Business & LicensingQuestion 1437 of 1632

Diversion of funds or property received for a specific construction project, causing inability to complete it, is known as what violation?

a.Abandonment of the project without legal excuse under §7107
b.Diversion of funds, a ground for disciplinary action (§7108)
c.Willful departure from accepted trade standards under §7109
d.Taking an excessive down payment on a home improvement contract

Explanation

B&P §7108 reaches the diversion of funds or property received for a project, or for payment of materials or services, where the diversion causes the contractor to fail to complete the work or pay for those items — the classic robbing-Peter-to-pay-Paul violation. (a) is §7107 abandonment, which turns on walking off the job, not on where the money went. (c) is §7109 workmanship, a quality violation rather than a financial one. (d) is the §7159.5 down-payment cap, which governs what may be collected at the front end, not what is done with money already collected.

Law Reference: B&P Code §7108

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