CSLB Law and Business 2025 || Needed to Pass.
What is the minimum bond amount required for a contractor license in California? correct
answers $25.000
What is the penalty for acting as a contractor without a license in California? correct answers it is
a MISDEMEANOR
What does the CSLB issue to a contractor for a minor violation as a warning? correct answers
Advisory Notice
How long are citations against licensed contractors disclosed to the public? correct answers 5
years
What is the maximum allowable down payment for a home improvement contract in California?
correct answers $1,000 or 10% of the contract price, Whichever is less
Home improvements contracts must include which of the following? correct answers
•description of materials
•start and completion dates
•permissible delays
Which business structures provides liability protection similar to a corporation but has different
tax treatment? correct answers Limited Liability Company (LLC)
What type of bond guarantees both job completion and payment of all labor and materials?
correct answers Contract Bond
What is the minimum liability insurance required for a limited liability company (LLC) with 5 or
fewer personnel? correct answers $1 million
What is the purpose of a disciplinary bond for a contractor? correct answers To ensure
compliance with licensing rules following disciplinary action
What agency is responsible for licensing and regulating contractors in California? correct
answers Contractors State Licensing Board (CSLB)
What is the main purpose of the contractors state license board? (CSLB) correct answers To
protect consumers by regulating the construction industry
Which of the following violations could be lead to a contractors license suspension? correct
answers •advertising without a license number
•failing to pay subcontractor
•poor workmanship
, Which license classification requires workers' compensation insurance, even if the contractor has
no employees? correct answers C-39 Roofing
Whats is the role of the Statewide Investigative Fraud Team? (SWIFT) correct answers To
investigate unlicensed contractors activity
What is the maximum civil penalty CSLB can impose for serious violations? correct answers
$30,000
What is the first step CSLB takes when a complaint is filed against a license contractor? correct
answers Review the complaint to determine if it falls under CSLB jurisdiction
What is required of a home improvement salesperson (HIS) before they begin working? correct
answers Registration and issuance of a registration number by CSLB
Which business entity allows its owner yo report income as personal income while enjoying
limited liability? correct answers S-Corporation
What type of bond is mandatory for all license contractors in California? correct answers License
bond
What is the purpose of a Mechanics Lien? correct answers To ensure payment for labor or
materials used in a project
What is the penalty for failing to secure workers' compensation insurance for employees? correct
answers •suspension of contractors license
•civil penalties and fines
•possible criminal charges
What financial statement summarizes a company's assets, liability and equity? correct answers
Balance Sheet
Under California Law, how long does a homeowner have to cancel a home improvement
contract if they are over 65 years old? correct answers 5 days
What is required in a home improvement contract to protect the consumer? correct answers
•payment schedule
•start and completion dates
•contractors license information
How often must a contractor renew their license in California? correct answers Every 2 years
What type of insurance is mandatory for all limited liability companies (LLC) in California?
correct answers Commercial general liability insurance
What is the minimum bond amount required for a contractor license in California? correct
answers $25.000
What is the penalty for acting as a contractor without a license in California? correct answers it is
a MISDEMEANOR
What does the CSLB issue to a contractor for a minor violation as a warning? correct answers
Advisory Notice
How long are citations against licensed contractors disclosed to the public? correct answers 5
years
What is the maximum allowable down payment for a home improvement contract in California?
correct answers $1,000 or 10% of the contract price, Whichever is less
Home improvements contracts must include which of the following? correct answers
•description of materials
•start and completion dates
•permissible delays
Which business structures provides liability protection similar to a corporation but has different
tax treatment? correct answers Limited Liability Company (LLC)
What type of bond guarantees both job completion and payment of all labor and materials?
correct answers Contract Bond
What is the minimum liability insurance required for a limited liability company (LLC) with 5 or
fewer personnel? correct answers $1 million
What is the purpose of a disciplinary bond for a contractor? correct answers To ensure
compliance with licensing rules following disciplinary action
What agency is responsible for licensing and regulating contractors in California? correct
answers Contractors State Licensing Board (CSLB)
What is the main purpose of the contractors state license board? (CSLB) correct answers To
protect consumers by regulating the construction industry
Which of the following violations could be lead to a contractors license suspension? correct
answers •advertising without a license number
•failing to pay subcontractor
•poor workmanship
, Which license classification requires workers' compensation insurance, even if the contractor has
no employees? correct answers C-39 Roofing
Whats is the role of the Statewide Investigative Fraud Team? (SWIFT) correct answers To
investigate unlicensed contractors activity
What is the maximum civil penalty CSLB can impose for serious violations? correct answers
$30,000
What is the first step CSLB takes when a complaint is filed against a license contractor? correct
answers Review the complaint to determine if it falls under CSLB jurisdiction
What is required of a home improvement salesperson (HIS) before they begin working? correct
answers Registration and issuance of a registration number by CSLB
Which business entity allows its owner yo report income as personal income while enjoying
limited liability? correct answers S-Corporation
What type of bond is mandatory for all license contractors in California? correct answers License
bond
What is the purpose of a Mechanics Lien? correct answers To ensure payment for labor or
materials used in a project
What is the penalty for failing to secure workers' compensation insurance for employees? correct
answers •suspension of contractors license
•civil penalties and fines
•possible criminal charges
What financial statement summarizes a company's assets, liability and equity? correct answers
Balance Sheet
Under California Law, how long does a homeowner have to cancel a home improvement
contract if they are over 65 years old? correct answers 5 days
What is required in a home improvement contract to protect the consumer? correct answers
•payment schedule
•start and completion dates
•contractors license information
How often must a contractor renew their license in California? correct answers Every 2 years
What type of insurance is mandatory for all limited liability companies (LLC) in California?
correct answers Commercial general liability insurance
