CSLB LAW AND BUSINESS QUESTIONS & ANSWERS
What is the minimum bond amount required for a contractor license in California? -
Answer -$25.000
What is the penalty for acting as a contractor without a license in California? - Answer -
it is a MISDEMEANOR
What does the CSLB issue to a contractor for a minor violation as a warning? - Answer
-Advisory Notice
How long are citations against licensed contractors disclosed to the public? - Answer -5
years
What is the maximum allowable down payment for a home improvement contract in
California? - Answer -$1,000 or 10% of the contract price, Whichever is less
Home improvements contracts must include which of the following? - Answer -
•description of materials
•start and completion dates
•permissible delays
Which business structures provides liability protection similar to a corporation but has
different tax treatment? - Answer -Limited Liability Company (LLC)
What type of bond guarantees both job completion and payment of all labor and
materials? - Answer -Contract Bond
What is the minimum liability insurance required for a limited liability company (LLC)
with 5 or fewer personnel? - Answer -$1 million
What is the purpose of a disciplinary bond for a contractor? - Answer -To ensure
compliance with licensing rules following disciplinary action
What agency is responsible for licensing and regulating contractors in California? -
Answer -Contractors State Licensing Board (CSLB)
What is the main purpose of the contractors state license board? (CSLB) - Answer -To
protect consumers by regulating the construction industry
Which of the following violations could be lead to a contractors license suspension? -
Answer -•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? - Answer -C-39 Roofing
Whats is the role of the Statewide Investigative Fraud Team? (SWIFT) - Answer -To
investigate unlicensed contractors activity
What is the maximum civil penalty CSLB can impose for serious violations? - Answer -
$30,000
What is the first step CSLB takes when a complaint is filed against a license contractor?
- Answer -Review the complaint to determine if it falls under CSLB jurisdiction
What is required of a home improvement salesperson (HIS) before they begin working?
- Answer -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? - Answer -S-Corporation
What type of bond is mandatory for all license contractors in California? - Answer -
License bond
What is the purpose of a Mechanics Lien? - Answer -To ensure payment for labor or
materials used in a project
What is the penalty for failing to secure workers' compensation insurance for
employees? - Answer -•suspension of contractors license
•civil penalties and fines
•possible criminal charges
What financial statement summarizes a company's assets, liability and equity? -
Answer -Balance Sheet
Under California Law, how long does a homeowner have to cancel a home
improvement contract if they are over 65 years old? - Answer -5 days
What is required in a home improvement contract to protect the consumer? - Answer -
•payment schedule
•start and completion dates
•contractors license information
How often must a contractor renew their license in California? - Answer -Every 2 years
What type of insurance is mandatory for all limited liability companies (LLC) in
California? - Answer -Commercial general liability insurance
What is the minimum bond amount required for a contractor license in California? -
Answer -$25.000
What is the penalty for acting as a contractor without a license in California? - Answer -
it is a MISDEMEANOR
What does the CSLB issue to a contractor for a minor violation as a warning? - Answer
-Advisory Notice
How long are citations against licensed contractors disclosed to the public? - Answer -5
years
What is the maximum allowable down payment for a home improvement contract in
California? - Answer -$1,000 or 10% of the contract price, Whichever is less
Home improvements contracts must include which of the following? - Answer -
•description of materials
•start and completion dates
•permissible delays
Which business structures provides liability protection similar to a corporation but has
different tax treatment? - Answer -Limited Liability Company (LLC)
What type of bond guarantees both job completion and payment of all labor and
materials? - Answer -Contract Bond
What is the minimum liability insurance required for a limited liability company (LLC)
with 5 or fewer personnel? - Answer -$1 million
What is the purpose of a disciplinary bond for a contractor? - Answer -To ensure
compliance with licensing rules following disciplinary action
What agency is responsible for licensing and regulating contractors in California? -
Answer -Contractors State Licensing Board (CSLB)
What is the main purpose of the contractors state license board? (CSLB) - Answer -To
protect consumers by regulating the construction industry
Which of the following violations could be lead to a contractors license suspension? -
Answer -•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? - Answer -C-39 Roofing
Whats is the role of the Statewide Investigative Fraud Team? (SWIFT) - Answer -To
investigate unlicensed contractors activity
What is the maximum civil penalty CSLB can impose for serious violations? - Answer -
$30,000
What is the first step CSLB takes when a complaint is filed against a license contractor?
- Answer -Review the complaint to determine if it falls under CSLB jurisdiction
What is required of a home improvement salesperson (HIS) before they begin working?
- Answer -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? - Answer -S-Corporation
What type of bond is mandatory for all license contractors in California? - Answer -
License bond
What is the purpose of a Mechanics Lien? - Answer -To ensure payment for labor or
materials used in a project
What is the penalty for failing to secure workers' compensation insurance for
employees? - Answer -•suspension of contractors license
•civil penalties and fines
•possible criminal charges
What financial statement summarizes a company's assets, liability and equity? -
Answer -Balance Sheet
Under California Law, how long does a homeowner have to cancel a home
improvement contract if they are over 65 years old? - Answer -5 days
What is required in a home improvement contract to protect the consumer? - Answer -
•payment schedule
•start and completion dates
•contractors license information
How often must a contractor renew their license in California? - Answer -Every 2 years
What type of insurance is mandatory for all limited liability companies (LLC) in
California? - Answer -Commercial general liability insurance
