What is a Notice of Rescission?
A Notice of Rescission or Notice of Right of Rescission is an official notice a buyer gives the seller of a property concerning the termination of a contract, but only if it is voidable. This is for when you, the buyer, think that you can no longer go through with the contract signed.
This means that you rescind your contract. However, in legal terms, rescinding can be one of two things:
- Rescinding a contract means that a party has intended to void the contract. This step is irreversible and removes the party from the obligations that were agreed upon in the contract. When rescinding of a contract is complete, it is as if the contract has never existed between two parties.
- Rescinding a contract can also be done under the court of law in the interest of the general public.
A Notice of Rescission is more in line with the first definition of rescinding a contract as it is often sent by a buyer out of their own will of canceling the contract they have made.
When to send a Notice of Rescission
Usually, contracts allow an interval between its creation and the time it will be in full effect. Within this timeframe, you will have a lot of time to think about the contract and your decisions regarding it. If you are having second thoughts about the contract or you have found a better property to buy, you may send a Notice of Rescission to your seller. The notice will restore the pre-contract status of the buyer and the seller, effectively removing them from the responsibilities they have towards one another. It will also inform the seller that you are not interested in the property anymore, allowing them to begin looking for a new client immediately.
There are times that a Notice of Rescission will not be useful and will not apply. These circumstances are as follows:
- When the party cannot return to the pre-contract positions
- When the rescission will affect a third party that is also part of the form
- When the seller has already incurred monetary damages to their property
- When the buyer is guilty of violating the contract in any way.
For best results, it is best to use a Notice of Rescission in the earlier stage of the contract signing, specifically before the contract comes into full effect. This will prevent any conflicts as to the obligations of both parties as the contract is not yet in full effect
In voiding a contract, the first thing you must do is ensure that the contract you entered is indeed voidable. Some reasons that justify your voiding of a contract is
- Mutual Consent —- when both parties agree that canceling the contract is for their benefit and they come to a mutual understanding of, rescission is viable.
- Issues on how the contract was formed — if the contract was signed under duress, threat, or undue influence, it can be rescinded.
- One party will not perform their obligations —- if one party has explicitly told the other that they cannot or will not do their obligations according to the contract. Rescission can occur.
- Failed Consideration —- if the contract was rejected by a competent court of jurisdiction, then it will be rescinded. However, the rescission is mostly assisted by the government.
- Against the interest of the public —-- if the contract to be entered threatens the public’s interest, it can be rescinded by the public offices.
It is highly advised to consult a legal professional when attempting to identify the grounds for rescission to ensure that the notice is valid. Then, the notice for rescission must be sent to the seller before negotiations or lawsuits concerning this matter can follow.
How to fill out a Notice of Rescission?
You can download a PDF copy of a Notice of Rescission Template from any website that offers legal templates. You may print the document and fill it out manually. Alternatively, you can fill out the form electronically on PDFRun.
Filling out the Document
Before filling out the document, input first the mortgage value of the property to acquire. In addition, input the complete address of this property.
Below this section is the Notice of Customer Required by Federal Law. This is the body of the letter.
First, it confirms the date of your transaction or the date when you have signed the contract. Input the month, day, and year of your transaction.
After confirming the date, your rights as a buyer are listed according to federal law, specifically the right to cancel the transaction you have listed. This cancellation can happen within three days of signing the document or within three days of receiving all materials disclosures that are required to be given to you by the seller under the Truth in Lending Act. These material disclosures must be information on any financial value that the property has so that you can compare the values with other potential properties.
After you have read and understood your rights thoroughly, the document states that if you decide to cancel this form any lien, mortgage, or interest that comes with the property in question will become void. In addition, you will also be entitled to a refund or any form of consideration if you do decide to cancel.
If you decide to cancel the transaction, then input the complete name of the seller and their mailing address.
Indicate also when the notice should be sent to the seller. Input the day, month, and year. The document states that the notice should not be sent later than midnight of that specific date. Furthermore, you can also send any other written document that would help identify the transaction (a disclosure statement) along with this notice.
Affix your signature here.
Input the date of signing.
Receiving the Notice
The second page of the document is for the reception of the document itself.
The receiver must verify that they have received two copies of the document and a copy of Disclosure statements concerning the transaction that is being canceled by affixing their signature to the document.
Before signing, input the day, month, and then year that you have received the notice.
Affix your signature here.
Input the date of signing.