Exceptions to Cooling-Off Rule

• The Cooling-Off Rule does not apply to contracts or sales for under $25, for the sale of goods not intended for household or personal use, to mail or telephone transactions, to transactions conducted at a seller's permanent office or to sales in a location where a seller regularly sells its goods. Furthermore, the federal Cooling-Off Rules does not cover real estate transactions, the purchase of securities, insurance transactions or vehicle sales.
  
  

Rights to Cancel Disclosure

• The Federal Trade Commission requires that a seller covered by the Cooling-Off Rule provide a cancellation form and disclosure notifying consumers of their rights to cancel their sales without penalty within three business days.
  
  A common misconception exists that buyers and consumers have three days to rescind their contracts or change their minds for all loan transactions. Although the federal Cooling-Off Rule provides many protections for buyers, it does not cover all types of transactions between buyers and sellers.
  
  

Virginia Cooling-Off Rule

• In states such as Virginia, residents may have a right to rescind their transactions relating to real estate. In the commonwealth of Virginia, the Virginia Home Solicitation Sales Act allows Virginians to cancel their transactions if they are over $25 or not made in a seller's usual or permanent office. As such, mortgage transactions for over $25 that are entered into in an attorney's office or settlement closing office generally fall within the Virginia Home Solicitation Sales Act. However, the Virginia Legislature carved out a niche for non-refinancing loans.
  
  As such, the seller has an affirmative legal obligation to notify the consumer or borrower at the time of a refinance of her rights to cancel the sale. Furthermore, Virginia law requires lenders to provide borrowers with a specific "Buyer's Right to Cancel" in at least 10-point bold font located immediately above the homeowner's signature block.
  
  

Considerations

• Since consumer protection laws can frequently change, do not use this information as a substitute for legal advice. Seek advice through an attorney licensed to practice law in your state.