In a credit transaction in which a security interest is or will be retained or acquired in a consumer's principal dwelling, each consumer whose ownership is or will be subject to the security interest has the right to rescind the transaction. Lenders are required to deliver two copies of the notice of the right to rescind and one copy of the disclosure statement to each consumer entitled to rescind. The notice must be on a separate document that identifies the rescission period on the transaction and must clearly and conspicuously:
" disclose the retention or acquisition of a security interest in the consumer's principal dwelling;
" the consumer's right to rescind the transaction; and
" how the consumer may exercise the right to rescind with a form for that purpose.
Puerto Rico Right to Rescind When Security Interest in Consumer's Principal Dwelling is Involved — Rescission: A Comprehensive Guide In Puerto Rico, the Right to Rescind when security interest in a consumer's principal dwelling is involved is a legal provision that allows consumers to cancel certain transactions secured by their homes. This right aims to protect consumers from predatory lending practices and ensures they have the ability to reconsider their decision. Under this provision, consumers have the right to rescind their agreement within a specified timeframe by providing written notice to the creditor. The rescission period generally begins on the date of the transaction or when the consumer receives disclosures regarding their right to rescind, whichever is later. If the creditor fails to provide these disclosures, the rescission period can be extended up to three years. The right to rescind applies to various transactions involving a consumer's primary residence, including mortgage loans, home equity loans, refinancing agreements, and certain types of contracts securing the property. However, it's essential to note that not all consumer transactions involving a dwelling are eligible for rescission, and specific requirements must be met. There are different types of rescission scenarios that consumers in Puerto Rico should be aware of: 1. Mortgage Loan Rescission: This type of rescission applies to mortgage loans obtained to finance the purchase or construction of the consumer's principal dwelling. It allows the consumer to cancel the loan agreement within the specified timeframe. 2. Home Equity Loan Rescission: Consumers who secure a home equity loan, where their dwelling is used as collateral, also have the right to rescind the agreement under certain circumstances. This includes situations where a new lender refinances an existing loan or grants additional funds. 3. Contract Rescission: In some cases, consumers may enter into contracts that secure their dwelling as collateral. Examples include land contracts or agreements wherein the consumer sells their home but retains a security interest. In such situations, the consumer may have the right to rescind the contract within the specified timeframe. To exercise the right to rescind, consumers must provide written notice to the creditor, clearly expressing their intent to cancel the transaction. Upon rescission, the creditor should return any money paid by the consumer, including finance charges and fees, within a specific timeframe. Additionally, the consumer must return any property acquired as part of the transaction. It's crucial for consumers in Puerto Rico to seek legal advice or consult relevant authorities to understand their specific rights and obligations when considering rescission. Proper understanding and implementation of this provision can protect consumers from unfair lending practices and safeguard their rights in important financial transactions involving their principal dwellings.
