In the garage conversion file, a $14,800 home improvement contract requires a $1,480 initial payment before work starts. What is the problem?
Correct Answer
A) Exceeds cap.
Ten percent is $1,480, but the cap is the lesser of 10 percent or $1,000, so $1,480 exceeds the down payment limit.
Why This Is the Correct Answer
Ten percent is $1,480, but the cap is the lesser of 10 percent or $1,000, so $1,480 exceeds the down payment limit.
Why the Other Options Are Wrong
Option B: The payment is allowed because $1,480 is exactly 10 percent of the contract price.
The payment is allowed because $1,480 is exactly 10 percent of the contract price. skips the written authority, scope, price, notice, or release control needed for down payment calculation.
Option C: The problem is only that the payment schedule needs a conditional lien waiver.
The problem is only that the payment schedule needs a conditional lien waiver. skips the written authority, scope, price, notice, or release control needed for down payment calculation.
Option D: The initial payment can be collected if the garage conversion materials have been ordered.
The initial payment can be collected if the garage conversion materials have been ordered. 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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