Utah Contractor Practice Exam

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What is the maximum down payment a licensed contractor may receive for a home improvement contract of $25,000?

$500
$1,000
$1,500
$2,500

The correct answer is: $1,000

In Utah, the maximum down payment a licensed contractor can receive for a home improvement contract is regulated by law to protect consumers from large upfront payments that can lead to potential loss if the contractor fails to complete the project. For a contract that totals $25,000, the maximum down payment allowed is set at $1,000. This regulation ensures that a contractor is incentivized to complete the work rather than taking a significant amount of money upfront without a commitment to deliver the promised services. By allowing only a limited down payment, it encourages contractors to maintain good business practices and keeps the consumer's interests safeguarded, as they will not be tied to a large financial commitment before work has commenced. This framework builds trust in home improvement markets by minimizing the risk of abandoning projects or taking deposits without intention to follow through, ensuring that both parties are more likely to uphold their responsibilities in the contractual agreement.