A residential contractor receives a $35,000 down payment on a $140,000 project. According to Tennessee law, what is the maximum allowable down payment percentage?
Correct Answer
B) 20% ($28,000 maximum allowed)
Tennessee residential contractor law limits down payments to 20% of the total contract price. 20% of $140,000 = $28,000, making the $35,000 down payment excessive.
Why This Is the Correct Answer
Tennessee residential contractor law caps down payments at 20% of the total contract price. 20% of $140,000 = $28,000, so $35,000 exceeds the legal maximum by $7,000.
Why the Other Options Are Wrong
Option A: 30% ($42,000 maximum allowed)
30% ($42,000) is not recognized as the legal cap under Tennessee law. It is a distractor that is higher than the actual 20% limit.
Option C: 25% ($35,000 is acceptable)
25% would equal $35,000 on this contract, making the payment appear acceptable — but Tennessee law does not allow 25%; the correct limit is 20%, making the payment illegal.
Option D: No limit if materials are ordered
There is no exception in Tennessee law that removes the down-payment cap when materials are ordered. The 20% cap applies regardless of material ordering.
Memory Technique
Think '20% = Twenty percent = Tennessee' — the two T's link the state to the cap. Always calculate 20% of the contract price first, then compare to the requested amount.
More tn-supplement Questions
Calculate the Tennessee workers' compensation premium for a roofing contractor with a $180,000 annual payroll and a rate of $28.50 per $100 of payroll:
How many hours of continuing education are required for Tennessee contractor license renewal?
Calculate the workers' compensation experience modification factor for a contractor with $85,000 in expected losses and $68,000 in actual losses:
Under Tennessee lien law, what is the maximum time limit to enforce a mechanics lien after it has been filed?
Under Tennessee lien law, which party has priority when multiple liens are filed against the same property?
Under Tennessee building codes, what is the maximum allowable deflection for a residential floor joist with a 16-foot span under live load?
A homeowner in Nashville hires an unlicensed contractor for $8,000 worth of electrical work. The contractor demands payment but the work fails inspection. Under TCA 62-6, what recourse does the unlicensed contractor have?
Under Tennessee building codes, what is the minimum ceiling height required for habitable rooms in residential construction?
A Tennessee contractor has 8 employees working on a residential project. The total weekly payroll is $6,400. If the workers' compensation rate for residential construction is $8.50 per $100 of payroll, what is the weekly workers' compensation premium?
A contractor is installing a septic system for a new home in rural Tennessee. The estimated cost is $8,500. According to TCA 62-6, what licensing requirement applies?
People Also Study
Business & Financial Management
120 questions · 70% to pass
Contract Administration
60 questions · 70% to pass
Project Management
60 questions · 70% to pass
Related Study Resources
Previous Question
Under TCA 62-6, a Tennessee contractor's license can be suspended for all of the following EXCEPT:
Next Question
A Tennessee contractor completes $45,000 worth of work on a residential project. The owner fails to pay the final invoice of $8,500. How many days does the contractor have to file a mechanics lien after the last day of work under Tennessee lien law?