Contracts & ExecutionQuestion 746 of 1605
A homeowner and contractor sign a $12,000 contract. The contractor lists a $1,200 down payment. Is this lawful?
a.No, because $1,000 is the cap when 10% exceeds $1,000
b.Yes, because it is under $2,000
c.No, because down payments are never allowed
d.Yes, because 10% is always allowed
Explanation
Ten percent of $12,000 is $1,200, but the down payment cannot exceed the lesser of $1,000 or 10%. Since $1,000 is less, the $1,200 down payment is unlawful.
Law Reference: B&P §7159Practice all 1605 questions free — no signup required.
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