Most of the time, a contract is binding once agreement is reached. In limited situations, either federal or NC law allows you to cancel a contract in a short period of time, even if you signed the contract. The time to cancel is short, usually 3 business days. The seller is required to tell you when you have a right to cancel, but you have that right in the transactions described in the list below, even if the seller fails to tell you.
Cancellation means a refund of money paid and not having to make future payments. Goods must be returned at your expense, in as good a condition as you received them.
Which contracts can be canceled?
· Home solicitation sales or other sales away from the seller’s normal place of business, like at fairs. (However, the right to cancel does not apply to sales of less than $25, sales or rentals of real estate, sale of insurance or securities, sales made entirely by phone or by mail, or sales made elsewhere after negotiating the deal at the seller’s normal place of business.) If goods aren’t delivered within 30 days of a home solicitation contract and delay is the seller’s fault, a separate law allows you to cancel any time before delivery, unless you have agreed in writing to a later delivery schedule.
· Prepaid entertainment contracts like gym memberships, art/dance lessons, martial arts classes, or dating/social clubs.
· Some food service contracts, like food subscription plans or food in bulk.
· Mobile homes purchased from a dealer (but not from an individual).
· Timeshares purchased from a developer or their sales rep (but not from an individual).
· Campground memberships exceeding one year purchased from the campground operator or their sales rep (but not from an individual).
· Refinances of primary residence mortgages. (This doesn’t include initial mortgages for the purchase or construction of a primary residence.)
· Home equity loans (HELOCs).
· Discount buying clubs.
· Credit repair services.
How do you cancel a contract in this list? Follow the instructions in the contract. Cancellation must be in writing to the address (or perhaps email address) listed in the contract. If those instructions aren’t followed exactly, the contract isn’t canceled. Most commonly, the cancellation period ends at midnight on the third business day after the contract is entered, but be sure to read the contract.
Notice that this list doesn’t include the purchase of a new or used vehicle. NC’s Lemon Law allows canceling the purchase of a new vehicle if it meets certain criteria for unsuccessful efforts to repair a serious problem. There is no Lemon Law for used cars, even those purchased form dealers. Some new and used car dealers advertise that they allow you to return a car within a certain amount of time and get another instead. Those voluntary policies won’t refund your money, but they provide a helpful alternative to keeping a vehicle you don’t like. Whatever voluntary policy a dealer advertises, they must honor.
If you have problems canceling a contract, try contacting the NC Attorney General’s Office at 1-877-5-NO-SCAM. They may be able to help you without having to hire an attorney.
Kim K. Steffan is an attorney with Steffan & Associates, P.C. in Hillsborough. She can be reached at (919)732-7300 or firstname.lastname@example.org.