CSLB Law & Business ExamContract Requirements and ExecutionHard
A homeowner properly cancels a home improvement contract within the 3-day cancellation period. Under California law, what must the contractor do regarding any payments or property received from the homeowner?
- ADeduct the cost of materials already ordered before returning any funds
- BReturn them only after the homeowner submits a written demand letter
- CKeep 20 percent of the payment as a processing fee
- DReturn them within 10 days after receipt of the cancellation notice
Show answer & explanationAnswer & explanation
Correct answer: D. Return them within 10 days after receipt of the cancellation notice
Under California Civil Code Section 1689.6, when a homeowner validly cancels a home improvement contract, the contractor must return any payments or property received within 10 days after receiving the cancellation notice, without deductions or fees.
Why the other options are wrong
- A. Contractors cannot deduct material costs; full refund is required.
- B. No additional written demand is required beyond the cancellation notice itself.
- C. Retaining a processing fee is not permitted under cancellation law.
Refund Obligation After Cancellation
After a valid cancellation, the contractor must return all payments and property to the homeowner within 10 days, with no deductions.
- Based on Civil Code 1689.6
- No fees or deductions allowed
- 10-day return deadline
Memory trick: Cancel today, refund within ten days—no fees, no delays