The Cooling-Off Rule and Sales Made in the Home

Why this matters

Most residential shops sell at the kitchen table, and the kitchen table is exactly where federal law gives the buyer a second chance. The FTC's Cooling-Off Rule lets a customer cancel many sales made in their home for three business days, and it requires the seller to tell them so, out loud and in writing, in a set form. Shops get this wrong in two directions. Some never give the notice at all and find out when a family cancels a finished job weeks later. Others think every in-home ticket is covered and refuse to start an emergency repair that the rule exempts. This card lays out when the rule applies, what it requires, how to count the days, the exceptions a service business actually uses, and where state law adds more, especially for older buyers.

When it applies: the gates come first

The rule is 16 CFR 429. It covers a sale of consumer goods or services when all of these are true:

• The sale is made at the buyer's home, or at a place that is not the seller's permanent place of business (a hotel room, a rented hall, a fair booth, a buyer's workplace).
• The purchase is above a small dollar threshold the rule sets. There are two thresholds: a lower one for sales at the buyer's home and a higher one for sales at other temporary locations. Almost every residential service ticket clears the home threshold; check the current figures in the rule text.
• The buyer is a consumer, buying for personal, family or household purposes. A landlord buying for a rental business or a company buying for its office is outside it.

If all three hold and no exception applies, the buyer has until midnight of the third business day after the date of the transaction to cancel. That is the federal floor; some states give longer, below.

What it does not cover, regardless of where the conversation happened:

• A sale made entirely by phone, mail or online, with no in-person sales contact before delivery.
• A sale made at the seller's own place of business, such as a showroom.
• Real estate, insurance and securities.
• A buyer-requested repair or maintenance visit, covered under its own heading below.
• A bona fide emergency, with the handwritten waiver below.

What the seller must do

Four requirements, all at the time of sale:

1. Tell the buyer orally about the right to cancel.
2. Give a completed contract or receipt showing the date, the seller's name and address, and a cancellation statement placed next to the buyer's signature or on the front page, in bold type of at least 10 points.
3. Give two copies of a Notice of Cancellation form, filled in with the date of the sale and the deadline, easy to detach, one for the buyer to send and one to keep.
4. Use the language of the sales presentation. A sale pitched in Spanish needs the contract and notices in Spanish.

The contract statement and the form text are set in the rule. Here is what the filled-in pieces look like on a real ticket:

CONTRACT, near buyer signature (bold, 10 pt min):
 YOU, THE BUYER, MAY CANCEL THIS TRANSACTION AT ANY
 TIME PRIOR TO MIDNIGHT OF THE THIRD BUSINESS DAY
 AFTER THE DATE OF THIS TRANSACTION. SEE THE
 ATTACHED NOTICE OF CANCELLATION FORM FOR AN
 EXPLANATION OF THIS RIGHT.

NOTICE OF CANCELLATION (two copies, detachable)
 Date of transaction: Fri Oct 9
 ...you may cancel within three business days...
 To cancel, mail or deliver a signed and dated
 copy of this notice to:
   [Shop name, street address]
 NOT LATER THAN MIDNIGHT OF: Wed Oct 14
 I HEREBY CANCEL THIS TRANSACTION.
 (Date) ________  (Buyer signature) __________

The deadline date on the notice is the field shops leave blank most often, and it is the one the buyer needs.

After a cancellation, the seller has ten business days to refund every payment, return any trade-in, and cancel any security interest, and ten business days to tell the buyer whether it will collect any goods left behind. If the seller does not pick them up within 20 days of the notice, the buyer may keep them. The seller also may not sell or assign the contract or the buyer's note to a finance company before midnight of the fifth business day.

And the seller may not misrepresent the right: no "that only applies to vacuum salesmen", no talking the buyer out of it.

Counting business days

Under this rule a business day is any calendar day except a Sunday and the federal holidays named in the rule's own definition at 16 CFR 429.0 (Columbus Day, Veterans Day, Thanksgiving and Christmas among them). That list is old and does not track every newer federal holiday, so count from the rule text, not from the calendar on the office wall. Saturdays count. That surprises people, and it is the most common counting error.

Day 1 is the first business day after the sale. The sale day itself is not counted.

Worked example: the deadline on that ticket

A heating shop sells a furnace replacement in a customer's living room on Friday, October 9. The customer, a homeowner buying for her own house, had called for a quote, not a repair. The rule applies.

• Saturday, October 10: business day 1.
• Sunday, October 11: not a business day.
• Monday, October 12: Columbus Day, a listed holiday, not a business day.
• Tuesday, October 13: business day 2.
• Wednesday, October 14: business day 3.

Deadline: midnight Wednesday, October 14, which is what goes on the notice above. A tech who counted calendar days from Friday would have written Monday; a tech who skipped Saturday would have written Thursday. Both are wrong, and the first one tells a customer their right ends before it does, which is itself a misrepresentation.

Scheduling the install. The rule does not forbid starting work inside the window, but if the customer cancels after you have installed a furnace, you owe the full refund and must arrange to collect the equipment. The practical rule most shops use: schedule non-emergency installs for the first business day after the deadline, here Thursday, October 15, and do not order special-order equipment that cannot be returned until then.

What changes the answer. If the same sale were made to a buyer 65 or older in California, the state's home-solicitation law gives five business days, not three, pushing the deadline to Friday, October 16 at the earliest, and California counts business days under its own definition, so re-count with the state rule. If the customer had walked into the shop's showroom and signed there, no federal cooling-off right would attach at all.

The repair-visit exception, and where it stops

If the customer initiated contact and asked you to come to the house to repair or maintain their property, the repair is exempt. A customer who calls with no heat and has the tech replace an igniter has no federal cooling-off right on that repair.

The exemption stops at the edge of what they asked for. If, during that visit, the tech sells additional goods or services other than the replacement parts needed for the repair, those additional items are not exempt. On a no-heat call:

• The igniter, the labor to fit it, and a tune-up the customer asked for: exempt.
• A humidifier, a new thermostat the customer did not need for the repair, or a replacement furnace sold because the old one is near the end of its life: covered. Give the notice for those.

That split is where in-home sales disputes come from. See related: The Adult Child Says Mom Was Overcharged, which turns on exactly this line.

The emergency exception, and the handwriting

A buyer can waive the three days for a bona fide immediate personal emergency (no heat in January, water pouring through a ceiling, a failed sewer line) when the buyer initiated the contact, and the buyer writes and signs a separate, dated personal statement in their own handwriting describing the emergency and expressly waiving the right to cancel. A pre-printed waiver the customer signs does not meet the rule; the statement has to be in their words and their writing.

In practice, the repair-visit exception already covers most emergency repairs. The handwritten waiver matters when the emergency calls for something beyond a repair, such as a full replacement that has to go in today because the old unit cannot be fixed. A shop that relies on it should have the tech keep a blank sheet for the purpose and photograph the statement into the job record. A waiver written by someone who does not understand what they are giving up is worth little; see related: Capacity to Contract: The Signs and What to Do.

State law on top

The federal rule is a floor. Where a state gives the buyer more, the buyer gets more. This is not legal advice, and the state layer is the part to confirm with your attorney or your state attorney general's consumer office before you rely on a form.

• California has its own home-solicitation law in the Civil Code (Section 1689.5 and following). It gives buyers aged 65 or older five business days instead of three, and gives longer, seven days, for home repair contracts made after a declared disaster. California home-improvement contracts are also regulated under the Business and Professions Code, including a cap on the down payment (ten percent of the contract price or a small fixed amount, whichever is less) and required contract language.
• Other states have home-solicitation statutes that mostly mirror three business days, often with their own notice wording, type-size and language rules, and some regulate home-improvement contracts separately with license-number and down-payment requirements. Search your state's code for "home solicitation sale" and "home improvement contract".
• Where both apply, use the longer deadline and include both notices if the state requires its own wording. A form that satisfies the FTC but not the state can still leave the window open under state law.

What a compliant in-home sale leaves behind

On every covered sale, the job file should hold: the signed contract with the cancellation statement by the signature, a copy of the filled-in notice with the deadline written in, a note that the right was explained orally and in which language, and, if used, a photo of the handwritten emergency waiver. If the contract is delivered electronically, keep the customer's consent to electronic delivery, and still leave a paper notice: an email to an address the customer never reads is a poor substitute for a form in their hand.

References

• FTC Cooling-Off Rule, 16 CFR 429 (coverage, the contract statement and Notice of Cancellation form, business days, repair and emergency exceptions, refund timing)
• FTC consumer and business guidance on the Cooling-Off Rule (current threshold amounts)
• California Civil Code Section 1689.5 and following (home solicitation contracts, including the longer window for buyers 65 and older)
• See related: The Adult Child Says Mom Was Overcharged