Contracts & ExecutionQuestion 131 of 1605
On a $40,000 home improvement contract, what is the maximum down payment a contractor may legally demand or accept before work begins?
a.$4,000 (10% of the contract)
b.$2,000 (5% of the contract)
c.$1,000
d.$10,000 (25% of the contract)
Explanation
California limits the down payment on a home improvement contract to $1,000 or 10% of the contract price, whichever is LESS. Here 10% would be $4,000, so the smaller cap of $1,000 controls.
Law Reference: Bus. & Prof. Code §7159.5Practice all 1605 questions free — no signup required.
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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)