Business FinancesQuestion 630 of 690
Under California home improvement contract law, the down payment a contractor may collect from an owner before any work is done or materials are delivered is limited to:
a.20% of the contract price, with no dollar cap
b.$5,000 or 25% of the contract price, whichever is less
c.10% of the contract price for any home improvement contract
d.$1,000 or 10% of the contract price, whichever is less (with no payment schedule allowing the contractor to be ahead of the value of work performed)
Explanation
Bus. & Prof. Code §7159(d) caps the down payment on a home improvement contract at $1,000 or 10% of the contract price, whichever is LESS. In addition, subsequent payments under the schedule of payments may not exceed the value of work performed plus materials delivered. The other options either omit the dollar cap, invert the relationship, or use thresholds (20%, 25%) that apply to swimming-pool contracts under §7159.5 or to other states. This rule is heavily tested because it is one of the most common sources of consumer complaints and CSLB discipline.
Law Reference: Bus. & Prof. Code §7159Practice all 690 questions free — no signup required.
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