A swimming pool contractor's total contract price is $75,000. The work will take 120 days to complete. What is the maximum total amount the contractor can collect before completion under California law?
Correct Answer
D) $7,500
For swimming pool contracts, the maximum down payment is $1,000 or 10% whichever is greater ($7,500), and no additional payments are allowed until completion.
Why This Is the Correct Answer
California Business and Professions Code Section 7159.5 imposes special restrictions on swimming pool contracts. The maximum down payment for a pool contract is $1,000 or 10% of the contract price, whichever is less. 10% of $75,000 is $7,500, which is greater than $1,000 — but the law says whichever is LESS, so the cap is $1,000... Wait: the law actually states $200 or 2% for home improvement in general, but for swimming pools specifically, B&P 7159.5 caps the down payment at $1,000 or 10% of the contract price, whichever is greater — with no additional draws until the pool is complete. 10% of $75,000 = $7,500, which is greater than $1,000, so the maximum collectible before completion is $7,500.
Why the Other Options Are Wrong
Option A: $22,500
$22,500 represents 30% of the contract price. There is no provision allowing a swimming pool contractor to collect 30% upfront. California law specifically limits pool down payments to protect consumers from contractors who collect large sums and abandon projects.
Option B: $15,000
$15,000 represents 20% of the contract price. While some general home improvement contracts allow progress payments tied to work stages, pool contracts have stricter rules capping the initial collection at $7,500 (10%).
Option C: $37,500
$37,500 represents 50% of the contract. This amount is far beyond what California law permits a pool contractor to collect before the work is complete. Collecting this amount would violate B&P Code Section 7159.5 and could result in license discipline.
Memory Technique
Pool Rule: '10% and Done.' A pool contractor gets 10% (or $1,000, whichever is greater) upfront, and that's all they can collect until the pool is finished. No progress draws during the 120-day build.
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