The Gemara (Pesachim 41a) states, “One fulfills one’s obligation using soaked Matzah.” This means that if one uses wet Matzah on the Seder night, one has fulfilled his obligation. The Gemara explains that there is certainly no prohibition to wet Matzah on Pesach. Although when flour is wet and left that way for a few minutes, the flour leavens, nevertheless, wetting Matzah poses no leavening concern since the concept of leavening only applies to fresh flour which has never been baked. Here, where the Matzah has already been baked along with all of the flour that remains within it, it cannot leaven any longer.
Indeed, Ra’avan (Rabbeinu Eliezer bar Natan, student of Rabbeinu Tam) quoted by Tosafot (Pesachim 39a) makes this point explicitly. He writes that although it is permissible to wet or cook an already baked Matzah, some do not wish to soak Matzah in soup on the Seder night since they have seen their forefathers act stringently in this regard and they believe it is because there is concern that the Matzah may leaven. However, this is mistaken, for the reason behind this custom is because they wish to have the taste of Matzah in their mouth for the duration of the Seder night.
This means that there is no concern of leavening regarding baked Matzah and even if it was soaked in water all day long, it will never leaven. The reason why we are careful to eat dry Matzah on the Seder night and we do not soak it in water is in order for the Matzah to retain its original taste and not that of soaked Matzah. (However, soaking Matzah for someone elderly and the like is permissible even on the Seder night.)
Nevertheless, Hagaon Rabbeinu Zalman, saintly author of the Tanya, writes in a response (printed at the end of volume 5 of his Shulchan Aruch Harav) that one who abstains from eating soaked Matzah throughout Pesach is especially praiseworthy. This is indeed the custom of the vast majority of Chassidic courts and their rebbes. The reason for this is because perhaps some flour fell onto the Matzah after it was baked. Furthermore, it is possible that since the Matzah is baked so quickly and some flour remains in the middle of the Matzah, it will then leaven when it comes in contact with water.
Several other great Acharonim rule stringently in this regard. The great Chafetz Chaim was cautious about this as well.
On the other hand, most Jewish communities do not observe this stringency at all. Indeed, the Vilna Gaon is quoted as having permitted preparing Matzah balls on Pesach, either by means of cooking or baking, for after having been baked, there is no reason to be concerned anymore with any flour remaining on or within the Matzah. Many other great Acharonim, quoted by the great Rishon Le’Zion, Hagaon Rabbeinu Yitzchak Yosef Shlit”a, in his Yalkut Yosef (Chapter 447), rule leniently on this matter. Although one who acts stringently is certainly praiseworthy, it is nevertheless not our custom to do so. Maran zt”l and an overwhelming majority of Sephardic Poskim and luminaries did not observe this stringency. This is especially true since flour is not kept near the area where the Matzah is baked, such that the concern of flour falling on the Matzah after it has been baked is quite negligible in addition to the fact that the Matzah is very well-baked. We are therefore not particular about this issue and we cook Matzah throughout Pesach and make cakes out of Matzah meal without any concern.
Thus, a Sephardic individual who acted stringently regarding this matter because he thought it was the letter of the law may nullify this custom immediately. However, if he observed this custom and understood that it was a stringency and not compulsory by Halacha and now wishes to nullify this custom must first perform “Hatarat Nedarim” (annulment of vows) in front of three people because he had not said “Bli Neder” before beginning to observe this stringency.
This is especially true this year (5781) when Erev Pesach coincides with Shabbat and we will have to cook the Matzah in order to be able to eat it on Shabbat, as we shall explain closer to Pesach, G-d-willing.