Under Arizona Revised Statutes Title 32, what is the maximum amount a residential contractor can collect as a down payment before beginning work?
Correct Answer
C) $1,000 or one-third of the contract price, whichever is less
Arizona law limits down payments to $1,000 or one-third of the contract price, whichever is less, to protect consumers from excessive upfront payments.
Why This Is the Correct Answer
Arizona law caps residential contractor down payments at $1,000 OR one-third of the total contract price, whichever is LESS. This dual cap protects consumers by limiting upfront exposure regardless of project size. For a $1,800 job, one-third is $600 — so $600 applies. For a $15,000 job, one-third is $5,000 — so $1,000 applies.
Why the Other Options Are Wrong
Option A: One-third of the total contract amount
One-third of the total contract amount with no dollar ceiling would allow a contractor on a $30,000 project to collect $10,000 upfront. Arizona law adds the $1,000 maximum cap specifically to prevent this, so this option omits the critical dollar limit.
Option B: $1,000 or 10% of the contract price, whichever is less
$1,000 or 10% of the contract price, whichever is less, is the Oregon CCB rule — not Arizona's. Confusing these two state-specific limits is a common cross-state error on multi-state exams.
Option D: 10% of the total contract amount
10% of the total contract amount has no statutory basis in Arizona for down payments. It lacks the dollar cap and uses the wrong percentage. This answer may seem plausible as a round number but does not reflect A.R.S. Title 32.
Memory Technique
AZ = 'A Third or A Grand' — one-third or $1,000, whichever is less. Oregon = '10% or $1,000.' AZ uses a fraction; OR uses a percentage.
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