Business FinancesQuestion 54 of 1632
A contractor receives a $5,000 deposit on a contract. Under California law for home improvement contracts, the maximum down payment is:
a.$500 or 5%, whichever is less
b.$2,500 or 15%, whichever is less
c.There is no legal limit on down payments
d.$1,000 or 10%, whichever is less
Explanation
California law limits down payments on home improvement contracts to the lesser of $1,000 or 10% of the contract price. Demanding more is a violation of the Contractors State License Law.
Law Reference: Bus. & Prof. Code §7159(d)This topic, taught in full in the CSLB Law & Business guide. CSLB Law & Business — Complete Study Guide (2026) — PDF + EPUB, $24.99 · 14-day refund →
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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)