A homeowner cancels a $22,000 home improvement contract within the 3-day cancellation period. The contractor has already ordered $3,200 in custom materials that cannot be returned. How much can the contractor legally retain?
Correct Answer
C) $0
When a homeowner exercises their 3-day right to cancel, the contractor must return all payments, regardless of costs incurred or materials ordered.
Why This Is the Correct Answer
Under California Business and Professions Code Section 7159 and the Home Solicitation Sales Act (Civil Code Section 1689.6 et seq.), when a homeowner validly exercises the 3-day right of rescission, the contractor must return all payments received within 10 days. The contractor may not retain any amount, even if custom materials were ordered or preparatory work was performed. The 3-day cancellation right is absolute — incurred costs do not create an exception.
Why the Other Options Are Wrong
Option A: $3,200
$3,200 — the actual cost of the non-returnable materials — cannot be retained by the contractor. While this may seem equitable, the law does not provide a cost-recovery exception when the homeowner cancels within the statutory 3-day window. The contractor bears the risk of ordering materials before the cancellation period expires.
Option B: $1,000
$1,000 appears to reference some arbitrary retention limit, but no such amount exists in California law for 3-day cancellation scenarios. There is no statutory provision allowing partial retention of payments when a homeowner timely cancels.
Option D: $4,200
$4,200 appears to combine the material cost ($3,200) with some additional amount ($1,000), suggesting the contractor could retain more than actual costs. This has no basis in California law. The 3-day cancellation right is unconditional — no retention is permitted.
Memory Technique
The 3-day cancellation rule has no exceptions: 'Cancel in time, get everything back.' The lesson for contractors: never order custom materials or begin work until the 3-day window has passed. Starting early is a business risk the contractor accepts.
More California Questions
A homeowner signs a $15,000 home improvement contract on Monday at 2 PM at the contractor's office. Under California law, what is the latest time the homeowner can cancel the contract without penalty?
A swimming pool contract for $28,000 is signed on Wednesday at the customer's home. The contract includes proper cancellation notices. If the customer wants to cancel, they must do so by when?
Under California's prompt payment law, if a contractor submits a proper payment request to a property owner, payment is due within how many days?
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Under California Civil Code Section 8180, when must a subcontractor serve a preliminary notice on a private work project?
Which of the following contracts is NOT subject to the 3-day right to cancel under California law?
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According to B&P Code 7159, which of the following must be included in a home improvement contract for work over $500?