A swimming pool contractor's total contract price is $35,000. The contract specifies completion in 60 days with payments tied to completion milestones. What is the maximum initial payment the contractor can collect?
Correct Answer
A) $1,000
For swimming pool contracts, the maximum down payment is the lesser of 10% of the contract price or $1,000. Although 10% would be $3,500, the $1,000 cap applies.
Why This Is the Correct Answer
For swimming pool contracts, California law caps the initial (down) payment at the lesser of 10% of the contract price or $1,000. On a $35,000 contract, 10% equals $3,500 — but because $3,500 exceeds the $1,000 cap, the maximum initial payment is $1,000. The 'lesser of' rule always applies, and $1,000 is the hard cap regardless of contract size.
Why the Other Options Are Wrong
Option B: $3,500
$3,500 represents 10% of the $35,000 contract price. While 10% is part of the formula, the law requires taking the LESSER of 10% or $1,000. Since $3,500 exceeds $1,000, the cap kicks in and limits the initial payment to $1,000.
Option C: $17,500
$17,500 is 50% of the contract price. No provision of California law allows a 50% initial payment for swimming pool contracts. This amount greatly exceeds the statutory cap and would be illegal.
Option D: $7,000
$7,000 is 20% of the contract price and has no basis in California's swimming pool contract down payment rules. It far exceeds the $1,000 statutory maximum initial payment.
Memory Technique
For pool contracts, think: 'A grand is the plan' — the maximum initial payment is $1,000, no matter how large the contract. On big contracts, 10% sounds nice for the contractor, but the law says: No more than $1,000 to start. 'Pool cap = $1,000 cap.'
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?
A general contractor hires a subcontractor for $22,000. The general contractor receives payment from the owner but fails to pay the subcontractor within how many days, subjecting themselves to penalty interest?
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?
A subcontractor completes roofing work on Tuesday, March 15th. The general contractor is paid by the owner on Friday, March 25th. Under California prompt payment laws, what is the latest date the general contractor must pay the subcontractor?
A contractor receives a progress payment of $18,000 from a property owner on Monday. The contractor owes subcontractors $12,000 of this amount. By what day must the contractor pay the subcontractors?
A swimming pool contractor enters into a $45,000 contract to install an in-ground pool. The contract includes a $5,000 down payment. What is the maximum down payment the contractor can legally collect under California law?
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