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Contracts & Execution

339 questions
121. A residential remodel contract for a four-unit building contains a mandatory arbitration clause. Under B&P §7191, the clause must:
a.Be set in at least 8-point boldface black type, with the owner's separate initials
b.Be titled 'ARBITRATION OF DISPUTES' and set in at least 10-point roman boldface✓
c.Be submitted to the CSLB registrar for prior approval before the contractor uses it
d.Be initialed by the contractor alone, because only the licensee is ever bound by it

B&P §7191(a) requires an arbitration provision in a contract for work on residential property of four or fewer units to be clearly titled 'ARBITRATION OF DISPUTES' and, in a printed contract, set in at least 10-point roman boldface — or in contrasting RED print in at least 8-point roman boldface. In a typed contract it must be in capital letters. (a) is the trap: 8-point boldface is permitted only when the print is a contrasting red, never in ordinary black. (c) invents an approval step; the Registrar does not review private contract forms. (d) inverts §7191(c): a non-compliant clause is unenforceable against everyone EXCEPT the licensee, so it is the owner who escapes it, not the contractor, and both parties still initial a compliant one.

Bus. & Prof. Code §7191(a), (c)
122. A homeowner contracts with a Class B contractor to build a new single-family dwelling the owner will keep for at least one year. Under B&P §7164, the written contract MUST contain:
a.A downpayment capped at $1,000 or 10 percent of the price, whichever is less
b.A three-business-day Notice of the Right to Cancel signed by the owner
c.The Mechanics Lien Warning and the approximate start and finish dates✓
d.A schedule of payments stating the amount of each payment in dollars and cents

B&P §7164(b) lists what a contract to build a single-family dwelling must contain: the contractor's name, address and license number; the approximate dates work will begin and be substantially completed; a legal description of the site; the statutory Mechanics Lien Warning; and a commercial general liability insurance statement with a check box. The downpayment cap of $1,000 or 10 percent belongs to §7159.5(a)(3), the payment schedule in dollars and cents to §7159.5(a)(4), and the three-business-day cancellation notice to §7159(e) and Civil Code §1689.7 for home-solicited contracts. All three are real California rules; none of them is what §7164 requires.

B&P §7164(b); cf. §7159.5(a)(3)-(4), §7159(e)
123. A new single-family home built in 2022 develops water intrusion at exterior windows in 2025. Under Civil Code §896 (SB 800 / Right to Repair Act), the homeowner's PRIMARY remedy is:
a.File suit at once for breach of contract and for negligence
b.Record a mechanics lien against the home for the repair cost
c.Report the builder to the CSLB and await its investigation
d.Serve a written claim notice and allow the statutory repair process✓

Civil Code §896 sets out the standards the Right to Repair Act covers, and the prelitigation chapter at §910 et seq. makes the homeowner serve written notice of the claim on the builder and let the statutory inspection and repair process run before filing. Suing immediately is barred while that process is available. A mechanics lien is the remedy of a person who furnished work or materials under Civil Code §8400, not of a homeowner with a defect. And a CSLB complaint is licence discipline: it neither starts nor satisfies the §910 process.

Civil Code §896; §910 et seq.; §8400
124. A subcontract contains a 'flow-down' clause stating the sub assumes toward the prime all obligations the prime owes the owner under the prime contract. The effect of this clause is that the subcontractor:
a.Owes the prime the same scope, schedule and quality duties✓
b.Becomes a direct party to the prime contract with the owner
c.May sue the owner directly for non-payment of its invoices
d.Is freed from any term not repeated in the subcontract

A flow-down clause incorporates the prime contract's obligations into the subcontract to the extent they reach the sub's scope, so the sub owes the general what the general owes the owner on that work - schedule, quality, indemnity, dispute resolution. It does not create privity, so the sub neither becomes a party to the prime contract nor gains a contract claim against the owner for non-payment; its remedies there are the lien and stop payment notice. And the clause works the opposite way from the last reading: terms not restated still bind.

Flow-down/pass-through clause; privity (industry practice); Civil Code §8400 et seq. (lien remedies)
125. A subcontract requires the sub to name the prime contractor and owner as ADDITIONAL INSUREDS on the sub's commercial general liability policy AND to provide a WAIVER OF SUBROGATION. The PRIMARY purpose of the waiver of subrogation is to:
a.Raise the limits of the sub's policy available to the prime
b.Bar the sub's insurer from suing the prime after it pays✓
c.Release the sub from its indemnity duty once the carrier pays
d.Make the prime's own carrier the primary payer for that loss

A waiver of subrogation stops the sub's carrier, once it has paid a covered loss, from standing in its insured's shoes and suing the prime to recover what it paid. It does not change how much insurance is available — that is what the limits and additional-insured status do. It does not touch the indemnity clause, which is a contractual duty that survives regardless of what the carrier pays. And it says nothing about whose policy responds first; that is the primary and non-contributory wording.

Commercial general liability / subrogation (industry practice); Civil Code §2778 (indemnity)
126. Under Bus. & Prof. Code §7159, a residential home improvement contract for $500 or more must include, in close proximity to the signature line, a notice informing the owner of the right to:
a.Withhold the entire contract price until the building department finals the permit
b.Require the CSLB registrar to inspect the work before the final payment
c.Cancel the transaction within 24 hours for any reason, without penalty
d.Cancel the transaction before midnight of the third business day after signing✓

B&P §7159(e) requires the home improvement contract to carry, in immediate proximity to the space for the buyer's signature, the 'Three-Day Right to Cancel' notice — captioned 'Five-Day Right to Cancel' if the buyer is a senior citizen, and seven business days for a contract to repair damage from a declared disaster — together with a detachable Notice of Cancellation in duplicate, in the language of the sales presentation. (c) shortens it to 24 hours, which is not a California period at all. (b) sends the owner to the wrong body: CSLB licenses and disciplines contractors, it does not inspect work or clear payments; the building department inspects. (a) inverts §7159.5(a)(5) — the contractor may not demand payment exceeding the value of work performed, but the owner gains no statutory right to hold the whole price until permit final. Worth knowing what else sits by the signatures: §7159(c)(6) requires a notice that the owner has the right to require the contractor to furnish a performance and payment bond.

Bus. & Prof. Code §7159(e); cf. §7159(c)(6), §7159.5(a)(5)
127. A change order on a home improvement contract is enforceable only if it is:
a.Oral, so long as the contractor logs it in the daily job record
b.Submitted to the CSLB for approval before the work is performed
c.Issued by the contractor alone if it stays under 10% of the contract price
d.In writing and signed by both parties before the changed work begins✓

B&P §7159(c)(5) makes a change-order form part of a home improvement contract only if it is in writing and signed by the parties prior to the commencement of any work covered by the change order; §7159(d)(13) requires the contract itself to say so under the heading Note About Extra Work and Change Orders. A daily job log is the contractor's own record, not the owner's signature. The CSLB licenses and disciplines contractors; it does not pre-approve change orders. And no percentage of the contract price lets a contractor change the work unilaterally - that is the practice §7159 was written to stop.

B&P Code §7159(c)(5); §7159(d)(13)
128. Under Bus. & Prof. Code §7191, a residential construction contract that contains a binding arbitration clause must:
a.Be filed with the CSLB registrar for review within 10 days after both parties have signed
b.Carry the statutory NOTICE only if the owner asks to see it
c.Name the American Arbitration Association as the forum, since no other body may arbitrate
d.Carry a capitalized NOTICE about waiving a jury trial, immediately above the initials✓

§7191(b) requires that, immediately after the arbitration provision and immediately before the space where the parties initial their assent, the contract carry the statutory NOTICE in capital letters, telling the owner that agreeing to arbitration gives up the right to a court or jury trial, to discovery and to appeal, and that the agreement is voluntary. (b) makes that notice optional; it is mandatory whenever the clause appears. (a) invents a filing step — CSLB does not review or file private contracts. (c) invents a forum mandate; §7191 regulates how the clause is presented, not who arbitrates. A clause that does not comply is unenforceable against anyone other than the licensee (§7191(c)) — the contractor stays bound either way.

Bus. & Prof. Code §7191(b)-(c)
129. Bus. & Prof. Code §7159 requires home improvement contracts to include the approximate dates when work will begin and when it will be substantially complete. If the contractor fails to commence the work within a reasonable time from the agreed start date, the consumer's primary remedy is to:
a.Complain to the district attorney's fraud unit after six months
b.Treat the unjustified delay as a material breach and rescind✓
c.Wait for the original completion date before any remedy ripens
d.Ask the Registrar to order the contractor to refund the deposit

B&P §7159(d)(10) and (d)(11) make the approximate start and completion dates required contract terms, so failing to start within a reasonable time is a breach of the contract itself — a material one that supports rescission, and conduct the CSLB may also pursue as abandonment under §7107 or failure to complete under §7113. Nothing requires a consumer to wait six months to complain, or to wait out the original completion date when the contractor never started. And the Registrar disciplines licensees; restitution comes through a disciplinary order, the license bond or a court, not on request.

B&P Code §7159(d)(10)-(11); §7107; §7113
130. An $80,000 residential remodel contract contains both a binding arbitration clause and a separate mandatory mediation clause. Under B&P §7191, the MEDIATION clause must:
a.Carry the same 10-point boldface title and separate initials required for the arbitration clause
b.Be filed with the CSLB registrar before the owner signs the contract
c.Meet no special §7191 formatting rule, because that section reaches only arbitration provisions✓
d.Be initialed by every owner of record, including a non-signing spouse

By its terms §7191 regulates 'a provision for arbitration of a dispute'. The special title, the 10-point roman boldface (or 8-point contrasting red), the capitalized NOTICE and the separate initials all attach to arbitration, because arbitration is what waives the owner's right to a court or jury trial, to discovery and to appeal. A mediation clause waives none of that — mediation is a non-binding settlement conference — so no §7191 formatting attaches to it. (a) is the usual misreading, treating the rule as covering any alternative-dispute clause. (b) invents a filing step; the Board does not review private contracts. (d) invents a signature rule; §7191(b) speaks of the parties to the contract, not of everyone on title.

Bus. & Prof. Code §7191(a)-(c)

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131. Under California's Right to Repair Act (Civil Code §895 et seq., enacted by SB 800), what is the general statute of limitations for a homeowner to bring a construction defect claim against the builder for a function/use defect not otherwise specified?
a.Four years for patent defects and ten years for latent defects, under CCP §337.15
b.One year from close of escrow, the period for the fit-and-finish warranty
c.Three years from discovery of the defect, under the general tort statute
d.Ten years from substantial completion, with shorter periods for some defects✓

Civil Code §941(a) sets the outside limit for a Right to Repair Act claim at 10 years after substantial completion. Inside that window §896 gives many defect types their own shorter period — 4 years for plumbing and sewer, 5 years for paint and stains, 1 year for landscaping and irrigation, 2 years for noise transmission — so the answer is layered, not a single number. (a) is the PRE-SB 800 framework of Code of Civil Procedure §337.15, which still governs projects outside the Act but is not the §896 scheme this question asks about. (b) confuses the limitations period with the separate one-year express fit-and-finish warranty a builder must give under Civil Code §900. (c) applies the general three-year discovery rule for injury to real property (CCP §338(b)), which SB 800 displaced for covered residential construction.

Civil Code §896, §941; cf. Civil Code §900, Code Civ. Proc. §337.15, §338(b)
132. Under the SB 800 Right to Repair Act, before a homeowner may file a construction defect lawsuit, they must generally:
a.Obtain a written opinion from the CSLB registrar identifying the building standard violated
b.Wait out the ten-year statute of repose set by Civil Code §941
c.Serve the builder written notice of the claim and allow inspection and repair✓
d.File a complaint with the Department of Real Estate against the builder first

Civil Code §910 requires the homeowner to give the builder written notice describing the claimed violation of the §896 standards in reasonable detail. The builder then has inspection rights under §916 (initial inspection within 14 days of acknowledgment, a second inspection within 40 days) and may make a repair offer under §917; skipping the §910-§938 procedure generally bars or stays the suit under §930. (a) invents a Registrar function — CSLB investigates complaints and disciplines licensees, it does not issue defect opinion letters as a precondition to suit. (b) inverts the statute of repose: §941's ten years is the OUTSIDE limit, so waiting for it to run destroys the claim rather than ripening it. (d) sends the owner to the wrong agency; the Department of Real Estate regulates real estate licensees, not builders or contractors.

Civil Code §910, §916, §917, §930; cf. §941
133. On a residential remodel, the homeowner verbally asks the contractor to upgrade tile from $4/sf to $9/sf mid-project. The contractor proceeds without paperwork and later bills the extra $1,800. Under Bus. & Prof. Code §7159, the contractor is most likely:
a.Entitled to the full $1,800 because the owner orally agreed and accepted the work
b.Unable to enforce the upcharge, because §7159 requires a signed written change order✓
c.Entitled to the $1,800 because changes under 10 percent need no writing
d.Entitled to the $1,800 because material upgrades are incidental and exempt from §7159

B&P §7159(d) is explicit: a home improvement contract 'and any changes to the contract' must be in writing and signed by the parties BEFORE the work covered by the change order begins. §7159(e)(3) requires the contract itself to warn the buyer that extra or change-order work is unenforceable unless the change order states in advance and in writing the scope of the work, the amount added to or subtracted from the contract, and the effect on the progress payments and completion date. (a) is the common-law answer, and it is the wrong body of law — §7159 displaces oral assent for home improvement work. (c) invents a de minimis exception; the only relief §7159.5(a)(8) gives turns on furnishing a performance and payment bond, not on the size of the change. (d) invents an 'incidental work' exemption; moving tile from $4 to $9 a square foot changes both scope and price. The contractor also risks discipline under §7159.5 and §7160.

Bus. & Prof. Code §7159(d), §7159(e)(3); §7159.5(a)(8)
134. Bus. & Prof. Code §7159.5 limits progress payments on a home improvement contract such that, at any given time during the project, the amount paid by the owner may not exceed:
a.50% of the total contract price until the final inspection passes
b.The value of the work performed plus the materials delivered✓
c.10% of the contract price each month, whatever the progress made
d.The amount of the most recent invoice, with no cumulative limit

B&P §7159.5(a)(5) says that except for a downpayment, the contractor shall neither request nor accept payment that exceeds the value of the work performed or material delivered - the 'no payment ahead of the work' rule. Its companion is §7159.5(a)(3): if a downpayment is charged it may not exceed $1,000 or 10 percent of the contract amount, whichever is less. A 50 percent milestone, a flat 10 percent a month and invoice-driven payments appear nowhere in the section; each would let the owner's money run ahead of the work, which is the precise harm the statute addresses, and a violation is a misdemeanour as well as grounds for discipline.

B&P Code §7159.5(a)(5); §7159.5(a)(3)
135. A contractor knocks on doors and signs a 42-year-old homeowner to a $9,000 home improvement contract at her kitchen table. Under Civil Code §1689.7, she may cancel:
a.Until midnight of the seventh business day after she receives a signed copy
b.Until midnight of the third business day after she receives a signed copy✓
c.Only until the contractor begins work at her property, by written notice
d.Until midnight of the fifth business day after she receives a signed copy

Civil Code §1689.6(a)(2) gives the buyer of a home improvement contract written under B&P §7151.2 until midnight of the THIRD business day after receiving a signed and dated copy of the contract to cancel, and B&P §7159(e) requires the contract to carry a 'Three-Day Right to Cancel' notice plus a detachable Notice of Cancellation in duplicate, in the language of the sales presentation. Each distractor is a real California deadline attached to a different fact pattern. (a) Seven business days is the period for a contract to repair damage from a disaster for which a state of emergency has been declared — and, under §1689.6(b), for a personal emergency response unit. (d) Five business days is the extension §1689.6(a) gives senior citizens; this buyer is 42. (c) is the service-and-repair rule of §1689.6(a)(3) and B&P §7159.10, which applies only when the buyer initiated the call and the price is $750 or less.

Civil Code §1689.6-§1689.7; Bus. & Prof. Code §7159(e), §7159.10
136. On a private construction project, a direct contractor wants to enforce a 'pay-when-paid' clause to delay payment to a subcontractor by 90 days while waiting for the owner to pay. Under California prompt-payment law, this clause is generally:
a.Enforceable only as a timing provision, not as a shifting of nonpayment risk✓
b.Fully enforceable as written, including as a condition precedent excusing payment on owner default
c.Enforceable on public works projects only, never on private works of improvement
d.Void in every circumstance, because subcontractor payment deadlines cannot be modified by contract

California courts read a 'pay-when-paid' clause as fixing a reasonable TIME for payment, not as a condition precedent. Wm. R. Clarke Corp. v. Safeco Ins. Co. (1997) 15 Cal.4th 882 held a true 'pay-if-paid' clause unenforceable because it waives the subcontractor's constitutionally protected mechanics lien remedy. So the prime still owes the sub under B&P §7108.5 (within 7 days of receiving a progress payment) and Civil Code §8814 (within 10 days of receiving retention), with a 2-percent-per-month penalty on amounts wrongfully withheld. (b) is the pay-if-paid reading Clarke rejected. (c) invents a public/private split; §7108.5(e) applies to all private works AND all public works except those under Public Contract Code §10262. (d) overstates: the clause is not void, and §7108.5(a) expressly lets the parties agree in writing to a different progress-payment interval. What they cannot do is move the owner's insolvency onto the sub.

Bus. & Prof. Code §7108.5; Civil Code §8800, §8814; Wm. R. Clarke Corp. v. Safeco (1997) 15 Cal.4th 882
137. A homeowner hires a licensed contractor to remodel a kitchen for $18,000. At what contract price does California law require that a home improvement contract be put in writing?
a.Only contracts over $25,000 must be written
b.Any amount over $500 (labor and materials combined)✓
c.Any amount over $2,500
d.Any amount over $5,000

Under B&P §7159, a home improvement contract and any changes to it must be in writing whenever the aggregate contract price, including labor and materials, exceeds $500.

B&P §7159
138. Which of the following projects is NOT considered a 'home improvement' under the Contractors State License Law?
a.Erecting a new commercial warehouse from the ground up✓
b.Replacing a homeowner's fence and driveway
c.Adding a patio cover to a private residence
d.Installing a new swimming pool at a residence

B&P §7151 defines home improvement as repairing, remodeling, altering, or adding to residential property, including pools, fences, driveways, and patios. New commercial construction is not a home improvement.

B&P §7151
139. A contractor begins demolishing a homeowner's bathroom before the written home improvement contract is signed. Under the Contractors State License Law, this is:
a.Permissible, as long as the contract is signed within 30 days
b.Permissible if the homeowner gave verbal approval
c.Permissible if the down payment was already paid
d.A violation, because the contract must be signed by both parties before work begins✓

B&P §7159 requires that a home improvement contract be signed by both parties and a copy given to the owner before any work is performed. Starting work first is a violation.

B&P §7159(a)
140. A home improvement contract has a total price of $6,000. What is the maximum down payment the contractor may lawfully require?
a.$1,200
b.$1,500
c.$1,000
d.$600✓

Under B&P §7159, the down payment on a home improvement contract may not exceed $1,000 or 10% of the contract price, whichever is less. Ten percent of $6,000 is $600, which is less than $1,000.

B&P §7159(d)
141. A home improvement contract totals $40,000. What is the maximum lawful down payment?
a.$1,000✓
b.$4,000
c.$10,000
d.$2,000

The down payment cannot exceed $1,000 or 10% of the price, whichever is LESS. Ten percent of $40,000 is $4,000, but the $1,000 cap is lower, so $1,000 is the maximum.

B&P §7159(d)
142. After signing a home improvement contract at their kitchen table, a homeowner changes their mind. How many business days does the buyer generally have to cancel the contract?
a.Five business days
b.Two business days
c.Seven calendar days
d.Three business days✓

A home solicitation home improvement contract may be canceled by the buyer within three business days after signing, under California's home solicitation cancellation law (Civil Code §1689.5 et seq.).

Civil Code §1689.7
143. A 72-year-old homeowner signs a home improvement contract. How many business days does this senior buyer have to cancel?
a.Ten business days
b.Five business days✓
c.Four business days
d.Three business days

For a buyer who is a senior citizen (65 years of age or older), California extends the home solicitation right to cancel to five business days rather than three.

Civil Code §1689.6
144. A contractor structures a home improvement contract so that each progress payment is due 'as work proceeds.' Under §7159, each progress payment must:
a.Be collected only on completion of the project taken as a whole
b.Not exceed the value of work performed or material delivered✓
c.Be at least $5,000 for the whole payment schedule to be enforceable
d.Equal exactly one-third of the total price stated in the contract

B&P §7159.5(a)(5) bars the contractor, downpayment aside, from requesting or accepting payment exceeding the value of the work performed or material delivered, so 'as work proceeds' is lawful only if the amounts actually track the work. §7159.5(a)(4) is the companion requirement: where payments fall due before completion, the contract must carry a schedule of payments in dollars and cents specifically referencing the work or services to be performed and the materials and equipment to be supplied. A schedule saying only 'as work proceeds' fails that on its face. (c) and (d) invent arithmetic the statute never uses — there is no minimum instalment and no thirds rule. (a) is the opposite error: nothing requires the contractor to finance the job, and progress payments up to the value in place are exactly what the statute allows.

Bus. & Prof. Code §7159.5(a)(4)-(5)
145. Which document, warning homeowners that unpaid subcontractors and suppliers may place a claim against their home, must be included in a home improvement contract?
a.A Notice of Completion
b.A Notice of Non-Responsibility
c.The Mechanics Lien Warning✓
d.A Preliminary Bond Notice

B&P §7159 requires a home improvement contract to contain a Mechanics Lien Warning, informing the owner that those who supply labor or materials and are not paid may record a lien against the property.

B&P §7159(c)
146. A home improvement contract states the project 'will start sometime soon and finish when done.' What is the defect?
a.It omits the approximate start and completion dates the law requires✓
b.Nothing is wrong with it, since approximate dates are entirely optional
c.Dates are required only on contracts worth more than $50,000 in total
d.Only the start date is required, never the completion date

B&P §7159(d)(10) requires the heading 'Approximate Start Date' followed by the approximate date work will commence, and §7159(d)(11) requires the estimated completion date to be referenced — both of them — and §7164(b)(2) requires the same pair in a contract to build a single-family dwelling. 'Sometime soon' and 'when done' are not approximations but the absence of a term, and §7159(a)(5) makes that cause for discipline. (d) keeps half the requirement, which is how this violation usually looks in practice. (c) invents a dollar threshold; the only threshold in the article is the $500 that makes it a home improvement contract at all. (b) reads 'approximate' as 'optional', when the statute has already made its concession by asking for an approximate date rather than a firm one.

Bus. & Prof. Code §7159(d)(10)-(11), §7159(a)(5); cf. §7164(b)(2)
147. Which of the following is a mandatory element that must appear in every written home improvement contract?
a.The homeowner's Social Security number
b.The contractor's license number✓
c.The contractor's personal home address
d.A notarized signature from a witness

B&P §7159 requires the contract to include the contractor's name, business address, and license number, among other elements. The homeowner's SSN and notarization are not required.

B&P §7159(c)
148. A contractor asks a homeowner to sign a home improvement contract that still has blank spaces for the price and scope of work. Under the CSLB law, this practice is:
a.Acceptable if filled in later that day
b.A prohibited act and grounds for disciplinary action✓
c.Allowed if the homeowner initials each blank
d.Allowed for repeat customers

B&P §7161 makes it a prohibited act (and cause for discipline) to cause a buyer to sign a contract containing blank spaces to be filled in after signing.

B&P §7161
149. After a home improvement contract is signed, when must the contractor give the homeowner a copy?
a.Only upon the homeowner's written request
b.After the first progress payment is made
c.Within 10 days of signing
d.Before any work begins, when the contract is signed✓

B&P §7159 requires the contractor to furnish the buyer a fully completed, signed copy of the contract before any work is performed.

B&P §7159(a)
150. A change order that increases the price of a home improvement project by $3,000 is agreed to verbally on-site. To be enforceable under §7159, the change order must be:
a.Witnessed by the project inspector
b.Recorded with the county recorder
c.Approved by the CSLB in advance
d.In writing and signed by both parties✓

B&P §7159 requires that any change to a home improvement contract be in writing and signed by both the contractor and the owner before the extra work is done.

B&P §7159(c)
151. Which of these is a condition that must be met before a contractor may use a 'service and repair' contract form instead of a full home improvement contract?
a.The homeowner must be a senior citizen
b.The contractor must be paid in full in advance
c.The contract price must exceed $2,500
d.The buyer must have initiated contact requesting the work✓

Under B&P §7159.10, a service and repair contract may be used only when, among other conditions, the buyer initiated contact to request the work and the price is $750 or less.

B&P §7159.10
152. What is the maximum contract amount for a job to qualify as a 'service and repair' contract under §7159.10?
a.$2,000
b.$500
c.$750✓
d.$1,000

B&P §7159.10 limits a service and repair contract to a total price of $750 or less; larger jobs require a full home improvement contract.

B&P §7159.10
153. Under a valid service and repair contract, when may the contractor collect payment from the homeowner?
a.No payment is due or collected until the work is completed✓
b.As a 50% deposit before starting
c.In weekly installments
d.A $200 down payment plus the balance later

B&P §7159.10 requires that under a service and repair contract, no payment is due and none may be collected until the work is complete. Down payments are not permitted on these contracts.

B&P §7159.10
154. A contractor collects a $2,500 down payment on a $15,000 room addition. Why is this unlawful?
a.The down payment exceeds $1,000, the maximum for a contract of this size✓
b.The down payment must equal exactly 10%
c.Down payments are never allowed on home improvement contracts
d.It is lawful; $2,500 is under the limit

The down payment cap is $1,000 or 10%, whichever is less. Ten percent of $15,000 is $1,500, but the $1,000 cap controls, so $2,500 is over the legal maximum.

B&P §7159(d)
155. An individual who is employed by a contractor and solicits, sells, or negotiates home improvement contracts is called a:
a.Joint control agent
b.Responsible managing officer
c.Home improvement salesperson✓
d.Qualifying individual

B&P §7152 defines a home improvement salesperson as a person employed by a licensed contractor to solicit, sell, negotiate, or execute home improvement contracts. Such persons must be registered with the CSLB.

B&P §7152
156. Before soliciting home improvement contracts on behalf of a licensed contractor, a home improvement salesperson must:
a.Hold a separate contractor's licence in their own name
b.Pass both the law and the trade examinations first
c.Post a $15,000 bond in the salesperson's own name
d.Be registered with CSLB as a home improvement salesperson✓

B&P §7153(a) makes it a misdemeanor to engage in the occupation of home improvement salesperson without a current and valid registration issued by the registrar at the time of the sales transaction, and §7154 requires the employing contractor to notify the registrar in writing before the salesperson begins work. The registration is not a licence: it authorises soliciting, selling, negotiating and executing contracts only for the licensed contractor or contractors behind it. (a) and (b) describe becoming a CONTRACTOR — the salesperson sits no trade or law examination and holds no licence. (c) borrows a bond from the licensing side and uses a superseded figure besides; the contractor's licence bond under B&P §7071.6 is $25,000, and a salesperson posts none. Note §7155.5: the salesperson's violations are cause for discipline against the contractor whether or not he knew of them.

Bus. & Prof. Code §7153(a), §7154, §7155.5; cf. §7071.6
157. A home improvement contract must include a schedule of progress payments that:
a.States each payment as a percentage of the total contract price
b.May be adjusted by the contractor as the work actually proceeds
c.States each payment in dollars and cents against the described work✓
d.Lists only the total amount that will be due at completion

B&P §7159.5(a)(4) requires that where payments are to be made before completion, the contract include 'a schedule of payments in dollars and cents specifically referencing the amount of work or services to be performed and any materials and equipment to be supplied.' Two elements, both mandatory: the figure in dollars and cents, and the work it buys. (a) gives the figure without the work, and percentages are exactly what the statute displaced — an owner cannot check '30 percent' against anything on site. (b) is unlawful under §7159.5(a)(5), which bars requesting or accepting any payment exceeding the value of the work performed or the material delivered, whatever the contractor now thinks the schedule should say. (d) describes a lump-sum-on-completion contract, which needs no schedule but also permits no progress payment.

Bus. & Prof. Code §7159.5(a)(4)-(5)
158. Which mandatory notice informs the homeowner that they may cancel the transaction within a stated period and how to do so?
a.The Preliminary Notice sent by a subcontractor or supplier
b.The Certificate of Occupancy issued by the building department
c.The Notice of Completion the owner records after the work
d.The 'Notice of the Three-Day Right to Cancel' form✓

B&P §7159(e) requires the contract to carry, near the buyer's signature, a notice captioned 'Three-Day Right to Cancel' — 'Five-Day' for a senior citizen, seven business days for repairs after a declared disaster — stating the transaction date, the date by which a cancellation must be sent and where to send it, plus a detachable Notice of Cancellation form in duplicate, in the language of the sales presentation. (a) is a lien document: Civil Code §8200 makes preliminary notice a precondition to a lien, a stop payment notice or a payment bond claim, and it can arrive up to 20 days after the claimant starts work. (c) is the owner's recorded notice, which shortens a subcontractor's lien deadline from 90 days after completion to 30 days after recording (Civil Code §8414). (b) is the building department's sign-off that the structure may be occupied.

Bus. & Prof. Code §7159(e); Civil Code §8200, §8182
159. How many copies of the 'Notice of Cancellation' form must the contractor provide to the buyer at the time a home solicitation home improvement contract is signed?
a.None; the buyer must request it
b.Two copies✓
c.Four copies
d.One copy

California's home solicitation law requires the seller to give the buyer two copies of a completed Notice of Cancellation form, so one can be mailed while the buyer retains a copy.

Civil Code §1689.7
160. When a homeowner properly exercises the three-day right to cancel a home improvement contract, the contractor must return any down payment within:
a.30 days
b.60 days
c.10 days✓
d.24 hours

Under the home solicitation cancellation law, upon cancellation the seller must return any payments made by the buyer within 10 days of receiving the notice of cancellation.

Civil Code §1689.7
161. A contractor and homeowner agree on a $9,000 bathroom remodel. The three-day right to cancel period generally begins:
a.When the permit is issued
b.When the first payment is made
c.On the date the buyer signs the contract✓
d.When work begins on the site

The three business-day cancellation period runs from the date the buyer signs the home solicitation contract, not from when work begins or a permit issues.

B&P §7159
162. A contractor includes a clause in the home improvement contract stating the buyer waives their right to cancel. This clause is:
a.Enforceable on contracts above $10,000 in total contract value
b.Enforceable where the buyer separately initials the clause
c.Valid only where the buyer is a commercial entity, not a consumer
d.Void; the cancellation right cannot be waived this way✓

The three-business-day right comes from Civil Code §1689.6 and B&P §7159(e), and the only route out of it is Civil Code §1689.13: a buyer-initiated contract for emergency or immediately necessary repairs, plus a SEPARATE dated statement signed by the buyer describing the situation and expressly waiving the three-, five- or seven-day right. A waiver pre-printed in the contractor's own form satisfies none of that. Putting it there is worse than ineffective — B&P §7161 makes a false or misleading statement used to induce a home improvement contract a public offense, and §7160 gives the owner damages plus a $500 penalty and fees. (a) and (c) invent thresholds; the right does not scale with price, and a home improvement contract is residential by definition. (b) treats the buyer's initials as the separate statement §1689.13 demands, which is precisely the shortcut that section forecloses.

Civil Code §1689.6, §1689.13; Bus. & Prof. Code §7159(e), §7160-§7161
163. A home improvement contract must be written in the same language principally used in the:
a.County where the property is located
b.Local building code
c.Contractor's license application
d.Oral sales presentation or negotiation✓

B&P §7159 requires that the home improvement contract be written in the same language (for example, Spanish) that was principally used in the oral sales presentation or negotiation.

B&P §7159(c)
164. Under §7159.5, a contractor may NOT do which of the following regarding down payments and progress payments?
a.Bill the owner after a phase of work is finished
b.Demand payment for work not yet performed or delivered✓
c.Accept a $1,000 downpayment on a large remodel job
d.Accept the final payment when the work is complete

B&P §7159.5(a)(5) is the prohibition: 'Except for a downpayment, the contractor shall neither request nor accept payment that exceeds the value of the work performed or material delivered', and the bar extends to advance payment in whole or in part from any lender or financier. The other three options are all lawful. Billing after a phase is finished is precisely what the §7159.5(a)(4) payment schedule contemplates. A $1,000 downpayment is the ceiling itself on any job of $10,000 or more, because §7159.5(a)(3) takes the LESSER of $1,000 and 10 percent. Final payment on completion is the ordinary close. Collecting ahead of the value in place is the only unlawful act among the four, and it is how most §7159 discipline cases begin.

Bus. & Prof. Code §7159.5(a)(3)-(5)
165. 'Joint control' in the context of a home improvement project refers to:
a.Two contractors operating together under a single licence number
b.The homeowner and the lender co-signing every cheque to the contractor
c.An approved funding control releasing money as work proceeds✓
d.The building department inspecting each separate phase of the work

A joint control, or funding control, is a neutral third party that holds the construction funds and releases them to the contractor against verified progress. B&P §7159.5(a)(8) is why it matters: a contractor who furnishes a joint control APPROVED BY THE REGISTRAR covering full performance and payment is exempt from the downpayment cap, the dollars-and-cents payment schedule, and the bar on accepting payment ahead of the value in place, and may take payment before completion. Two conditions travel with it — the registrar's approval, and the contractor holding no financial or other interest in the control. (b) describes joint checks, the different protection the Mechanics Lien Warning recommends to owners. (d) describes permit inspections, which verify code compliance, not payment. (a) describes unlawful licence sharing.

Bus. & Prof. Code §7159.5(a)(8)
166. When a home improvement contract's funds are handled through an approved joint control, the effect on the standard down payment and progress payment limits is that they:
a.Are doubled, so a $2,000 downpayment becomes lawful on the job
b.Are cut in half, because the joint control already holds funds
c.May not apply, where the registrar has approved the joint control✓
d.Apply unchanged, since those limits protect the owner in either case

B&P §7159.5(a)(8) exempts a contractor who furnishes a performance and payment bond, a lien and completion bond, an approved bond equivalent, or a JOINT CONTROL approved by the registrar covering full performance and payment, from paragraphs (3), (4) and (5) — the $1,000-or-10-percent downpayment cap, the dollars-and-cents payment schedule, and the bar on accepting payment beyond the value in place. Such a contractor may accept payment before completion, and the matching §7159 notices may be omitted. The security replaces the statutory cash controls. Two conditions are easy to miss: the joint control must be REGISTRAR-APPROVED, and the contractor may hold no financial or other interest in it. (d) reads the exemption out of the statute; (a) and (b) invent arithmetic the statute never performs.

Bus. & Prof. Code §7159.5(a)(8)
167. The home improvement contract must include a heading identifying the document. That heading must be titled:
a.'Construction Agreement'
b.'Owner-Contractor Memorandum'
c.'Home Improvement'✓
d.'Residential Work Order'

B&P §7159 requires the contract to contain the heading 'Home Improvement' in at least 10-point boldface type at the top of the first page.

B&P §7159(c)
168. In addition to the contract price, a home improvement contract that includes a finance charge must separately disclose:
a.The dollar amount of the finance charge✓
b.The homeowner's credit score
c.The contractor's profit margin
d.The subcontractors' hourly rates

B&P §7159 requires the contract to state the total contract price and, if financing is involved, to disclose the amount of any finance charge separately from the cash price.

B&P §7159(c)
169. Which statement about the contractor's license must appear in the home improvement contract's required notices?
a.That a contractor's license guarantees the quality of the completed work
b.That CSLB approves the contract price before any work may begin
c.That a licensed contractor need not carry workers' compensation insurance
d.That contractors are licensed and regulated by CSLB, with contact information✓

B&P §7030(b) requires every licensee to include, in at least 12-point type, in all home improvement contracts and service and repair contracts, the 'Information about the Contractors State License Board (CSLB)' notice: that CSLB is the state consumer protection agency that licenses and regulates contractors, that the owner can contact it about disclosable complaints, disciplinary actions and civil judgments, that a complaint filed within the legal deadline (usually four years) can be investigated, and that a buyer who uses an unlicensed contractor may have no remedy but a civil suit — plus CSLB's website, telephone number and address. §7030(c) makes omitting it cause for discipline. It sits alongside the §7159(e) notices: commercial general liability, workers' compensation, the Mechanics Lien Warning and the cancellation notice. (a) is what a licence conspicuously does NOT do, which is why the contractor must separately disclose whether he carries commercial general liability insurance. (c) inverts the workers' compensation notice, which requires the contractor to state either that he carries coverage for all employees or that he has no employees and is exempt. (b) invents a rate-approval role; CSLB licenses and disciplines, it does not price jobs.

Bus. & Prof. Code §7030(b)-(c); cf. §7159(e)
170. A homeowner calls a plumber for an urgent $400 leak repair. The plumber may use a service and repair contract only if, among other conditions, the plumber:
a.Collects at least a 25 percent deposit before beginning the work
b.Adds a yearly maintenance plan so the customer's system stays covered
c.Extends the job to include a full bathroom remodel while on site
d.Sells nothing beyond what is reasonably necessary to fix the reported leak✓

B&P §7159.10(a) allows a service and repair contract only when four things are all true: the contract amount is $750 or less, the buyer initiated contact to request the work, the contractor does not sell goods or services beyond those reasonably necessary to take care of the particular problem that caused the buyer to call, and no payment is due or accepted until the work is completed. (a) breaks the fourth condition outright — a deposit on a service and repair job is prohibited, not merely capped by the home improvement rule of $1,000 or 10 percent. (b) and (c) both break the third. The consequence matters: under §7159.10(b), the moment any condition fails the full §7159 home improvement requirements apply to the contract regardless of price, cancellation rights included.

Bus. & Prof. Code §7159.10(a), (b)
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