Contractor Law Exam Questions and Correct Answers Latest Update 2025 (Already Passed)

Contractor Law Exam Questions and Correct Answers Latest Update 2025 (Already Passed) Division within the dept. of Consumer Affairs - Answers Contractors State License Board 13: 7 public, 5 licensed contractor, 1 labor rep. - Answers How many members CSLB? Not a board member, executive secretary - Answers CSLB appoints the Registrar Issue licenses, all records of apps, official seal, changes in exam procedure - Answers Salaried Registrar 18 years old, 4 yrs experience in last 10 yrs. - Answers Journeyman must be able to prove $2,500 in cash or assets - Answers Financial Solvency Sole proprietor owns 100% of business and license - Answers Individual Business 2 or more persons share ownership - Answers Partnership Reguired to supervise all activities of business. If the qualifying individual owns 10% or more of the licensee, he/she is not required to post bond - Answers Qualifying individual Its own entity consisting of one or more shareholders - Answers Corporation Must have President, Secretary, and Treasurer - Answers Corporation The qualifying individual for a corporation - Answers Responsible Managing Officer RMO This person obtains license for the business they are full time employee - Answers Responsible Managing Employee RME Guarantee funds to those deserving of compensation for damages done by contractor - Answers Contractor's Bond $15,000 issued by insurance company, admitted surety company, or cash deposit filed with the Registrar. - Answers Required bond Two or more licensees able to work together, new application required, additional bond required. - Answers Joint Venture License First offense: $4,500, Second: criminal charges and 20% of contract price, up to 6 months of prison. Unlicensed person may not bring any legal action. - Answers Penalty for unlicensed work 2 years, mail in renewal with fee by the last day of the month in which it was issued or suspension, needs to be renewed within 3 years of the expiration date with registration fee and late penalty fee or becomes void. - Answers How long is a license effective for? License not renewed for circumstances beyond their control, petition includes reasons why, 90 days of license expiration date. - Answers Retroactive Renewal Must register with the Contractors State License Board, misdemeanor for not registering, separate registrations for multiple contractors, must be renewed every 2 years. - Answers Home Improvement Salesperson not to exceed $2,000, include a time period in which violation should be corrected. 15 working days to notify Registrar of appeal - Answers Issue a citation Must notify Registrar within 90 days - Answers Change business name or address Licensee may designate a responsible managing person to act in their place for up to one year - Answers Armed Forces Complete and sign Application to Inactivate, with the plastic pocket size license copy. Must be renewed every 4 years. Considered "on hold" and no bond or proof of workers comp. required. - Answers Inactivate License Remaining partners may, within 90 days, apply for continuance. If died, the continuance would allow for entering into new contracts, if disassociated, continuance would only allow for completion of projects. - Answers A partner has died or disassociated A new license must be obtained within 90 days - Answers New Partner has joined the partnership Will not affect the status of the license, however must be reported to CSLB within 90 days - Answers Changes in officers of a corporation The qualifying individual must be replaced within 90 days - Answers The qualifying member has disassociated from the licensee within 90 days, apply for continuance of completion of projects only. To be permitted to enter into new contracts, a new joint venture license must be obtained within 90 days - Answers A business has withdrawn from joint venture license Any contractor who has entered into a contract directly with the owner of property, their authorized agent, or awarding authority of a Public Works project. Must include note from CSLB on all contracts. - Answers Prime Contractor Any contractor who has entered into a contract with another contractor - Answers Subcontractor Clearly explains mechanic lien laws and all rights and responsibilities of the owner and contractor - Answers Notice to Owner Explains changes to be made, materials to be used, cost of the work, and revised total price of the contract. Require that the owner was aware of all costs and changes made. - Answers Change Order Generally heard within a month, usually under $50, although defendant has the right to appeal, heard within apprx. 2 months. Can offer judgement in your favor up to $1,500. There are no attorneys. - Answers Small Claims Court Both parties must agree, and may represent themselves or acquire assistance of an attorney. Allows for more evidence than a standard court. The decision of an arbitrator is virtually non-appealable. - Answers Arbitration In California, you have the right to file on any property for which your services have been provided (enhancement of the value of property). Allows contractor to foreclose on the property as means to collect payment. - Answers Mechanics' Lien Serves as a burden on property, "tied-up" and cannot be sold until the title has been cleared. Contractor can file suit and foreclose on property, only private. - Answers Mechanics' Lien filed with County Recorder's Office Anyone who has contracted directly with the owner or agent of owner, whose services or materials provided have been incorporated into the structure. - Answers Persons entitled to mechanics' lien In most cases, all mechanics' liens must be filed with County Recorder's office within 90 days of the completion of the contract. To remain in effect, you must also file a lawsuit (foreclosure action) within 90 days of the date the lien was initially filed, to enforce or "perfect" the lien. Will remain in effect until payment has been made or lawsuit has concluded, in which case property will be auctioned. - Answers When must a lien be filed? Must be filed with the County Recorder's office within 10 days following the completion of the project. Once filed, the time period to file lien shortens to 30 days for subcontractor and 60 days for prime contractor. - Answers Notice of Completion Serves to state contract has been terminated, although project has not been completed. May not be filed until a period of 30 days after work has stopped. The time period to file a lien is then shortened same as notice of completion. - Answers Notice of Cessation Contract will not become legally terminated for a period of 60 days following cessation of labor. In this case, the contractor has an additional 90 days following the termination of contract to file a mechanics' lien - Answers Labor has ceased, project is incomplete, notice of cessation has NOT been filed Written statement expressing job is complete, payments are satisfactory, and agreed to waive lien rights. .May be included as a term or the contract or requested following completion of the contract. - Answers Release of mechanic's lien rights of