CSLB Law & Business ExamContract Requirements and ExecutionMedium
A contractor has completed work valued at $4,000 on a $20,000 kitchen remodel contract. What is the maximum progress payment the contractor may lawfully request at this point?
- A$6,000, to help cover anticipated overhead and profit
- B$20,000, the full contract price collected in advance
- C$10,000, representing 50% of the total contract price
- D$4,000, the value of work and materials actually furnished
Show answer & explanationAnswer & explanation
Correct answer: D. $4,000, the value of work and materials actually furnished
Progress payments under California home improvement contract law may not exceed the value of the work completed and materials delivered at the time the payment is requested; here, only $4,000 in work has been performed, so that is the maximum lawful progress payment.
Why the other options are wrong
- A. Adding a buffer beyond completed value is not allowed.
- B. Full advance payment ignores the completed-work limitation.
- C. An arbitrary percentage unrelated to actual work performed is not permitted.
Progress Payment Limit
Progress payments in home improvement contracts must not exceed the value of the work completed and materials delivered as of the date of the request.
- Payments must track actual work performed
- Prevents front-loading of contract funds
- Protects homeowners from paying for undelivered work
Memory trick: Pay for what's built, not what's promised.