North Carolina General Contractor Exam — All Questions

Which body licenses general contractors in North Carolina?

• a.The U.S. Department of Housing and Urban Development, acting through its state field office
• b.The North Carolina Licensing Board for General Contractors (NCLBGC)✓
• c.The North Carolina Real Estate Commission, under its authority over property transactions
• d.The register of deeds in the county where the contractor's principal office is located

General contractors in North Carolina are licensed by the North Carolina Licensing Board for General Contractors (NCLBGC). Its authority comes from Chapter 87, Article 1 of the North Carolina General Statutes.

In North Carolina, a general contractor license is required when the cost of the undertaking reaches what threshold?

• a.$40,000 or more✓
• b.$100,000 or more
• c.Any amount, no matter how small
• d.$1,000 or more

A North Carolina general contractor license is required for any construction project where the total cost is $40,000 or more. Below that threshold a license is not required by the NCLBGC (though local permits and other rules may still apply). Bidding on or performing $40,000+ work without a license is unlawful.

North Carolina general contractor licenses come in tiers that limit project value. Which set correctly describes the three limitation levels?

• a.Apprentice, Journeyman, and Master, each tied to the qualifier's years of field experience
• b.Limited (single project up to $40,000), Intermediate (up to $500,000), and Unlimited (up to $5,000,000 per project)
• c.Limited (single project up to $750,000), Intermediate (up to $1,500,000), and Unlimited (no dollar limit)✓
• d.Residential, Commercial, and Industrial, each with the same $1,000,000 cap

Under G.S. 87-10(a), North Carolina issues licenses at three limitation levels based on the value of a single project: a limited license allows a single project up to $750,000, an intermediate license allows a single project up to $1,500,000, and an unlimited license has no restriction on project value. Each cap excludes the cost of land and ancillary costs to improve the land. The level a contractor qualifies for depends on demonstrated financial strength.

The powers and duties of the North Carolina Licensing Board for General Contractors are established by which law?

• a.Chapter 87, Article 1 of the North Carolina General Statutes✓
• b.The federal Miller Act, which governs payment bonds on federal projects
• c.The North Carolina State Building Code alone, as adopted by the Building Code Council
• d.Chapter 44A of the General Statutes

Chapter 87, Article 1 of the North Carolina General Statutes creates the Licensing Board for General Contractors and defines who must be licensed, the license classifications, and the Board's disciplinary powers. (Chapter 44A is North Carolina's lien law, a separate subject.)

North Carolina's mechanic's/construction lien on real property is governed by which chapter of the General Statutes?

• a.Chapter 44A (Statutory Liens)✓
• b.Chapter 20 (Motor Vehicles)
• c.Chapter 105 (Taxation)
• d.Chapter 87 (Contractors)

Chapter 44A of the North Carolina General Statutes governs statutory liens, including the claim of lien on real property available to contractors, subcontractors, and suppliers. (Chapter 87 governs contractor licensing, a separate topic.)

Under North Carolina lien law, within how long after the last furnishing of labor or materials must a claim of lien on real property be filed?

• a.Within 3 years
• b.Within 45 days
• c.Within 120 days✓
• d.Within 15 days

A claim of lien on real property must be filed with the clerk of superior court within 120 days after the last furnishing of labor or materials. An action to enforce the lien must then be started within 180 days of the last furnishing. These deadlines are strict.

For many North Carolina construction projects, the owner must designate a 'lien agent.' When is a lien agent generally required?

• a.Only when the project cost exceeds $5,000,000 and the owner is a corporation, partnership, or limited liability company
• b.Only for public government buildings
• c.Never; North Carolina abolished lien agents
• d.When the project cost is $40,000 or more (with an exception for certain owner-occupied single-family residences)✓

Under G.S. 44A-11.1(a), an owner must designate a lien agent for improvements to real property where the costs of the undertaking are $40,000 or more. The owner need not designate one for improvements to an existing single-family residential dwelling unit that the owner occupies as a residence. Potential lien claimants give notice to the lien agent to preserve their rights.

North Carolina ties a contractor's license limitation level to financial strength. Which pairing of level and minimum working capital (or net worth) is correct?

• a.Limited requires $17,000; Intermediate requires $75,000; Unlimited requires $150,000✓
• b.Limited requires $150,000; Intermediate requires $75,000; and Unlimited requires $17,000
• c.Limited requires $1,000,000; Intermediate requires $1,500,000; Unlimited requires $2,000,000
• d.There is no financial requirement for any license level in North Carolina

Board rule 21 NCAC 12A .0204 sets the financial test by license level: a limited license requires working capital (current assets over current liabilities) of at least $17,000 or a total net worth of at least $80,000; an intermediate license requires working capital of at least $75,000; an unlimited license requires at least $150,000. A contractor that cannot document the higher figures is issued the lower limitation level, capping the value of projects it may take.

When a company (rather than an individual) holds a North Carolina general contractor license, what is the role of the 'qualifier'?

• a.The qualifier is an outside auditor who reviews the company's tax returns and certifies its financial statements to the Board each year
• b.North Carolina has no qualifier concept, so a company is licensed solely on its articles of incorporation and proof of working capital
• c.The qualifier is the individual who passed the examination and is responsible for the company's contracting work✓
• d.The qualifier is the customer who signs the construction contract and thereby accepts legal responsibility for the contractor's work

Under G.S. 87-10(b), an applicant identifies an individual who has passed a Board-approved examination, known as the qualifier or qualifying party. Under G.S. 87-10(c1), if the qualifier ceases to be connected with the licensee, the license remains in force for 90 days and is then invalidated until the licensee returns to active status; during those 90 days the licensee may not bid on or undertake additional contracts.