Which scenario would allow a contractor to collect more than the standard down payment limits under B&P Code 7159?
Correct Answer
C) Building permit fees and inspection costs
B&P Code 7159 specifically allows collection of building permit fees and inspection costs in addition to the standard down payment limits.
Why This Is the Correct Answer
B&P Code 7159 limits down payments to the lesser of 10% of the contract price or $1,000. However, the code explicitly carves out an exception: a contractor may collect building permit fees and inspection costs in addition to this limit, because these are pass-through government fees rather than compensation to the contractor.
Why the Other Options Are Wrong
Option A: Project is scheduled to start more than 60 days from contract signing
A project scheduled to start more than 60 days out does not create any exception to the down payment limit under B&P Code 7159. There is no time-delay exemption in the statute.
Option B: Contractor needs to purchase specialized tools for the job
Needing to purchase specialized tools is a business cost that must be covered within the standard down payment limits. The law does not create exceptions for contractor tool or equipment purchases.
Option D: Customer requests premium materials requiring special order
Special-order or premium materials do not create a statutory exception to the down payment cap. If the contractor wishes to secure funds for special materials, they must structure a progress payment schedule, not increase the down payment beyond the legal limit.
Memory Technique
Remember: the down payment cap is a CONSUMER PROTECTION rule. The only reason the state allows extra collection is for government fees — money that goes directly to the government, not into the contractor's pocket. Ask yourself: 'Does this money go to the government?' If yes, it may be an exception.
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Under B&P Code 7159, which of the following must be included in a home improvement contract for work valued at $2,500?