CALIFORNIA Home Improvement Contract Law Schedule of Payments Test Question 6
6. My contract has a heading titled "Schedule of Progress Payments" and a bold notice by it stating that it is against the law for a contractor to collect payment for work not yet completed or materials not yet delivered.
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 "Schedule of Progress Payments" and a new Notice informing the reader that a contractor cannot charge for work not done or materials not delivered to the job site. Here is the text of this notice and the law which covers this:
(9) If any payments, other than the downpayment, are to be made before the project is completed, the details of these payments, known as progress payments, shall be expressed in substantially the following form, and shall include the text of the statement as specified in subparagraph (C):
(A) A schedule of progress payments shall be preceded by the heading: ï¿½Schedule of Progress Payments.ï¿½
(B) Each progress payment shall be stated in dollars and cents and specifically reference the amount of work or services to be performed and any materials and equipment to be supplied.
(C) The section of the contract reserved for the progress payments shall include the following statement in at least 12-point boldface type:
The schedule of progress payments must specifically describe each phase of work, including the type and amount of work or services scheduled to be supplied in each phase, along with the amount of each proposed progress payment. IT IS AGAINST THE LAW FOR A CONTRACTOR TO COLLECT PAYMENT FOR WORK NOT YET COMPLETED, OR FOR MATERIALS NOT YET DELIVERED. HOWEVER, A CONTRACTOR MAY REQUIRE A DOWNPAYMENT.