An $11,200 home improvement contract requires a $1,120 initial payment before work starts. What is the problem?
Correct Answer
A) Exceeds cap.
Ten percent is $1,120, but the cap is the lesser of 10 percent or $1,000, so $1,120 exceeds the down payment limit.
Why This Is the Correct Answer
Ten percent is $1,120, but the cap is the lesser of 10 percent or $1,000, so $1,120 exceeds the down payment limit.
Why the Other Options Are Wrong
Option B: The initial payment is allowed because it equals 10 percent of the contract price.
The initial payment is allowed because it equals 10 percent of the contract price. skips the written authority, scope, price, notice, or release control needed for down payment calculation.
Option C: The issue is retention withholding, not the statutory down payment limit.
The issue is retention withholding, not the statutory down payment limit. skips the written authority, scope, price, notice, or release control needed for down payment calculation.
Option D: The payment is allowed if the contract labels the amount as mobilization before work starts.
The payment is allowed if the contract labels the amount as mobilization before work starts. skips the written authority, scope, price, notice, or release control needed for down payment calculation.
Memory Technique
Down Payment cue Checking Contract: ceiling and percentage shake hands; the lower hand controls.
Reference Hint
Study anchor (closed-book): memorize Down payment calculation from CSLB 2026 Law Book; CSLB Home Improvement Contracts / B&P Code Section 7159 home improvement contract requirements; know the rule or calculation trigger without relying on exam-room lookup.
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