The FTC Cooling-Off Rule for in-home sales

This is general information, not legal advice

This article summarizes the federal rule as published in 16 CFR Part 429. Some states have their own home solicitation sales laws that add requirements or set different terms, and the details of a particular sale matter. Have a lawyer review your contracts, notices and sales process.

What the rule does

The Cooling-Off Rule gives buyers time to reconsider a purchase made away from the seller's normal place of business, where they may have felt rushed. For home service companies, the most common situation is the kitchen-table sale: a replacement system, a new roof, a panel upgrade or a large add-on sold in the homeowner's living room. If the rule applies, the buyer may cancel without penalty within the cancellation period, and you must tell them about that right in specific ways.

When it applies

Under the rule's definitions, a "door-to-door sale" is a sale, lease or rental of consumer goods or services in which the seller or its representative personally solicits the sale and the buyer's agreement is made somewhere other than the seller's place of business, such as the buyer's home^[1]. Two price thresholds apply, counted whether the sale is under one contract or several^[1]:

• $25 or more if the sale is made at the buyer's residence^[1].
• $130 or more if it is made at another location, such as a temporary or rented space at a home show^[1].

The word "door-to-door" can mislead. A pre-booked appointment at the homeowner's request is still a sale in the home. The question is where the agreement is made and whether the seller solicited it there, not whether anyone knocked on doors.

The exclusions that matter to home services

The rule lists transactions that are not covered. Four of them come up most often in home services^[1]:

1. Buyer-requested repairs and maintenance. If the homeowner initiated the contact and specifically asked you to visit their home to repair or maintain their personal property, the visit is excluded. But if you sell additional goods or services during that visit, other than replacement parts needed for the repair, those additional sales are not excluded.
2. Bona fide emergencies. If the buyer initiated the contact and needs the goods or services to meet a genuine, immediate personal emergency, the sale can be excluded, but only if the buyer gives you a separate, dated and signed personal statement in their own handwriting that describes the emergency and expressly waives the right to cancel within three business days.
3. Prior negotiations at your place of business. A sale made under prior negotiations during the buyer's visit to your retail business establishment is excluded.
4. Sales conducted entirely by mail or telephone, with no other contact between buyer and seller.

The first exclusion is the one most likely to be misread. A no-cool repair visit is excluded; a full system replacement sold during that repair visit is an additional sale and is likely covered.

Common scenarios

What you must give the buyer

If the rule applies, the seller has several duties at the time of sale^[2]. Build them into the contract packet and the advisor's closing checklist.

1. 01

   A complete contract or receipt in the right language

   Give the buyer a fully completed copy, in the same language principally used in the oral sales presentation. If the presentation was in Spanish, the contract and notice must be in Spanish.

2. 02

   The cancellation statement in bold

   Near the buyer's signature, or on the front page of the receipt, a statement in bold type of at least 10 points that the buyer may cancel at any time prior to midnight of the third business day after the transaction.

3. 03

   Two copies of the cancellation form

   A completed form, in duplicate, headed "Notice of Cancellation" or "Notice of Right to Cancel", with the date of the transaction and the date by which the buyer may cancel filled in.

4. 04

   Tell the buyer out loud

   At the time the buyer signs, inform them orally of their right to cancel.

5. 05

   Keep a copy of everything

   File the signed contract, the cancellation form and a note that the oral notice was given.

Counting three business days

Under the rule, a business day is any calendar day except Sunday or a federal holiday^[1]. Saturdays count. The cancellation period ends at midnight of the third business day after the transaction.

Example (fictional): A homeowner signs a replacement contract on a Thursday. Friday is day one, Saturday is day two and Monday is day three, because Sunday does not count. If Monday is a federal holiday, Tuesday becomes day three. The buyer can cancel until midnight at the end of day three.

Put the calculated date on the cancellation form at the time of sale. Do not leave it for the buyer to work out.

If the buyer cancels

When a buyer sends a valid cancellation notice, the rule requires you, within 10 business days of receiving it, to refund all payments, return any trade-in and cancel any note or security interest created by the sale^[2]. If you left goods with the buyer, the notice form tells them that if they make the goods available and you do not pick them up within 20 days of the notice, they may keep or dispose of them without further obligation^[2].

Practical steps:

• Have one person in the office handle cancellations, with a log of the date received and the refund date.
• Cancel any financing application or agreement promptly with the lender.
• Do not argue, call repeatedly or offer inducements to withdraw the cancellation. A single, polite confirmation is enough.

Scheduling and pay around the window

The rule affects operations as much as paperwork.

• Scheduling: many companies book installations after the cancellation period ends, unless the emergency exclusion properly applies. Ordering custom equipment before the window closes is a business risk you carry.
• Deposits: if you take a deposit, it must be refunded on a valid cancellation within the time allowed.
• Spiffs and commissions: pay on installed jobs, not signed contracts, so cancellations do not create clawbacks. Our guide to tech-generated leads covers spiff design.
• Financing: coordinate with your lender so financing paperwork and the cancellation period work together.

Training the sales team on the rule

Advisors and technicians who sell in the home should be able to explain the right to cancel in their own words without sounding nervous about it. A short, confident script works best: "You have until midnight on Monday to change your mind. This form explains how, and I've filled in the date for you. If you cancel, we refund everything you've paid." Practice it in role play until it sounds routine.

Add the rule to your closing checklist and audit a sample of contract packets each month for the bold statement, both copies of the form, the filled-in dates and the note that the oral notice was given. Missing paperwork is the most common and most avoidable problem, and it is much easier to fix in a monthly audit than after a dispute.

Why the rule is good for honest sellers

A clear right to cancel makes it easier for homeowners to say yes, because the decision is not final the moment they sign. Budgets are stretched: Angi found that 56% of homeowners ran into budget issues on maintenance projects in 2025^[3], and the Federal Reserve found that 63% of US adults would cover a $400 emergency expense entirely with cash or its equivalent^[4]. A buyer who has time to check the numbers is less likely to cancel later, complain or leave a bad review. Our article on selling without pressure covers the habits that make cancellations rare.