Contracts & ExecutionQuestion 708 of 1632
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)This 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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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:
- Before soliciting home improvement contracts on behalf of a licensed contractor, a home improvement salesperson must:
- A home improvement contract must include a schedule of progress payments that:
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Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)