§ 14A-5-204. Right to rescind certain transactions.

(1)  Except as otherwise provided in this section, in the case of a consumer credit sale or consumer loan, including opening or increasing the credit limit for an open-end credit plan, with respect to which a security interest, including any such interest arising by operation of law, is or will be retained or acquired in any real or personal property which is used as the principal dwelling of the person to whom credit is extended, each person in whose principal dwelling a security interest is or will be retained or acquired, if that person's ownership interest in the dwelling is or will be subject to the security interest, shall have the right to rescind the transaction until midnight of the third business day following the consummation of the transaction or the delivery of the information and rescission forms required under this section together with a statement containing the material disclosures as defined in subsection (7) of this section, whichever is later, by notifying the creditor, in accordance with rules of the Administrator, of the person’s intention to do so.  The creditor shall clearly and conspicuously disclose, in accordance with rules of the Administrator, in a transaction subject to this section the rights of the person having the right of rescission under this section. The creditor shall also provide, in accordance with rules of the Administrator, appropriate forms and an adequate opportunity to a person having the right of rescission to exercise the right to rescind any transaction subject to this section.  If the required notice and material disclosures are not delivered, the right to rescind shall expire no later than three (3) years after the date of consummation of the transaction giving rise to the right of rescission, or upon sale of the property, whichever occurs first; except that if the Administrator or any other appropriate agency institutes a proceeding to enforce the provisions of this section within three (3) years after the date of consummation of the transaction and finds a violation of this section and the right to rescind is based in whole or in part on any matter involved in such proceeding, then the right of rescission shall expire three (3) years after the date of consummation of the transaction or upon the earlier sale of the property, or upon the expiration of one (1) year following the conclusion of the proceeding, or any judicial review or period for judicial review thereof, whichever is later.

(2)  When the right of rescission is exercised under subsection (1) of this section, the debtor or person exercising the right of rescission is not liable for any credit service charge, loan finance charge or other charge, and any security interest given, including any such interest arising by operation of law, becomes void upon the rescission.  Within twenty (20) days after receipt of a notice of rescission, the creditor shall return any money or property given as earnest money, down payment or otherwise, and shall take any action necessary or appropriate to reflect the termination of any security interest created under the transaction.  If the creditor has delivered any property to the person exercising the right of rescission, such person may retain possession of it.  Upon the performance of the creditor's obligations under this section, the person exercising the right of rescission shall tender to the creditor all property delivered by the creditor in the consumer credit transaction, except that if return of the property in kind would be impractical or inequitable, tender of its reasonable value shall be made.  Tender shall be made at the location of the property or at the principal dwelling of the person exercising the right of rescission, at the option of the person.  If the creditor does not take possession of the property within twenty (20) days after tender by the person exercising the right of rescission, such person may keep it without further obligation.  The procedures prescribed by this subsection shall apply except when otherwise ordered by a court.

(3)  Notwithstanding any rule of evidence, written acknowledgment of receipt of any disclosure required under this title by a person to whom information, forms, and a statement is required to be given pursuant to this section does no more than create a rebuttable presumption of delivery thereof.

(4)  The person entitled to exercise the right of rescission may modify or waive the right to rescind if that person determines that the extension of credit is necessary in order to meet a bona fide personal financial emergency.  To modify or waive the right, the person shall give the creditor a dated written statement that describes the emergency, specifically modifies or waives the right to rescind, and bears the signature of all of the persons entitled to rescind.  Printed forms for this purpose are prohibited.

(5)  This section does not apply to the creation or retention of a consensual lien against a principal dwelling to finance the acquisition or initial construction of that dwelling; a transaction which constitutes a refinancing or consolidation (with no new advances) of the principal balance then due and any accrued and unpaid finance charges of an existing extension of credit by the same creditor secured by an interest in the same property; a transaction in which an agency of a state is the creditor; or advances under a preexisting open-end credit plan if a security interest has already been retained or acquired and such advances are in accordance with a previously established credit limit for such plan.

(6)  In any action in which it is determined that a creditor has violated this section, in addition to rescission the court may award relief under Section 5-203 of this title for violations of this title not relating to the right to rescind.

(7)  The term "material disclosures" means the disclosure, as required by this title, of the annual percentage rate, the method of determining the finance charge and the balance upon which a finance charge will be imposed, the amount of the finance charge, the amount to be financed, the total of payments, the number and amount of payments, and the due dates or periods of payments scheduled to repay the indebtedness.

(8)  An obligor shall have no rescission rights arising solely from the form of written notice used by the creditor to inform the obligor of the rights of the obligor under this section, if the creditor provided the obligor the appropriate form of written notice published and adopted by the Administrator, or a comparable written notice of the rights of the obligor, that was properly completed by the creditor, and otherwise complied with all other requirements of this section regarding notice.

(9)(a)              Notwithstanding the provisions of Section 21 of this act, and subject to the time period provided in subsection (1) of this section, in addition to any other right of rescission available under this section for a transaction, after the initiation of any judicial or nonjudicial foreclosure process on the primary dwelling of an obligor securing an extension of credit, the obligor shall have a right to rescind the transaction equivalent to other rescission rights provided by this section, if:

(i)a mortgage broker fee is not included in the finance charge in accordance with the laws and regulations in effect at the time the consumer credit transaction was consummated; or

(ii)the form of notice of rescission for the transaction is not the appropriate form of written notice published and adopted by the Administrator or a comparable written notice, and otherwise complied with all the requirements of this section regarding notice.

(b)Notwithstanding the provisions of subsection (6) of Section 3-304 of this title, and subject to the time period provided in subsection (1) of this section, for the purposes of exercising any rescission rights after the initiation of any judicial or nonjudicial foreclosure process on the principal dwelling of the obligor securing an extension of credit, the disclosure of the finance charge and other disclosures affected by any finance charge shall be treated as being accurate for purposes of this section if the amount disclosed as the finance charge does not vary from the actual finance charge by more than Thirty-five Dollars ($35.00) or is greater than the amount required to be disclosed under this title.

(c)Nothing in this subsection affects a consumer's right of rescission in recoupment under law.

(d)This subsection shall apply to all consumer credit transactions in existence or consummated on or after September 30, 1995.

Added by Laws 1969, c. 352, § 5-204, eff. July 1, 1969.  Amended by Laws 1976, c. 263, § 6, emerg. eff. June 17, 1976; Laws 1982, c. 335, § 53, operative Oct. 1, 1982; Laws 2000, c. 217, § 20, eff. July 1, 2000.