In the tenant-improvement file, a $12,500 home improvement contract requires a $1,250 initial payment before work starts. What is the problem?
Correct Answer
A) Exceeds cap.
Ten percent is $1,250, but the cap is the lesser of 10 percent or $1,000, so $1,250 exceeds the down payment limit.
Why This Is the Correct Answer
Ten percent is $1,250, but the cap is the lesser of 10 percent or $1,000, so $1,250 exceeds the down payment limit.
Why the Other Options Are Wrong
Option B: The payment is allowed because $1,250 is 10 percent of the tenant-improvement contract.
The payment is allowed because $1,250 is 10 percent of the tenant-improvement contract. skips the written authority, scope, price, notice, or release control needed for down payment calculation.
Option C: The only problem is that a schedule of values has not been attached.
The only problem is that a schedule of values has not been attached. skips the written authority, scope, price, notice, or release control needed for down payment calculation.
Option D: The contractor may collect the amount if the owner signs a separate allowance authorization.
The contractor may collect the amount if the owner signs a separate allowance authorization. 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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