Excessive Downpayment

One of the more common reasons for CSLB discipline is violation of California Business and Professions Code Section 7159.5(a)(3), accepting an excessive downpayment on a home improvement contract. The section reads “If a downpayment will be charged, the downpayment may not exceed one thousand dollars ($1,000) or 10 percent of the contract amount, whichever is less.” Accordingly, if the contract is for $5,000 and the contractor accepts a $1,000 downpayment the contractor has violated Section 7159.5(a)(3) as they have accepted more than 10% of the contract amount as a downpayment.

Discipline

The Contractor State License Board can issue a Citation or Accusation for violation of Section 7159.5(a)(3). However, Accusations are rarely filed for a single regulatory violation. In practice, charging an excessive downpayment will often be accompanied by additional alleged regulatory violations in the Accusation.