you cancel? The right of rescission
Real Estate Adviser,
Is there a right of rescission when you sign
a contract on a residential property? It seems to me there used
to be a three-day clause, but I can't recall. And if there is, what
are the rules for doing so? Thank you for your time.
State and city laws vary on this. But there's a good chance you
can't cancel the contract except in cases of fraud, nondisclosure,
misrepresentation or where specific contingency clauses were not
met that you (I hope) had placed into the contract.
That's why it's imperative that consumers are 100-percent
certain they want to purchase a property before signing a sales
contract, and that they fully comprehend all the terms of said contract.
It is a binding deed.
There is, however, a federal law that provides a three-day
"right-of-rescission" period for residential properties, but it
doesn't apply to loans made for the purchase of real estate. It
only covers borrowers
who are getting certain home equity and refinancing loans for
their primary residence, or who are securing an extension of credit.
A rescinding in this case entitles the would-be borrower
to a refund of all fees paid in advance of getting the refinancing
loan, including title search fee, inspection fees, escrow fees,
etc. It's essentially a "cooling-off" law created by the Federal
Truth in Lending Act to help protect certain borrowers from such
things as high-pressure sales tactics, door-to-door remodeling scams
(and to protect overzealous consumers from themselves).
Some states, such as Florida, do have rescission laws
that protect condominium buyers or time-share buyers from developers
in certain circumstances, but it doesn't apply to conventional mortgage
On the off chance you're referring to a listing contract
you'd like to break, it's generally not a problem to get the agency
to terminate the agreement if you are dissatisfied with the level
of effort or service by the agent.
If that's not the case, here's another tidbit to chew
over. In the event you have been deceived by the seller or broker
in the deal, you are protected under the Deceptive Trade Practices
Act. If something really untoward has happened to you in this transaction,
such as nondisclosure of still-prevalent flood damage, then you
can pursue rescission through legal or lender channels, or be eligible
to recover damages, depending at what stage of the transaction you're
Or sometimes the buyer and seller and agents can agree
to simply terminate the contract to avoid a big mess. It might be
worth a try.
Failing that, you probably ought to talk with a real
estate attorney if you really want out of this thing. Good luck.
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