Federal law allows consumers to cancel a home improvement contract within three days if the contract was signed in the consumer’s home or if the contract is financed with a home equity loan. Some states offer more protections to cancel a home improvement contract if the contractor arranges the financing or if the contract is to be paid by installment payments.  The following tips offer valuable information to help ensure you are not taken advantage of when purchasing a home improvement contract.

Step 1:  Insist on a written contract
Not every state requires home improvement contracts to be in writing.  However, even if your state does not require it, insisting on a written contract is a good idea.  A written contract should specify who will do the work, what work will be done, when it will be completed and how much it will cost.  Memories fade and opinions differ, particularly if something goes wrong with the home improvement job.  When the work to be done is in writing, it can serve as a reference point for both parties. 

Step 2:  Read your contract
Most states require that the contractor include language explaining in the contract about the homeowner's right to cancel the contract as well as a copy of a cancellation form to send back to them if the homeowner decides to cancel the contract.  Even if your state does not require it, insist that the contractor include a cancellation provision in your contract.

Step 3:  Find out about your state law
Most state Attorney General offices and local governments can provide you with information about cancelling a home improvement contract.  You may also contact your local Better Business Bureau to determine what cancellation rights you have.

Step 4:  Send the cancellation in writing
Most laws require that you cancel the contract in writing.  If your contract contains a cancellation form, you can certainly use it, but you are not required to use it.  You may cancel the contract by a handwritten letter as well.  Do not rely on an email or phone call to cancel your contract, particularly if your contract or local law requires the cancellation to be “in writing.”  If you mail the cancellation notice, it's a good idea to send it to the contractor by registered mail.

Step 5:  Contact your local Better Business Bureau or state Attorney General
If your contractor did not include a cancellation form or language in your contract notifying you how to cancel the contract, file a complaint with your Better Business Bureau or Attorney General at the same time that you cancel the contract.  This will provide some protection if the contractor attempts to collect on the canceled contract.

Civil Law Sub-categories