Contracts & ExecutionQuestion 708 of 1605
A contractor collects a $2,500 down payment on a $15,000 room addition. Why is this unlawful?
a.The down payment exceeds $1,000, the maximum for a contract of this size
b.The down payment must equal exactly 10%
c.Down payments are never allowed on home improvement contracts
d.It is lawful; $2,500 is under the limit
Explanation
The down payment cap is $1,000 or 10%, whichever is less. Ten percent of $15,000 is $1,500, but the $1,000 cap controls, so $2,500 is over the legal maximum.
Law Reference: B&P §7159(d)Practice all 1605 questions free — no signup required.
Related questions on this topic
- Which of these is a condition that must be met before a contractor may use a 'service and repair' contract form instead of a full home improvement contract?
- What is the maximum contract amount for a job to qualify as a 'service and repair' contract under §7159.10?
- Under a valid service and repair contract, when may the contractor collect payment from the homeowner?
- An individual who is employed by a contractor and solicits, sells, or negotiates home improvement contracts is called a:
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