A Sacramento homeowner signs an $8,400 home improvement contract. What is the largest lawful down payment the contractor may collect at signing?
Correct Answer
A) $840, because 10 percent is less than the $1,000 cap.
For a CA home improvement job, the down payment may not exceed $1,000 or 10 percent of the contract price, whichever is less. Ten percent of $8,400 is $840.
Why This Is the Correct Answer
For a CA home improvement job, the down payment may not exceed $1,000 or 10 percent of the contract price, whichever is less. Ten percent of $8,400 is $840.
Why the Other Options Are Wrong
Option B: Use the material-order amount as the signing payment without applying the statutory contract limit.
Use the material-order amount as the signing payment without applying the statutory contract limit. skips the written authority, scope, price, notice, or release control needed for project contracts.
Option C: $1,680, if the contractor lists two early mobilization tasks.
$1,680, if the contractor lists two early mobilization tasks. is above the supported result for project contracts; it likely adds scope or money the rule does not allow.
Option D: $2,500, when materials are ordered before the first work day.
$2,500, when materials are ordered before the first work day. is above the supported result for project contracts; it likely adds scope or money the rule does not allow.
Memory Technique
Project Contracts cue Preparing Payment: ceiling and percentage shake hands; the lower hand controls.
Reference Hint
Study anchor (closed-book): memorize Project contracts from CSLB 2026 Law Book; CSLB Home Improvement Contracts / Business and Professions Code Section 7159; know the rule or calculation trigger without relying on exam-room lookup.
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