New York Home Improvement Contractor Practice Test

What percentage of customer payments can a contractor allocate for administrative and overhead expenses?

1. 50%

2. 100%

3. None, unless home improvement costs are settled

4. 30%

The correct answer is: None, unless home improvement costs are settled

In the context of home improvement contracting in New York, the allocation of customer payments for administrative and overhead expenses is tightly regulated to protect consumers. Specifically, the law states that contractors may not allocate any portion of customer payments toward administrative or overhead expenses unless the costs related to the home improvement project have been settled. This means that contractors must first ensure that the actual costs of the work performed and goods supplied are covered before any funds can be legally attributed to administrative tasks or overheads. By requiring that costs be settled before allocating funds for overhead, this regulation helps maintain transparency and accountability, ensuring that customers' payments are primarily directed toward tangible project-related expenses. This protects homeowners from being charged excessive administrative fees while also fostering fair business practices within the industry.