Calculate the maximum down payment a contractor can legally request for a $24,000 kitchen remodel under B&P Code 7159.
Correct Answer
D) $1,000
B&P 7159 limits down payments to the lesser of $1,000 or 10% of contract price. 10% of $24,000 = $2,400, but the maximum is capped at $1,000.
Why This Is the Correct Answer
B&P Code Section 7159 limits the down payment to the lesser of 10% of the total contract price OR $1,000. For a $24,000 contract, 10% = $2,400, but since $1,000 is less than $2,400, the maximum allowable down payment is $1,000. This statutory cap protects consumers from contractors who might take large upfront payments and abandon the project.
Why the Other Options Are Wrong
Option A: $2,400
$2,400 represents exactly 10% of the $24,000 contract price. While 10% is part of the calculation, B&P Code 7159 caps the down payment at the LESSER of 10% or $1,000. Since $2,400 exceeds the $1,000 cap, this amount is not legally permitted.
Option B: $7,200
$7,200 represents 30% of the contract price. There is no provision in B&P Code 7159 that permits a 30% down payment. This amount far exceeds the statutory limit and would expose the contractor to disciplinary action by the CSLB.
Option C: $4,800
$4,800 represents 20% of the contract price. Like $7,200, this amount has no basis in B&P Code 7159 and substantially exceeds both the 10% and $1,000 thresholds. Collecting this amount as a down payment would be a B&P Code violation.
Memory Technique
B&P 7159 down payment rule: '10% or $1,000—whichever is LESS.' For contracts over $10,000, the $1,000 cap always wins. For contracts under $10,000, the 10% wins. The magic threshold is $10,000: above it, the cap is $1,000.
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