A woman signing property papers next to a small model house and keys

What the federal right to rescind is

The Truth in Lending Act gives borrowers a right to rescind, meaning cancel, certain credit transactions. The rule is in Regulation Z at 12 CFR 1026.23. It applies to credit in which a security interest is or will be kept in your principal dwelling, the home you live in.

Some transactions are exempt. The most important is a residential mortgage transaction, a loan used to buy or build the home. That is why you cannot rescind the mortgage you used to buy your house. The CFPB says the right typically applies to loans such as refinances and home equity loans.

Rescission cancels the credit transaction. It is a separate question from whether you can cancel your contract with the installer, which we cover below.

Does it apply to your solar loan?

The answer turns on one question: did the lender take a security interest in your home? Solar loans come in a few forms.

Solar loan types and rescission

Home equity loan or refinance used to pay for solarGenerally covered
Solar loan with a mortgage or deed of trust on the homeLikely covered, unless an exemption applies
Solar loan secured only by the equipment, with a UCC fixture filingUncertain. The leading appellate decision said no
Unsecured personal loanNot covered
Lease or PPANot a loan. Not covered

Read the security section of your loan agreement. It will say what the lender took as collateral. An attorney should confirm whether rescission applies to your loan.

Regulation Z’s official commentary also says some liens that arise by law can count. Its examples include a mechanic’s lien kept by a contractor who is also the creditor.

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How UCC fixture filings fit

Many solar loans are not secured by a mortgage. Instead, the lender records a UCC-1 fixture filing on the equipment in the county land records. GoodLeap, for example, says its filing is a lien on the solar system only and not a lien against your home. So does a fixture filing count as a security interest in your dwelling?

The key appellate decision so far said it did not:

  • Lankhorst v. Independent Savings Plan Co., 787 F.3d 1100 (11th Cir. 2015). Homeowners financed water treatment equipment, and the lender recorded a UCC financing statement against their homes. The court held the filing did not create a security interest in the homes, even if the equipment was a fixture, because the lender’s remedies were limited to the equipment. Rescission was not available. The court noted such deals may invite the abuse Congress meant to prevent, but said fixing that was for regulators.
  • In re Evans (Bankr. D.N.M., December 12, 2023). Not a rescission case, but a solar one. The court held a credit union’s security interest in a rooftop solar system never attached to the house, finding the system could be removed without material injury to it.

These decisions do not settle the question everywhere. Lankhorst binds federal courts only in Alabama, Florida, and Georgia, and courts can reach different results on different loan documents and state fixture law. If your documents give the lender rights against the home itself, or a lien arose against the home, the analysis may change. This is a question for a consumer attorney.

For removing a filing after payoff or cancellation, see how to remove a solar UCC filing.

The 3-day deadline, and when it starts

If the right applies, you may rescind until midnight of the third business day after the latest of these three events:

  1. You sign the loan (consummation).
  2. You receive the notice of the right to rescind.
  3. You receive all the material disclosures.

For rescission, the CFPB says Saturdays count as business days, but Sundays and federal holidays do not. You do not need a reason.

Counting example

Signed loan and got all documentsThursday
Day 1Friday
Day 2Saturday
Day 3Monday (Sunday skipped)
DeadlineMidnight Monday

If a federal holiday falls in the window, skip it too.

During those three days, unless you waive the right for a genuine personal financial emergency, the lender generally may not disburse money other than into escrow, perform services, or deliver materials. Printed waiver forms are not allowed.

The extended right: up to three years

If the lender never delivered the rescission notice or the material disclosures, the right does not end after three days. It expires three years after consummation, or earlier if you transfer all your interest in the home or sell it. A foreclosure sale also ends it.

The material disclosures are the annual percentage rate, the finance charge, the amount financed, the total of payments, and the payment schedule, plus certain disclosures for high-cost loans.

In Jesinoski v. Countrywide Home Loans (2015), the Supreme Court unanimously held that you exercise the right by sending written notice to the lender within three years. You do not have to file a lawsuit within that time. Treat the three-year limit as firm, because waiting can cost you the right.

What the rescission notice must include

When the right applies, the lender must give each person entitled to rescind two copies of a separate notice. It must clearly disclose:

  • That the lender is taking a security interest in your home.
  • Your right to rescind.
  • How to rescind, with a form you can use and the lender’s address.
  • What happens if you rescind.
  • The date the rescission period ends.

Look through your closing packet for a page titled “Notice of Right to Cancel.” If there is none, if you got only one copy, if a co-owner got none, or if the end date is missing or wrong, note it and tell an attorney. Those details can bear on whether the three-day clock ever started.

How to rescind, and what happens next

  1. Write it down. Rescission must be in writing. A phone call or visit does not count. You may use the lender’s form or your own letter.
  2. Say it plainly. Include your name, address, loan number, and the date you signed, and state that you are rescinding the transaction under the Truth in Lending Act and 12 CFR 1026.23.
  3. Send it the right way. Notice counts when mailed or when delivered to the lender’s designated place of business. Use certified mail with a return receipt, send it to the address on the notice, and keep a copy.
  4. Know that one owner can act for all. If more than one person has the right, rescission by one is effective for everyone.

After you rescind, the security interest becomes void and you owe no finance charges. Within 20 calendar days of receiving your notice, the lender must return money you paid in connection with the loan and take steps to end its security interest. Then you must return the money or property the lender provided, or its reasonable value if returning it would be impracticable or inequitable. If the loan paid an installer $40,000, you may have to tender that amount. A court can modify these steps.

Because of that tender obligation, talk to a consumer attorney before you rescind after the three days, and before you stop any payment.

How this differs from the Cooling-Off Rule and state laws

Three different cancellation rights often get mixed up.

Three cancellation rights

TILA rescissionCancels a loan secured by your home. 3 business days, up to 3 years
FTC Cooling-Off RuleCancels a sale made at your home or a temporary location. Generally 3 business days
State home solicitation or solar lawsVary by state. Some give longer windows

For TILA rescission and the Cooling-Off Rule, Saturdays count as business days and Sundays and federal holidays do not.

  • The Cooling-Off Rule covers the sale itself, usually the installation contract signed at your kitchen table. The FTC says your right to cancel for a full refund lasts until midnight of the third business day after the sale, the seller must give you two cancellation forms, and the seller must refund your money within 10 days. The rule’s definition of a covered sale excludes transactions where you have a TILA right of rescission, so the two do not stack for the same transaction.
  • State laws may add longer windows or solar-specific rules. For one example, see Virginia’s new solar sales law, and check your state on our state solar laws page.

If you signed recently, cancel the installation contract in writing under whichever rule gives you the most time, and send a copy to the lender. Our cancellation letter builder can help.

What to do now

  • Find the security section of your loan agreement and any mortgage, deed of trust, or UCC filing. Search your county records.
  • Find your closing packet and check for the rescission notice and the Truth in Lending disclosures.
  • Count the days from the latest of signing, the notice, and the disclosures.
  • Keep paying unless an attorney advises otherwise. Missed payments bring fees and credit damage, and they do not cancel anything.
  • Write down what happened at signing. Who was present, what device you signed on, what you were handed, and whether every owner of the home signed. These details matter if the notice was missing or incomplete.
  • Keep everything together. Our document checklist lists what to save.
  • Look at other tools. If the installer misled you, the FTC Holder Rule may let you raise that against the lender.

Common questions

Can I cancel a solar loan after signing?

Possibly. If the loan is secured by your home, the federal right to rescind generally lasts until midnight of the third business day after the latest of signing, receiving the rescission notice, and receiving the required disclosures. If the loan is not secured by your home, look to the Cooling-Off Rule, your state’s law, and your contract.

Does a UCC fixture filing give me a right to rescind my solar loan?

Not clearly. The leading appellate decision, Lankhorst (11th Cir. 2015), held a UCC fixture filing on home equipment did not create a security interest in the home, so rescission was not available. Results can depend on your documents and state law, so ask an attorney.

Can I rescind a solar loan after three years?

Generally no. The extended right expires three years after signing even if the notice or disclosures were never given, and it ends sooner if you sell the home.

Do Saturdays count in the three-day right to cancel?

Yes. For both TILA rescission and the FTC Cooling-Off Rule, Saturdays count as business days. Sundays and federal holidays do not.

If I rescind, do I have to give the money back?

Yes, generally. After the lender returns your payments and ends its security interest, you must return the money or property it provided, or its reasonable value. Talk to an attorney first.

Does rescinding my solar loan cancel my installation contract?

Not by itself. TILA rescission cancels the credit transaction. Your contract with the installer is a separate agreement with its own cancellation rules under the Cooling-Off Rule, your state’s law, and the contract. If you are canceling both, send a written notice to each company and keep proof of both.

Is the right to rescind the same as the three-day cooling-off rule?

No. Rescission cancels a loan secured by your home. The Cooling-Off Rule cancels a sale made at your home. A transaction with a TILA rescission right is excluded from the Cooling-Off Rule.

Sources

  1. CFPB: 12 CFR 1026.23, Right of rescission. Coverage, deadlines, notice, effects, waiver, exemptions, commentary
  2. CFPB: What is the three-day right to rescind?. Saturdays count; written notice; 20-day refund
  3. FTC: The Cooling-Off Rule. Three business days, forms, refunds
  4. FTC: Cooling-Off Rule, Federal Register (October 20, 1995). 16 CFR 429.0 excludes sales with a TILA rescission right
  5. Holland & Knight: Jesinoski v. Countrywide Home Loans (2015). Written notice within three years is enough
  6. National Law Review: Lankhorst v. Independent Savings Plan Co. (2015). Fixture filing not a security interest in the dwelling
  7. U.S. Bankruptcy Court, D.N.M.: In re Evans (December 12, 2023). Solar lender’s interest did not attach to the house
  8. GoodLeap: Frequently asked questions. UCC-1 is a lien on the equipment only

General information, not legal advice.

This guide can’t tell you whether a right applies to your agreement. For that, talk with a licensed attorney in your state.