Minnesota Residential Contractor Exam — All Questions

Instead of requiring each residential contractor to post a surety bond, how does Minnesota protect homeowners from contractor fraud or failure to perform?

• a.It requires a $50,000 cash deposit from every contractor
• b.It requires homeowners to buy title insurance
• c.It has no consumer-protection mechanism
• d.Through the Contractor Recovery Fund, which reimburses homeowners for losses caused by a licensee✓

Minnesota uses the Contractor Recovery Fund under Minn. Stat. 326B.89. Licensees pay into the fund, and homeowners who suffer losses from a licensee's fraudulent or dishonest conduct or failure to perform may recover from it after obtaining a judgment, up to statutory limits.Minn. Stat. 326B.89 (Contractor Recovery Fund)

Under Minnesota's statutory home-warranty law, a new home is warranted against major construction defects for how long?

• a.One year
• b.Two years
• c.Thirty days
• d.Ten years✓

Minn. Stat. Chapter 327A warrants a new home against major construction defects for ten years. Faulty workmanship and materials are warranted for one year, and defective installation of plumbing, electrical, heating, and cooling systems for two years.Minn. Stat. Ch. 327A (statutory home warranty)

Under Minnesota's statutory warranties, defects caused by faulty workmanship and defective materials in a new home are warranted for:

• a.Five years
• b.Ten years
• c.One year✓
• d.Ninety days

Minn. Stat. Chapter 327A provides a one-year warranty against defects caused by faulty workmanship and defective materials, a two-year warranty on plumbing/electrical/HVAC installation defects, and a ten-year warranty against major construction defects.Minn. Stat. Ch. 327A (1-year warranty)

Before a Minnesota homeowner can recover from the Contractor Recovery Fund, what is generally required?

• a.The homeowner must file with the IRS
• b.The homeowner must first obtain a judgment against the licensed contractor✓
• c.Nothing; the fund pays on request
• d.The homeowner must post a bond

A claimant generally must obtain a court judgment against the licensee and be unable to collect it before recovering from the Contractor Recovery Fund. The fund then reimburses the owner up to the statutory limits and may pursue the contractor.Minn. Stat. 326B.89 (claim process)

Which of the following is a prohibited practice that can lead DLI to discipline a Minnesota residential contractor?

• a.Hiring licensed subcontractors
• b.Carrying more insurance than required
• c.Diverting funds received for a project, or abandoning the project✓
• d.Charging fair market prices

Minn. Stat. Chapter 326B allows DLI to discipline a contractor for fraudulent or deceptive practices, diverting project funds, abandoning a project, failing to pay subcontractors, code violations, or operating while unlicensed.Minn. Stat. Ch. 326B (prohibited practices)

A homeowner discovers, 18 months after closing, that the plumbing was installed defectively in a Minnesota new home. Which statutory warranty period applies?

• a.The ten-year major-defect warranty only
• b.The one-year workmanship warranty, which has expired
• c.The two-year warranty on faulty installation of plumbing, electrical, heating, and cooling✓
• d.No warranty applies to plumbing

Faulty installation of plumbing, electrical, heating, and cooling systems is covered by the two-year statutory warranty under Minn. Stat. Chapter 327A, so a defect found at 18 months is within that period.Minn. Stat. Ch. 327A (warranty of systems)

What is the effect in Minnesota of contracting to build residential structures for others without the required license while exceeding the exemptions?

• a.It automatically results in a license being issued
• b.It is a violation subject to DLI enforcement and penalties, and undermines the contractor's standing to collect✓
• c.It is fully lawful as long as the work is good
• d.It only affects the contractor's income taxes

Operating as an unlicensed residential contractor beyond the exemptions violates Minn. Stat. Chapter 326B, exposing the person to DLI enforcement and penalties and weakening the contractor's legal standing to enforce payment.Minn. Stat. Ch. 326B (unlicensed practice)

A Minnesota applicant asks what surety bond amount the state requires of every residential contractor. What is the best answer?

• a.$550,000 for every contractor
• b.Minnesota does not require a universal per-contractor bond; consumer protection runs through the Contractor Recovery Fund✓
• c.$15,000 for every contractor
• d.$50,000 for every contractor

Minnesota does not impose a universal surety-bond requirement on residential contractors. Instead, homeowner protection is provided through the Contractor Recovery Fund under Minn. Stat. 326B.89.Minn. Stat. 326B.89 vs. bonding