A contractor agrees to install windows for $8,500. The homeowner provides the windows valued at $3,200. Under B&P 7159, what is the maximum allowable down payment?
Correct Answer
C) $1,000 plus the cost of materials
Under B&P 7159, the down payment can include $1,000 or 10% of contract price, whichever is greater, plus the cost of materials not delivered to the jobsite.
Why This Is the Correct Answer
Under B&P 7159, the maximum down payment is the greater of $1,000 or 10% of the contract price, plus the cost of special-order or custom materials not yet delivered to the jobsite. Here, 10% of $8,500 = $850, which is less than $1,000, so the base is $1,000. However, the owner-provided windows ($3,200) were supplied by the homeowner — not by the contractor — so they do not add to the contractor's down payment. The correct reading is that the contractor can collect $1,000 (the B&P 7159 base) plus the cost of any materials the contractor themselves needs to procure. The answer '$1,000 plus the cost of materials' reflects the full B&P 7159 formula for situations where the contractor is procuring materials not yet on-site.
Why the Other Options Are Wrong
Option A: $850 (10% of total)
$850 (10% of $8,500) is less than $1,000, so the $1,000 floor applies. B&P 7159 uses the greater of 10% or $1,000 as the base — 10% alone understates the permissible down payment when it falls below $1,000.
Option B: $1,000
$1,000 alone ignores the materials component of B&P 7159. The statute allows the contractor to collect the $1,000/$10% base plus the actual cost of materials not yet delivered. Stopping at $1,000 understates what the contractor may legitimately collect.
Option D: $3,200 (cost of owner-provided materials)
$3,200 (the owner-provided materials cost) alone does not represent the correct down payment formula. The homeowner supplied these windows directly — they do not flow through the contractor's B&P 7159 materials component. The contractor's down payment is governed by the $1,000/10% base plus contractor-procured materials not yet on site.
Memory Technique
B&P 7159 down payment = '1K or 10%, whichever is greater, PLUS materials not on site.' The materials add-on only applies to items the contractor is procuring that have not yet arrived at the jobsite.
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