A residential contractor enters into a contract for $15,000 to remodel a kitchen. Under Arizona law, what is the required down payment limitation?
Correct Answer
D) No more than $1,000 or 10% of the contract, whichever is less
Arizona residential contractor law limits down payments to no more than $1,000 or 10% of the contract amount, whichever is less. In this case, 10% would be $1,500, so the limit is $1,000.
Why This Is the Correct Answer
Arizona Revised Statutes A.R.S. §32-1129.02 specifically limits residential contractor down payments to no more than $1,000 or 10% of the total contract amount, whichever is less. For a $15,000 kitchen remodel, 10% would equal $1,500, but since the statute caps the down payment at $1,000, the contractor can only collect a maximum of $1,000 as a down payment, making option D the correct application of Arizona law.
Why the Other Options Are Wrong
Option A: No more than 10% or $1,000, whichever is less
This option reverses the correct formula by stating '10% or $1,000, whichever is less' instead of '$1,000 or 10%, whichever is less.' The order matters because it changes which amount takes precedence. Arizona law specifically states the $1,000 cap first, then the 10% alternative, with the lesser amount controlling.
Option B: No more than 20% or $2,000, whichever is less
This option incorrectly states the down payment limits as 20% or $2,000. Arizona law is more restrictive, limiting down payments to only 10% or $1,000, whichever is less. The 20%/$2,000 figures do not reflect Arizona's actual statutory requirements for residential contractor down payments.
Option C: No more than one-third of the total contract amount
Arizona law does not permit down payments of one-third of the contract amount. This would allow $5,000 on a $15,000 contract, which far exceeds Arizona's protective consumer limits. The one-third rule may apply in other contexts or states, but Arizona specifically caps residential contractor down payments at $1,000 or 10%, whichever is less.
Memory Technique
Remember 'Arizona's $1K-10% Rule': '$1,000 or 10%, whichever is LESS' - think 'Arizona protects consumers with the LOWER limit.'
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