Download CSLB - Law and Business Exam: Questions and Answers and more Exams Business Administration in PDF only on Docsity!
CSLB - Law and Business Exam
Questions and Answers | 100%
Correct Answer | Grade A+
2 types of qualifying individuals for each type of license Ans: Individual - Responsible Managing Employee (RME) or Owner Partnership - Qualifying Partner or RME Corporation - Responsible managing officer (RMO) or RME LLC - RME, RMO, Responsible Managing member/manager What must be filed w/CSLB if RME/RMO leaves? Within how long? If not, what happens? Ans: "Notice of disassociation" and "application for replacing qualifying individual". Within 20 days Or license automatically suspended Responsible Managing Employee (RME) Ans: 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 Responsible Managing Officer (RMO) Ans: Officer of Corp Journeyman Ans: 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. Foreman/Supervisor Ans: A person who has the knowledge/skill of a journeyman and directly supervises physical construction What are penalties for contracting w/out a license Ans: - 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
Performance Bond Ans: 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. Payment Bond Ans: Guarantee to the owner that no liens for materials or labor will be filed against the property. Contract Bond Ans: Guarantees both job completion and payment of all labor and materials. Bid Shopping Ans: When prime contractor discloses sub's bid to other subs to get them to lower their price. Bid Peddling Ans: When a sub whose bid wasn't chosen lowers bid in attempt to induce contractor to pick them instead. The Listing Law
Ans: Applies to state and local public works projects. 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. 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. If material change is made by public entity to its invitation to bid w/in 72 hours of bid closing, what has to happen? Ans: Must extend deadline by no less than 72 hours. Reasons public entity can give consent for contractor to substitute a sub. Ans: 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
Contractors License Law Ans: 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. 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. 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. 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. Must include general liability disclosure. Heading must be 14pt type with questions in at least 12pt, with comments in italics of at least 11pt. 20 - day Preliminary Notice Ans: 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.
Not used by prime contractor as already obvious they are working on owner's property. Requirements for written contract Ans: - Must be signed by all parties involved.
- Estimated start and finish of work.
- Name, address, license number, description of license classification of contractor.
- Name and registration number of home improvement sales person if applicable.
- Description of materials to be used, work to be done, equipment to be installed, and contract price.
- Statement of what constitutes substantial commencement of work to be performed.
- Whether you charge down payment. Must be $1000 or 10% of contract amount, whichever is less.
- In addition to down payment, if other payments made prior to completion of work, must provide schedule of payments to be made in dollars and cents. Contractor cannot accept payments that exceed the value of work or materials delivered up to that point.
- Notice to Owner that describes Mechanic's Lien Law and how it applies to owner/contractor.
- Statement that when payments are made for any portion of the work performed, contractor shall furnish a full and unconditional release from any claim or mechanic's lien for that portion of the work.
Penalty for violation of home improvement contract laws Ans: Both misdemeanor and cause for disciplinary action. May result in fine of $100-$ and/or up to 1 year in jail. If a false representation is made in a home improvement contract... Ans: The owner may recover up to $500 plus attorney's fees plus damages. Specific penalty for receiving a false completion certificate? Ans: 500 - $ What info should change order include? Ans: Description of work to be done; total price of change; total price of contract including change. When should contractor collect for change order? Ans: As soon as the change order is complete. Home Solicitation Contract/Offer
Ans: Any contract/offer subject to approval for sale, lease, or rental of goods or services or both made OUTSIDE of the contractor's normal place of business in the amount of $25 or more. Buyer may cancel home solicitation contract w/in how many days? Ans: 3 (any time prior to midnight of 3rd business day) Notice of Cancellation Ans: Must be included in Home Solicitation Contract with statement that is super long, but includes the fact that they can cancel w/in 3 business days and that the contractor then has 10 days to return any amount paid. Contractor has 20 days to pick up any materials delivered after which point owner can keep it. When does Notice of Cancellation's 3-day window not apply? Ans: Emergency repair work situations in which owner provides written and dates statements both waiving their right to cancel w/in 3 days AND describing the emergency situation. In state of emergency declared by gov't, how many days does customer have to cancel contract? Ans: 7
Mechanic's Lien Ans: - Used by contractor to enforce payment on a contract by placing a lien on property where work was done. (private only, not public)
- Gives Contractor right to foreclose on owner's property
- Must file document with county recorder's office including description of work, address of property, name of owner, and unpaid balance.
- Can be filed by anyone (contractor, sub, supplier, employee) that dealt directly with owner or agent of the owner (like the contractor).
- Owner must know work is being done.
- May be filed within 90 days of completion of contract. Mechanic's lien must be filed within how many days of completion of contract? Ans: 90 Notice of Completion Ans: - May be filed by contractor, owner, agent in order to shorten the 90-day lien period
- Filed with Country recorder
- Serves as indication that the filer accepts the work performed by a particular contractor as complete.
- Must be filed within 10 days following completion of contract.
- Reduces lien period for sub to 30 days and 60 days for prime contractor. Notice of Completion mus be filed within how many days of completion of contract? Ans: 15 Notice of Cessation Ans: - Same effect as Notice of Completion (reduces window for filing Mechanic's lien from 90 to 30 days for a sub and 60 for prime), but it's for when the contract is legally terminated even though the work isn't completed.
- Can be filed only after 30 days of stoppage.
- Work is not considered legally terminated unless 60 days pass from last date contractor performed any work.
- Contractor has additional 90 days to file mechanic's lien following this period. When can Notice of Cessation be filed? Ans: After 30 days of stoppage. What must the contractor do in addition to filing a mechanic's lien in order to enforce payment on a contract? Ans: File a lawsuit to enforce or "perfect" the lien within 90 days following the date mechanic's lien was filed.
- Contractor who contracts with someone who is not the owner of the property (includes tenants and architects).
- If a contractor is working on a job funded by construction loan.
- A contractor that is performing work on public works project. Preliminary 20-day Notice must contain: Ans: - Name and address of person furnishing labor, materials, equipment, or service.
- General description and price estimate.
- Name of person who contracted for purchase of labor, materials, equipment or service.
- Description of jobsite sufficient for ID
- Statement that claimant has right to file mechanic's lien.
- If lender involved, total price of claimant's contract must be included. Notice of Nonresponsibility Ans: - A contractor must send a preliminary 20-day notice to owner if contractor contracts with tenant or an agent.
- Owner may choose to not be held responsible by filing this notice with county recorder within 10 days of prelim notice.
- Renders contractor unable to file mechanic's lien.
- Must be posted at job site in conspicuous place.
Release of Mechanic's Lien Ans: - Once contractor or suppliers have been paid in full, owner may ask contractor or supplier to sign this to prove the contractor/supplier is paid in full and thus can't file mechanic's lien. Construction Loan Ans: - Money not dispersed at once, rather over life of project.
- Balance of loan does not exceed value of property at particular point in time.
- Lender can place lien on property until amount owed is paid in full. Stop Notice Ans: - Similar to mechanic's lien in that it ensures contractor can collect funds due.
- Different in that it's placed on funds as opposed to on property.
- Given to lender or awarding authority in case of public works obligating them to withhold money on the loan to pay notice amount.
- Doesn't have to be filed, just delivered to lender or awarding authority.
- Hand delivered w/receipt or registered mail
- Deadline to file same a mechanic's lien - 90 days from termination of contract unless notice of cessation or notice of completion is filed.
