Contracts & ExecutionQuestion 541 of 1632

A contractor wishes to collect progress payments on a home-improvement contract. Under B&P §7159.5, each progress payment must:

a.Equal exactly 10 percent of the contract price each time
b.Be payable when materials are ordered, before delivery
c.Cover the next phase's costs before that work starts
d.Not exceed the value of work done and materials on site

Explanation

B&P §7159.5(a)(5) bars front-loading: apart from the downpayment, a contractor may neither request nor accept a payment exceeding the value of the work performed or the material delivered. The exact-10-percent answer borrows the §7159.5(a)(3) downpayment cap — $1,000 or 10 percent of the contract, whichever is less — and misapplies it to every progress payment. Billing when materials are merely ordered fails because §7159.5(a)(5) counts material delivered, not material promised, and billing the next phase before that work starts is the front-loading the section exists to stop.

Law Reference: B&P §7159.5(a)(5); cf. §7159.5(a)(3)-(4)

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