CSLB LAW AND BUSINESS 2025
TEST QUESTIONS AND
ANSWERS
What must be included in a home improvement contracts description of work? - Answer-
Description of material and equipment
When must a contractor notify CSLB of a change in their business address? - Answer-
Within 90 days
What does a contractor need to provide for a work requiring a permit? - Answer-Proof of
the required permit and inspection approvals
What is the minimum workers compensation insurance coverage for a roofing
contractor? - Answer-$100,000
What is the primary goal of the construction safety regulations? - Answer-To protect
workers and ensure safe working environments
Who can file a complaint against a contractor with CSLB? - Answer-Any entity, including
•homeowners
•subcontractors
•suppliers
•other contractors
What is the primary purpose of a performance bond? - Answer-To guarantee
completion of the project according to plans and specification
How often must a contractor renew their workers' compensation exemption with CSLB?
- Answer-Every time they renew license
What is the first step a contractor must take when forming a corporation? - Answer-File
Articles of Incorporation with the Secretary of State
What happens if a contractor fails to renew their license within 5 years of expiration? -
Answer-They must reapply for a new license and meet all current requirements
What must contractors disclose to homeowners regarding mechanics lien? - Answer-
The homeowners liability, if a lien is file
Which entity enforces California's construction safety standards? - Answer-Cal/OSHA
, Division of Occupational Safety and Health (DOSH)
How can a contractor dispute a citation issued by CSLB? - Answer-Attend an informal
citation conference or request a gearing with an administrative law judge
What is the maximum print size for text in a home improvement contract? - Answer-10-
point type
Who is responsible for ensuring all required permits are obtained for a construction
project? - Answer-The contractor
What must be included in a contractor's license application? - Answer-A valid social
security number or federal tax ID
Which financial statement shows a company's revenue and expenses over a specific
period? - Answer-Income Statement
What is the main purpose of a payment schedule in a home improvement contract? -
Answer-To ensure payments are tied to project progress
What is a stop notice in the context of a construction project? - Answer-A lien filed to
prevent payment to the contractor until claims are resolved
What should a contractor do if they encounter unanticipated delays in a project? -
Answer-Notify the client and provide a written explanation of permissible delays as
outline in the contract
What is the purpose of the Statewide Investigative Fraud Team (SWIFT) ? - Answer-To
investigate unlicensed contractor activity and enforce compliance
What type of accounting method reports income and expenses when they are earned or
incurred, regardless of payment? - Answer-Accruel Basis
Im California, which agency must contractors contact to verify construction standards
and permits? - Answer-The local building department
Which document provides the legal description and scope of work for a construction
project? - Answer-Contract agreement
What is required before a contractor can place a lien on a property? - Answer-A
preliminary lien notice
How does a contractor qualify for an LLC license in California? - Answer-By submitting
a $100,000 surety bond and meeting insurance requirements
TEST QUESTIONS AND
ANSWERS
What must be included in a home improvement contracts description of work? - Answer-
Description of material and equipment
When must a contractor notify CSLB of a change in their business address? - Answer-
Within 90 days
What does a contractor need to provide for a work requiring a permit? - Answer-Proof of
the required permit and inspection approvals
What is the minimum workers compensation insurance coverage for a roofing
contractor? - Answer-$100,000
What is the primary goal of the construction safety regulations? - Answer-To protect
workers and ensure safe working environments
Who can file a complaint against a contractor with CSLB? - Answer-Any entity, including
•homeowners
•subcontractors
•suppliers
•other contractors
What is the primary purpose of a performance bond? - Answer-To guarantee
completion of the project according to plans and specification
How often must a contractor renew their workers' compensation exemption with CSLB?
- Answer-Every time they renew license
What is the first step a contractor must take when forming a corporation? - Answer-File
Articles of Incorporation with the Secretary of State
What happens if a contractor fails to renew their license within 5 years of expiration? -
Answer-They must reapply for a new license and meet all current requirements
What must contractors disclose to homeowners regarding mechanics lien? - Answer-
The homeowners liability, if a lien is file
Which entity enforces California's construction safety standards? - Answer-Cal/OSHA
, Division of Occupational Safety and Health (DOSH)
How can a contractor dispute a citation issued by CSLB? - Answer-Attend an informal
citation conference or request a gearing with an administrative law judge
What is the maximum print size for text in a home improvement contract? - Answer-10-
point type
Who is responsible for ensuring all required permits are obtained for a construction
project? - Answer-The contractor
What must be included in a contractor's license application? - Answer-A valid social
security number or federal tax ID
Which financial statement shows a company's revenue and expenses over a specific
period? - Answer-Income Statement
What is the main purpose of a payment schedule in a home improvement contract? -
Answer-To ensure payments are tied to project progress
What is a stop notice in the context of a construction project? - Answer-A lien filed to
prevent payment to the contractor until claims are resolved
What should a contractor do if they encounter unanticipated delays in a project? -
Answer-Notify the client and provide a written explanation of permissible delays as
outline in the contract
What is the purpose of the Statewide Investigative Fraud Team (SWIFT) ? - Answer-To
investigate unlicensed contractor activity and enforce compliance
What type of accounting method reports income and expenses when they are earned or
incurred, regardless of payment? - Answer-Accruel Basis
Im California, which agency must contractors contact to verify construction standards
and permits? - Answer-The local building department
Which document provides the legal description and scope of work for a construction
project? - Answer-Contract agreement
What is required before a contractor can place a lien on a property? - Answer-A
preliminary lien notice
How does a contractor qualify for an LLC license in California? - Answer-By submitting
a $100,000 surety bond and meeting insurance requirements
