For a home improvement contract exceeding $500, the down payment may be limited to which amount?

For a home improvement contract exceeding $500, the down payment may be limited to which amount?

• A. $500
• B. $1,000 or 10% of the total price, whichever is less
• C. $2,000
• D. $5,000

Answer: (B)

For home improvement contracts that exceed $500, the down payment is limited to the lesser of 10% of the total price or $1,000. This protects homeowners from large upfront costs while still allowing the contractor to receive a portion as work begins. Think through examples: - A $600 contract: 10% is $60, so the down payment cannot exceed $60. - A $5,000 contract: 10% is $500, which is under the $1,000 cap, so the down payment can be $500. - A $15,000 contract: 10% would be $1,500, but the limit is $1,000, so the down payment cannot exceed $1,000. This rule applies only to contracts over $500; smaller jobs aren’t subject to this limit.

For home improvement contracts that exceed $500, the down payment is limited to the lesser of 10% of the total price or $1,000. This protects homeowners from large upfront costs while still allowing the contractor to receive a portion as work begins.

Think through examples:

• A $600 contract: 10% is $60, so the down payment cannot exceed $60.

• A $5,000 contract: 10% is $500, which is under the $1,000 cap, so the down payment can be $500.

• A $15,000 contract: 10% would be $1,500, but the limit is $1,000, so the down payment cannot exceed $1,000.

This rule applies only to contracts over $500; smaller jobs aren’t subject to this limit.