CALIFORNIA Home Improvement Contract Law Test Question 5
5. I sometimes charge a downpayment so my contract has a heading titled "Down Payment" and a notice by it stating how much the down payment can be by California Law...
CORRECT ANSWER IS YES
Here is why: This is covered under section 7159 of the California Business and Professions Code. Part of the changes made to contractors law recently,covered in SB30, SB1113 and AB316, included specifying a heading titled "Down Payment" and a new Notice informing the reader of the limitations on the amount you can charge for a down payment. Here is the text of this notice and the law which covers this:
(8) If a downpayment will be charged, the details of the downpayment shall be expressed in substantially the following form, and shall include the text of the notice as specified in subparagraph (C):
(A) The heading: "Down Payment"
(B) A space where the actual downpayment appears.
(C) The following statement in at least 12-point boldface type:
"THE DOWN PAYMENT MAY NOT EXCEED $1000 OR 10 PERCENT OF THE CONTRACT PRICE, WHICHEVER IS LESS"