The FTC Cooling-Off Rule for Contractors: In-Home Sales Cancellations

Most home improvement sales happen at the homeowner's kitchen table — which means the FTC's Cooling-Off Rule usually applies. It gives buyers a short window to cancel, and it requires sellers to provide specific notices and forms. Getting the paperwork wrong can extend the cancellation window and create disputes long after the sale.

This is general information, not legal advice. State laws add their own requirements; confirm what applies where you sell.

What the rule covers

The Cooling-Off Rule (16 CFR Part 429) generally applies to sales of:

• $25 or more made at the buyer's home, or
• $130 or more made at temporary locations, such as hotel rooms, fairgrounds, convention centers, or rented spaces.

For most contractors, any contract signed during an in-home appointment is likely covered.

The buyer's right to cancel

The buyer may cancel until midnight of the third business day after the sale. Business days generally include Saturdays but not Sundays or federal holidays.

What the seller must provide

• Oral notice of the right to cancel at the time of sale.
• A copy of the contract or receipt showing the date, your business name and address, and a statement of the buyer's right to cancel, in the required form.
• Two copies of a cancellation form, one for the buyer to keep and one to send to cancel.

If these aren't provided correctly, the cancellation period may not start.

If the buyer cancels

• Refund payments within 10 days, and return any trade-in property.
• Retrieve any goods left with the buyer within the time the rule allows, or reimburse the buyer's mailing expense if you agree they'll send items back.

Exceptions

Some sales are excluded — for example, sales under the dollar thresholds, sales made entirely by mail, phone, or online, and certain bona fide emergency situations where the buyer waives the right in a handwritten statement. Exceptions are narrow; don't assume one applies without advice.

State home solicitation laws

Many states have their own home solicitation or home improvement contract laws, sometimes with longer cancellation periods, specific notice wording, or extra protections for older buyers. California, for example, gives buyers aged 65 and older a longer window on certain home improvement contracts. Use contract templates that meet both federal and state requirements.

Practical guidance for sales teams

1. Build the notice and forms into every contract and train reps to explain them.
2. Don't start work during the cancellation window unless an emergency exception properly applies.
3. Schedule start dates after the window closes.
4. Avoid pressure tactics. Sales won through pressure are the ones most likely to cancel — see same-day close ethics.
5. Track cancellations by rep as a quality signal.

Cancellation windows also matter in commission arrangements, where "closed" may be defined as surviving the cancellation period — see commission-only lead generation. For the full appointment flow, see the in-home sales process.