Contracts & ExecutionQuestion 656 of 1605
Bus. & Prof. Code §7159.5 limits progress payments on a home improvement contract such that, at any given time during the project, the amount paid by the owner may not exceed:
a.50% of the total contract price until the final inspection passes
b.The value of the work performed plus the value of materials actually delivered to the jobsite — meaning the contractor may not be paid 'ahead of the work'
c.10% of the contract per month, regardless of progress
d.The amount of the most recent invoice, with no cumulative limit
Explanation
Bus. & Prof. Code §7159.5(a)(8) prohibits a contractor from requesting or accepting payment that exceeds the value of the work performed plus the value of materials and equipment delivered to the jobsite. This 'no payment ahead of the work' rule, combined with the §7159(d) down-payment cap ($1,000 or 10%, whichever is less), forms California's core consumer-protection scheme on residential remodels. The 50% milestone, monthly 10%, and invoice-driven options are not statutory; violating §7159.5 is itself a misdemeanor and grounds for license suspension under §7159.5(b).
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)