Reg Z - Right to Rescind

I need an opinion. The customer lives in an apartment in a pole building on the property. This has been there primary residence for 4 years. They are now applying for a construction-perm that will include the property and the pole building. So technically they are refinancing their primary residence, even though once the construction phase is complete the pole building will no longer be their primary residence. Do they have the right to rescind on this loan?

Thanks in advance for your replies.

They are encumbering their current primary residence with a non-purchase money lien - sounds like they are entitled to notice. On rescission, whenever in doubt just do it.

What's a pole building?

Frame structure, often with a packed earth floor. Uninsulated aluminum walls. Farmers around here use them for equipment storage - they provide good protection from the elements (except tornadoes) and are comparatively inexpensive to construct. Smaller-scale pole buildings are also used for additional garages, and they also sometimes house small businesses. They're pretty common around here, but I wouldn't want to live in one.

This particular building looks better than some houses. It is 42' x 60', completely insulated, was constructed with a full foundation including a concrete floor and has a second floor aprtment.

The structure you descibed is known to us local folks as a barn but I have also known some individuals to live in these types of structures as well.

I am of the opinion that this loan should have had a rescission notice.

Thank You for the comments.

Do they currently own this apartment and land, or are they renting this apartment and have decided to purchase the property to build on.

If they currently own the apartment and land, then ROR applies. If they are renting, and have decided to purchase the property then ROR would not apply IMO. However, if they are purchasing the property on contract and are paying off the contract and getting the const/perm loan, ROR would apply.