Which practice by a home improvement contractor is expressly prohibited?
Explanation
B&P §7159.5 caps the down payment at $1,000 or 10 percent of the contract price, whichever is less, and forbids later payments that exceed the value of work performed or material delivered. On a $20,000 contract 10 percent is $2,000, so the $1,000 cap controls: the $2,500 deposit in (b) is prohibited and the $500 deposit in (a) is lawful. The trap is reading 10 percent as the operative figure on a large job — it only controls when the contract price is under $10,000. (c) is lawful because delivered material counts toward value furnished, and (d) is lawful and merely conservative.
Law Reference: B&P Code §7159.5This 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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