Nevada Contractor General Business and
Law (CMS) Exam Questions and Correct
Answers (Verified Answers) Plus Rationales
Question 1
what is the maximum administrative fin for abandonment or failure to complete a
construction project? (NRS 624.301 NAC 624.7251)
Correct Answer
$10,000
Question 2
What is the fee to renew an inactive license? (NRS 624.130)
Correct Answer
$300
Page 1 of 84
,Question 3
Two licensees each have a monetary bid limit of $50,000. They want to for a joint
venture in order to bid for a job that is 1,000,000. Which of the following statement is
true regarding this situation? (NRS 624.740)
Correct Answer
They must obtain a separate joint venture from the board prior to the bidding
Question 1: Which state agency is responsible for licensing, regulating, and
disciplining contractors in Nevada?
A. Nevada Department of Business and Industry
B. Nevada State Contractors Board (NSCB)
C. Nevada Secretary of State
D. Nevada Division of Industrial Relations
CORRECT ANSWER: B. Nevada State Contractors Board (NSCB)
Rationale: The Nevada State Contractors Board (NSCB) is the specific
regulatory body tasked with administering the contractor licensing laws,
conducting examinations, and enforcing disciplinary actions under NRS
Chapter 624.
Question 2: In Nevada, what is the primary role of a "qualifying individual"
for a contractor's license?
A. To provide the financial capital required for the business
B. To serve as the legal registered agent for the corporation
C. To demonstrate the required technical knowledge and experience to
oversee the contracting work
D. To manage the company's payroll and tax submissions
CORRECT ANSWER: C. To demonstrate the required technical knowledge
and experience to oversee the contracting work
Rationale: A qualifying individual is the person who passes the trade
examination and meets the experience requirements, proving to the NSCB
that the entity has the technical competency to perform the contracted work
legally and safely.
Question 3: How often must a Nevada contractor's license be renewed?
A. Annually
B. Biennially (every two years)
C. Every three years
D. Every five years
CORRECT ANSWER: B. Biennially (every two years)
Rationale: Nevada contractor licenses are valid for a two-year period and
Page 2 of 84
,must be renewed biennially to remain active and in good standing with the
NSCB.
Question 4: If two separately licensed Nevada contractors wish to bid on a
large public works project together as a joint venture, what must they do?
A. Simply sign a private partnership agreement and bid under one of their
existing licenses
B. Obtain a separate joint venture license from the NSCB before submitting
the bid
C. Register the joint venture with the Secretary of State but use the lead
contractor's license
D. Notify the awarding agency in writing; no NSCB license is required for
joint ventures
CORRECT ANSWER: B. Obtain a separate joint venture license from the
NSCB before submitting the bid
Rationale: Nevada law requires that any joint venture engaging in
contracting work must obtain a specific joint venture license from the NSCB,
even if all individual parties hold active licenses.
Question 5: What is the Residential Recovery Fund in Nevada designed to
do?
A. Provide low-interest loans to contractors for building affordable housing
B. Compensate homeowners for actual financial losses caused by the
fraudulent or dishonest acts of a licensed residential contractor
C. Fund the rehabilitation of abandoned residential properties
D. Pay for the repair of homes damaged by natural disasters
CORRECT ANSWER: B. Compensate homeowners for actual financial losses
caused by the fraudulent or dishonest acts of a licensed residential
contractor
Rationale: The Residential Recovery Fund is a state-mandated pool of money,
funded by contractor assessments, used to reimburse homeowners who
suffer direct financial damages due to a residential contractor's violation of
licensing laws.
Question 6: Which of the following must be included in a Nevada home
improvement contract to be legally enforceable?
A. A clause waiving the homeowner's right to a jury trial
B. The approximate start and completion dates, a detailed scope of work,
and the total contract price
C. A mandatory arbitration agreement signed by a notary
D. A guarantee that no change orders will ever be issued
CORRECT ANSWER: B. The approximate start and completion dates, a
Page 3 of 84
, detailed scope of work, and the total contract price
Rationale: Nevada law strictly requires home improvement contracts to
contain specific elements, including the parties' names, license number,
scope of work, start and completion dates, and the total price, to protect
consumers from deceptive practices.
Question 7: Under Nevada law, what is the legal consequence of a
contractor advertising their services without including their license
number in the advertisement?
A. A minor warning from the NSCB
B. The contract becomes automatically voidable by the client
C. It is considered a misdemeanor and grounds for disciplinary action by the
NSCB
D. The contractor must pay a fine to the local municipality only
CORRECT ANSWER: C. It is considered a misdemeanor and grounds for
disciplinary action by the NSCB
Rationale: Failing to include the contractor's license number in any
advertisement is a violation of NRS Chapter 624, constituting a misdemeanor
and subjecting the licensee to disciplinary action, including fines or
suspension.
Question 8: When a Nevada contractor executes a contract for residential
construction, what must they provide to the homeowner regarding the
Residential Recovery Fund?
A. A verbal explanation only
B. A specific written notice informing the homeowner of the fund's existence
and how to file a claim
C. A copy of the state's entire financial ledger
D. Nothing, as the state automatically mails this to the homeowner
CORRECT ANSWER: B. A specific written notice informing the homeowner
of the fund's existence and how to file a claim
Rationale: Contractors must include a state-prescribed notice in all
residential contracts informing the homeowner about the Residential
Recovery Fund, ensuring the consumer is aware of their protections.
Question 9: Which of the following best describes a "Notice of Right to
Lien" in Nevada?
A. A document filed by the owner to prevent any liens from being placed on
the property
B. A notice required by subcontractors and suppliers on residential projects
to preserve their lien rights
C. A final warning sent 10 days before a lawsuit is filed
Page 4 of 84
Law (CMS) Exam Questions and Correct
Answers (Verified Answers) Plus Rationales
Question 1
what is the maximum administrative fin for abandonment or failure to complete a
construction project? (NRS 624.301 NAC 624.7251)
Correct Answer
$10,000
Question 2
What is the fee to renew an inactive license? (NRS 624.130)
Correct Answer
$300
Page 1 of 84
,Question 3
Two licensees each have a monetary bid limit of $50,000. They want to for a joint
venture in order to bid for a job that is 1,000,000. Which of the following statement is
true regarding this situation? (NRS 624.740)
Correct Answer
They must obtain a separate joint venture from the board prior to the bidding
Question 1: Which state agency is responsible for licensing, regulating, and
disciplining contractors in Nevada?
A. Nevada Department of Business and Industry
B. Nevada State Contractors Board (NSCB)
C. Nevada Secretary of State
D. Nevada Division of Industrial Relations
CORRECT ANSWER: B. Nevada State Contractors Board (NSCB)
Rationale: The Nevada State Contractors Board (NSCB) is the specific
regulatory body tasked with administering the contractor licensing laws,
conducting examinations, and enforcing disciplinary actions under NRS
Chapter 624.
Question 2: In Nevada, what is the primary role of a "qualifying individual"
for a contractor's license?
A. To provide the financial capital required for the business
B. To serve as the legal registered agent for the corporation
C. To demonstrate the required technical knowledge and experience to
oversee the contracting work
D. To manage the company's payroll and tax submissions
CORRECT ANSWER: C. To demonstrate the required technical knowledge
and experience to oversee the contracting work
Rationale: A qualifying individual is the person who passes the trade
examination and meets the experience requirements, proving to the NSCB
that the entity has the technical competency to perform the contracted work
legally and safely.
Question 3: How often must a Nevada contractor's license be renewed?
A. Annually
B. Biennially (every two years)
C. Every three years
D. Every five years
CORRECT ANSWER: B. Biennially (every two years)
Rationale: Nevada contractor licenses are valid for a two-year period and
Page 2 of 84
,must be renewed biennially to remain active and in good standing with the
NSCB.
Question 4: If two separately licensed Nevada contractors wish to bid on a
large public works project together as a joint venture, what must they do?
A. Simply sign a private partnership agreement and bid under one of their
existing licenses
B. Obtain a separate joint venture license from the NSCB before submitting
the bid
C. Register the joint venture with the Secretary of State but use the lead
contractor's license
D. Notify the awarding agency in writing; no NSCB license is required for
joint ventures
CORRECT ANSWER: B. Obtain a separate joint venture license from the
NSCB before submitting the bid
Rationale: Nevada law requires that any joint venture engaging in
contracting work must obtain a specific joint venture license from the NSCB,
even if all individual parties hold active licenses.
Question 5: What is the Residential Recovery Fund in Nevada designed to
do?
A. Provide low-interest loans to contractors for building affordable housing
B. Compensate homeowners for actual financial losses caused by the
fraudulent or dishonest acts of a licensed residential contractor
C. Fund the rehabilitation of abandoned residential properties
D. Pay for the repair of homes damaged by natural disasters
CORRECT ANSWER: B. Compensate homeowners for actual financial losses
caused by the fraudulent or dishonest acts of a licensed residential
contractor
Rationale: The Residential Recovery Fund is a state-mandated pool of money,
funded by contractor assessments, used to reimburse homeowners who
suffer direct financial damages due to a residential contractor's violation of
licensing laws.
Question 6: Which of the following must be included in a Nevada home
improvement contract to be legally enforceable?
A. A clause waiving the homeowner's right to a jury trial
B. The approximate start and completion dates, a detailed scope of work,
and the total contract price
C. A mandatory arbitration agreement signed by a notary
D. A guarantee that no change orders will ever be issued
CORRECT ANSWER: B. The approximate start and completion dates, a
Page 3 of 84
, detailed scope of work, and the total contract price
Rationale: Nevada law strictly requires home improvement contracts to
contain specific elements, including the parties' names, license number,
scope of work, start and completion dates, and the total price, to protect
consumers from deceptive practices.
Question 7: Under Nevada law, what is the legal consequence of a
contractor advertising their services without including their license
number in the advertisement?
A. A minor warning from the NSCB
B. The contract becomes automatically voidable by the client
C. It is considered a misdemeanor and grounds for disciplinary action by the
NSCB
D. The contractor must pay a fine to the local municipality only
CORRECT ANSWER: C. It is considered a misdemeanor and grounds for
disciplinary action by the NSCB
Rationale: Failing to include the contractor's license number in any
advertisement is a violation of NRS Chapter 624, constituting a misdemeanor
and subjecting the licensee to disciplinary action, including fines or
suspension.
Question 8: When a Nevada contractor executes a contract for residential
construction, what must they provide to the homeowner regarding the
Residential Recovery Fund?
A. A verbal explanation only
B. A specific written notice informing the homeowner of the fund's existence
and how to file a claim
C. A copy of the state's entire financial ledger
D. Nothing, as the state automatically mails this to the homeowner
CORRECT ANSWER: B. A specific written notice informing the homeowner
of the fund's existence and how to file a claim
Rationale: Contractors must include a state-prescribed notice in all
residential contracts informing the homeowner about the Residential
Recovery Fund, ensuring the consumer is aware of their protections.
Question 9: Which of the following best describes a "Notice of Right to
Lien" in Nevada?
A. A document filed by the owner to prevent any liens from being placed on
the property
B. A notice required by subcontractors and suppliers on residential projects
to preserve their lien rights
C. A final warning sent 10 days before a lawsuit is filed
Page 4 of 84
