You can purchase any of our forms or agreements at the Catalog
page.
