Homeowner Law: Rescinding A Home Improvement Contract

by Les Mark Esq. Council to The League

Q. I recently signed a contract with a contractor to undertake a remodel of my kitchen at my home. I first learned of this contractor by way of an advertisement he sent to my home. Within two days of signing the contract, I had second thoughts about this particular contractor and I decided to get some other bids. I telephoned the contractor and told him that I would like to rescind the contract. He told me that I could not do so. In his words, we have a binding agreement. On that day, I faxed him a letter to advice him that I disagreed with his position and that I had no intention of honoring the agreement. Can the contractor successfully sue me for breach of contract?

A. The short answer is no. The contract you entered into constitutes a home solicitation contract. A home solicitation contract is one as to which a representative solicits an owner for the remodeling, alteration, or improvement of a home. Such a contract is subject to the provisions of the consumers Legal Remedies Act, which prohibits certain sales practices, which are false or misleading.

The legislature enacted the Act, because it deemed the consumer to be in need of additional protection from sharp practices and injury resulting from contracts for home improvement. As a result, the Act contains extensive regulation, which governs the procedures for the solicitation of contracts for the construction of improvements to homes.

One protection set forth in the Act is the owner's right to rescind the contract until midnight of the third business day following the date the contract is executed. The notice must be in writing and addressed to the location provided in the contract; it becomes effective upon its deposit into the mail, postage prepaid.

Upon rescission, the contractor must return all money received from the homeowner, and until received by him, the owner has a lien on all goods delivered to him as security for the return of the money paid to the contractor. Within 20 days after the contract has been canceled, the contractor must make a demand on the owner at his residence for a return of all goods delivered; if he fails to do so, the goods become the property of the owner, without any obligation to pay for them. Inasmuch as you provided the contractor with written notice within the prescribed time period, the contractor is deemed rescinded. If you paid the contractor a deposit, you are entitled to the return of these funds.

Mr. Les Marks is a litigation partner with the Los Angeles law firm of Wolf, Rifkin & Shapiro, LLP, and acts as council to The League. He specializes in construction defect litigation and real estate matters.

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Canceling a Contract