Contracts & ExecutionQuestion 131 of 1632
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 §7159.5This topic, taught in full in the CSLB Law & Business guide. CSLB Law & Business — Complete Study Guide (2026) — PDF + EPUB, $24.99 · 14-day refund →
Practice all 1632 questions free — no signup required.
Own the complete CSLB Law & Business guide — PDF + EPUB, $24.99 →
Related questions on this topic
- California's "prompt payment" law requires owners to pay general contractors within how many days of a proper invoice?
- On a private project, a direct (general) contractor receives a progress payment from the owner. Within how many days must it pay each subcontractor that subcontractor's share?
- A contractor is hired to build a room addition. After completion, the homeowner claims defects. The contractor's written warranty on new residential construction must be at least:
- On a $6,000 home improvement contract, what is the maximum allowable down payment?
- Which of the following is NOT a required element of a California home improvement contract?
- A home improvement contract in California must be signed by the homeowner and contractor and a copy given to the buyer:
Last reviewed: · editorial process
PrepPass team · Verified against California CSLB Contractor License Law & Business Exam · How we review
Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)