1
CSLB Contractor’s Law Exam Prep (Part 2):
Questions with 100% Correct Answers
1. A Stop Notice is the only single means to force payment on a public-works
job. You must not lien public property, so in the event a contractor needs to
serve a Stop Notice on a public-works job, he should serve it to the:
A. Lender
B. Prime contractor
C. Awarding authority
D. Division of Payments - ANSWER C. Awarding authority - Remember
only subs use the stop notice
2. 2 types of qualifying individuals for each type of license - ANSWER
Individual - Responsible Managing Employee (RME) or Owner
3. Partnership - Qualifying Partner or RME
4. Corporation - Responsible managing officer (RMO) or RME
5. LLC - RME, RMO, Responsible Managing member/manager
6. What must be filed w/CSLB if RME/RMO leaves? Within how long? If not,
what happens? - ANSWER "Notice of disassociation" and "application for
replacing qualifying individual".
Within 20 days
Or license automatically suspended
7. Responsible Managing Employee (RME) - ANSWER Full time employee
works at least 32 hours or 80% of operating time of biz, whichever is less.
May be used to qualify for individual, partnership, or corp license.
Never more than 3 licensees at one time.
Can only act as qualifier for 1 license at a time unless either: 1) other
licensee is subsidiary 2) he/she owns at least 20% of licensee 3) majority of
officers/partners of other one also are those of 1st
8. Responsible Managing Officer (RMO) - ANSWER Officer of Corp
9. Journeyman - ANSWER A person who has completed an apprecnticeship
program or is an experienced worker, not a trainee, and is fully qualified to
perform the trade without supervision.
, 2
10.Foreman/Supervisor - ANSWER A person who has the knowledge/skill of a
journeyman and directly supervises physical construction
11.What are penalties for contracting w/out a license - ANSWER -
Misdemeanor offense
- 1st offense may receive citation from registrar, potential
sentence of up to 6 months in jail and/or $500 fine, which is
accompanied by civil penalty of no less than $200 and no
more than $15,000. May lessen or waive if contractor obtains
license within prescribed period of time.
- Felony charges for contracting w/out a license in emergency
projects.
- 2nd offense found guilty of criminal offense which is
punishable by civil penalty of 20% contract price or $4,500,
whichever is greater, and county jail min 90 days.
12.Penalty for advertising for work outside of your license - ANSWER fine of
$700-$1000
13.Penalty for hiring unlicensed sub or allowing use of license - ANSWER
Citation from registrar and civil penalty up to $15,000
14.Penalty for deliberate fraudulent use of contractor's license - ANSWER Up
to $10,000 and/or one year jail
15.Bond must be filed with _ within _ days of effective date of bond. -
ANSWER CSLB ; 90
16.Contractor's Bond amount - ANSWER $15,000
17.Performance Bond - ANSWER guarantees job will be completed according
to building plans and specs. If work is unacceptable or project is abandoned,
bonding company can hire another contractor to complete the work or settle
for damages.
18.Payment Bond - ANSWER Guarantee to the owner that no liens for
materials or labor will be filed against the property.
19.Contract Bond - ANSWER Guarantees both job completion and payment of
all labor and materials.
, 3
20.Bid Shopping - ANSWER When prime contractor discloses sub's bid to
other subs to get them to lower their price.
21.Bid Peddling - ANSWER When a sub whose bid wasn't chosen lowers bid
in attempt to induce contractor to pick them instead.
22.The Listing Law - ANSWER Applies to state and local public works
projects.
23.Requires contractor to include in their bid name, place of business, and
license # of each sub whose bid is .5% or more of total bid or $10,000 or
more, whichever is greater, and the portion of work performed by each sub.
24.If contractor violates, public entity may cancel contract or assess penalty of
not more than 10% of amount of subcontract involved. May also be
subjected to discipline by CSLB.
25.If material change is made by public entity to its invitation to bid w/in 72
hours of bid closing, what has to happen? - ANSWER Must extend deadline
by no less than 72 hours.
26.Reasons public entity can give consent for contractor to substitute a sub. -
ANSWER Failure to execute contract
Insolvency
Failure to perform subcontract
Failure to furnish bonds
Clerical error
Unlicensed
Failure to perform work
Failure to pay prevailing wages
Not qualified
Public emergency or necessity (only after written finding)
27.If contractor requests substitution of sub on public job, public entity is
required to___? - ANSWER Give written notice to sub of request and reason
for it by certified mail. Sub has 5 working days to submit appeal. Then a
hearing will be held. Public entity must give written notice to sub at least 5
working days before hearing.
, 4
28.If contractor requests substitution of sub on public job due to clerical error,
what must he/she do? - ANSWER Give written notice to public entity, listed
sub, and intended sub, within 2 working days after bid opening. Listed sub
has 6 working days from bid opening to submit to public entity written
objections. Contractor, listed sub, and intended sub then have 8 working
days from bid opening to submit affidavits to public entity. Then a hearing is
held.
29.For a contract to be formed: - ANSWER Offer
Acceptance
Consideration
Legality
30.Contractors License Law - ANSWER Must give owner a notice (on property
with 4 or fewer units) informing them of contractor's license requirements
and give info on how to check with board to determine status of license.
Notice must be in capital letters in 10pt Roman bold font or in contrasting
red in at least 8pt Roman bold font.
31.If license has be suspended or revoked 2 or more times w/in 8 year period,
any disciplinary license suspension or revocation must be disclosed. Same
font requirements.
32.Contract Notice must be included in at least 10pt letting owner know of
requirements to become licensed by the board and address if further
questions.
33.Swimming pool and home improvement contracts must include a
Mechanic's Lien Warning. Informs owner of his/her and contractor's rights
and responsibilities with respect to Mechanic's Lien Warning.
34.Must include general liability disclosure. Heading must be 14pt type with
questions in at least 12pt, with comments in italics of at least 11pt.
35.20-day Preliminary Notice - ANSWER Not a lien. Preserves right of
subs/materials provider to record a lien on your property if not paid. Can be
sent up to 20 days after the sub starts work or supplier provides materials.
36.Not used by prime contractor as already obvious they are working on
owner's property.
CSLB Contractor’s Law Exam Prep (Part 2):
Questions with 100% Correct Answers
1. A Stop Notice is the only single means to force payment on a public-works
job. You must not lien public property, so in the event a contractor needs to
serve a Stop Notice on a public-works job, he should serve it to the:
A. Lender
B. Prime contractor
C. Awarding authority
D. Division of Payments - ANSWER C. Awarding authority - Remember
only subs use the stop notice
2. 2 types of qualifying individuals for each type of license - ANSWER
Individual - Responsible Managing Employee (RME) or Owner
3. Partnership - Qualifying Partner or RME
4. Corporation - Responsible managing officer (RMO) or RME
5. LLC - RME, RMO, Responsible Managing member/manager
6. What must be filed w/CSLB if RME/RMO leaves? Within how long? If not,
what happens? - ANSWER "Notice of disassociation" and "application for
replacing qualifying individual".
Within 20 days
Or license automatically suspended
7. Responsible Managing Employee (RME) - ANSWER Full time employee
works at least 32 hours or 80% of operating time of biz, whichever is less.
May be used to qualify for individual, partnership, or corp license.
Never more than 3 licensees at one time.
Can only act as qualifier for 1 license at a time unless either: 1) other
licensee is subsidiary 2) he/she owns at least 20% of licensee 3) majority of
officers/partners of other one also are those of 1st
8. Responsible Managing Officer (RMO) - ANSWER Officer of Corp
9. Journeyman - ANSWER A person who has completed an apprecnticeship
program or is an experienced worker, not a trainee, and is fully qualified to
perform the trade without supervision.
, 2
10.Foreman/Supervisor - ANSWER A person who has the knowledge/skill of a
journeyman and directly supervises physical construction
11.What are penalties for contracting w/out a license - ANSWER -
Misdemeanor offense
- 1st offense may receive citation from registrar, potential
sentence of up to 6 months in jail and/or $500 fine, which is
accompanied by civil penalty of no less than $200 and no
more than $15,000. May lessen or waive if contractor obtains
license within prescribed period of time.
- Felony charges for contracting w/out a license in emergency
projects.
- 2nd offense found guilty of criminal offense which is
punishable by civil penalty of 20% contract price or $4,500,
whichever is greater, and county jail min 90 days.
12.Penalty for advertising for work outside of your license - ANSWER fine of
$700-$1000
13.Penalty for hiring unlicensed sub or allowing use of license - ANSWER
Citation from registrar and civil penalty up to $15,000
14.Penalty for deliberate fraudulent use of contractor's license - ANSWER Up
to $10,000 and/or one year jail
15.Bond must be filed with _ within _ days of effective date of bond. -
ANSWER CSLB ; 90
16.Contractor's Bond amount - ANSWER $15,000
17.Performance Bond - ANSWER guarantees job will be completed according
to building plans and specs. If work is unacceptable or project is abandoned,
bonding company can hire another contractor to complete the work or settle
for damages.
18.Payment Bond - ANSWER Guarantee to the owner that no liens for
materials or labor will be filed against the property.
19.Contract Bond - ANSWER Guarantees both job completion and payment of
all labor and materials.
, 3
20.Bid Shopping - ANSWER When prime contractor discloses sub's bid to
other subs to get them to lower their price.
21.Bid Peddling - ANSWER When a sub whose bid wasn't chosen lowers bid
in attempt to induce contractor to pick them instead.
22.The Listing Law - ANSWER Applies to state and local public works
projects.
23.Requires contractor to include in their bid name, place of business, and
license # of each sub whose bid is .5% or more of total bid or $10,000 or
more, whichever is greater, and the portion of work performed by each sub.
24.If contractor violates, public entity may cancel contract or assess penalty of
not more than 10% of amount of subcontract involved. May also be
subjected to discipline by CSLB.
25.If material change is made by public entity to its invitation to bid w/in 72
hours of bid closing, what has to happen? - ANSWER Must extend deadline
by no less than 72 hours.
26.Reasons public entity can give consent for contractor to substitute a sub. -
ANSWER Failure to execute contract
Insolvency
Failure to perform subcontract
Failure to furnish bonds
Clerical error
Unlicensed
Failure to perform work
Failure to pay prevailing wages
Not qualified
Public emergency or necessity (only after written finding)
27.If contractor requests substitution of sub on public job, public entity is
required to___? - ANSWER Give written notice to sub of request and reason
for it by certified mail. Sub has 5 working days to submit appeal. Then a
hearing will be held. Public entity must give written notice to sub at least 5
working days before hearing.
, 4
28.If contractor requests substitution of sub on public job due to clerical error,
what must he/she do? - ANSWER Give written notice to public entity, listed
sub, and intended sub, within 2 working days after bid opening. Listed sub
has 6 working days from bid opening to submit to public entity written
objections. Contractor, listed sub, and intended sub then have 8 working
days from bid opening to submit affidavits to public entity. Then a hearing is
held.
29.For a contract to be formed: - ANSWER Offer
Acceptance
Consideration
Legality
30.Contractors License Law - ANSWER Must give owner a notice (on property
with 4 or fewer units) informing them of contractor's license requirements
and give info on how to check with board to determine status of license.
Notice must be in capital letters in 10pt Roman bold font or in contrasting
red in at least 8pt Roman bold font.
31.If license has be suspended or revoked 2 or more times w/in 8 year period,
any disciplinary license suspension or revocation must be disclosed. Same
font requirements.
32.Contract Notice must be included in at least 10pt letting owner know of
requirements to become licensed by the board and address if further
questions.
33.Swimming pool and home improvement contracts must include a
Mechanic's Lien Warning. Informs owner of his/her and contractor's rights
and responsibilities with respect to Mechanic's Lien Warning.
34.Must include general liability disclosure. Heading must be 14pt type with
questions in at least 12pt, with comments in italics of at least 11pt.
35.20-day Preliminary Notice - ANSWER Not a lien. Preserves right of
subs/materials provider to record a lien on your property if not paid. Can be
sent up to 20 days after the sub starts work or supplier provides materials.
36.Not used by prime contractor as already obvious they are working on
owner's property.
