CSLB Law & Business ExamContract Requirements and ExecutionEasy
A homeowner signs a contract for construction of a swimming pool for $40,000. What is the maximum down payment the contractor may legally collect at signing?
- A$800
- B$1,000
- C$200
- D$4,000
Show answer & explanationAnswer & explanation
Correct answer: C. $200
For swimming pool contracts, California law limits the down payment to whichever is LESS: $200 or 2% of the contract price. Here, 2% of $40,000 is $800, but $200 is less, so $200 is the maximum allowed.
Why the other options are wrong
- A. This is 2% of the contract price, but the lower figure of $200 governs.
- B. This is the general home improvement down payment cap, not the swimming pool cap.
- D. This is 10% of the contract price, far exceeding the swimming pool limit.
Swimming Pool Down Payment Limit
For swimming pool home improvement contracts, the maximum down payment is the lesser of $200 or 2% of the contract price.
- Special lower limit than standard contracts
- Compare $200 vs 2% of price
- Always take the smaller number
Memory trick: Pools get a smaller splash of cash upfront.