What is the maximum down payment a contractor can legally collect under a home improvement contract governed by B&P Code 7159?
Correct Answer
C) $1,000 or 10% of the contract price, whichever is less
B&P 7159 limits down payments to $1,000 or 10% of the contract price, whichever is less.
Why This Is the Correct Answer
Business & Professions Code Section 7159 explicitly caps down payments on home improvement contracts at $1,000 or 10% of the contract price, whichever is less. This consumer protection provision prevents contractors from collecting large upfront sums before work begins.
Why the Other Options Are Wrong
Option A: $500 or 10% of the contract price, whichever is less
Option A has the percentage right (10%) but the dollar cap wrong ($500 instead of $1,000). The statutory cap is $1,000, not $500.
Option B: $1,500 or 15% of the contract price, whichever is less
Option B doubles both the correct figures — $1,500 instead of $1,000 and 15% instead of 10%. Neither figure matches the statute.
Option D: $2,000 or 20% of the contract price, whichever is less
Option D doubles the correct figures even further — $2,000 instead of $1,000 and 20% instead of 10%. This would allow far more upfront collection than the law permits.
Memory Technique
B&P 7159 = '$1,000 or 10%' — remember '1-10': one thousand dollars, ten percent. The '1' in $1,000 and the '10' go together. Always take whichever is LESS to protect the homeowner.
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