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1. A subcontractor begins work on a private project on March 1. To preserve lien rights, the preliminary notice must be served by:

On private works, preliminary notices must be served within 20 days of first furnishing labor, services, equipment, or materials. Serving late does not eliminate lien rights entirely but limits them to work performed within 20 days before service.

2. A preliminary notice on a private construction project must be served on:

Preliminary notices must be served on the owner, the prime contractor, and the construction lender (if any). Serving all three is necessary to fully protect lien and stop payment notice rights.

3. After completion of a private project, a claimant has how many days to record a mechanics' lien if no Notice of Completion is filed?

If no Notice of Completion or Cessation is recorded, a mechanics' lien must be recorded within 90 days of completion of the project. This is the maximum window for lien claimants.

4. If the owner records a Notice of Completion, subcontractors and suppliers must record their mechanics' lien within:

When an owner records a Notice of Completion, subcontractors and material suppliers (who are not the direct contractor) have only 30 days to record their mechanics' lien. The prime contractor has 60 days.

5. After recording a mechanics' lien, the claimant must file a lawsuit to enforce the lien within:

A recorded mechanics' lien expires unless the claimant files a lawsuit to enforce it within 90 days of recording. Failure to sue timely renders the lien void.

6. What is the purpose of a "stop payment notice" on a private construction project?

A stop payment notice (formerly "stop notice") requires the owner, lender, or public entity to withhold sufficient funds from the prime contractor to satisfy the claimant's unpaid claim.

7. An owner can release a recorded mechanics' lien by obtaining a lien release bond equal to:

To release a mechanics' lien from a property, the owner or contractor can record a lien release bond equal to 125% of the lien amount. This shifts the claimant's security from the property to the bond.

8. Which of the following is NOT required to be included in a mechanics' lien?

A valid mechanics' lien must include the claimant's name/address, employer/employee info, description of work/materials, amount of claim, description of the property, and owner's name. No SSN is required.

9. On a public works project, a claimant who did not serve a preliminary notice can still file a:

Mechanics' liens cannot be recorded against public property. However, on public works, unpaid claimants can serve a stop payment notice on the public entity to hold project funds.

10. A general contractor typically has how many days after a Notice of Completion is recorded to file a mechanics' lien?

The prime (direct) contractor has 60 days after the owner records a Notice of Completion to record a mechanics' lien. Subcontractors and suppliers have the shorter 30-day window.

11. The purpose of the preliminary notice requirement is to:

Preliminary notices protect owners by informing them early who is furnishing labor and materials. Owners can then ensure funds flow properly and avoid paying the general contractor if subs are unpaid.

12. A claimant recorded a mechanics' lien but was paid in full before filing a lawsuit. The claimant must:

Once paid, the claimant must release the lien. If the owner makes a written demand, the claimant has 30 days to record a release. Failure to release can result in damages and attorney's fees.

13. Which statement about a "joint check agreement" is correct?

A joint check agreement requires checks to be made payable jointly to the GC and subcontractor or supplier. This ensures the sub/supplier actually receives payment and reduces lien exposure.

14. California law requires that contractors give residential owners a "Notice to Owner" (preliminary notice). What additional notice must contractors give homeowners on home improvement projects?

Home improvement contractors must provide a "Notice to Owner" regarding the contractor's right to file a mechanics' lien AND a "Notice of Right to Cancel" informing homeowners of their three-day rescission right.

15. Workers' compensation insurance in California is required for:

California Labor Code §3700 requires every employer to secure workers' compensation coverage before employing even one employee. There is no minimum employee threshold.

16. A contractor operates without workers' compensation insurance. Cal/OSHA or the Labor Commissioner may issue:

Operating without WC insurance can result in a stop order immediately prohibiting the use of employee labor, as well as substantial fines of up to $100,000. The CSLB may also suspend the license.

17. Workers' compensation is described as a "no-fault" system. This means:

In a no-fault WC system, injured workers receive benefits regardless of whether they or the employer caused the injury. In exchange, workers' comp is generally the exclusive remedy against the employer.

18. When an employee reports a work injury, the employer must provide a claim form (DWC-1) within:

Upon notice of a work injury, the employer must provide the employee with a DWC-1 claim form within one working day. Failing to do so can result in penalties and expanded employer liability.

19. While a workers' compensation claim is being investigated, the employer must authorize up to how much in medical treatment?

California law requires employers to authorize up to $10,000 in medical treatment within one working day while a claim is being investigated (the "30-day presumption" period for treatment authorization).

20. Which of the following best describes "temporary total disability" (TTD) benefits in California WC?

TTD benefits replace approximately 2/3 of the injured worker's pre-injury average weekly earnings while they are temporarily unable to work, subject to state minimum and maximum weekly amounts.

21. A "permanent and stationary" (P&S) status in workers' compensation means:

When a treating physician declares an injured worker permanent and stationary (P&S) — also called maximum medical improvement — the acute phase of treatment has ended and permanent disability is evaluated.

22. A corporate officer of a corporation may be excluded from workers' compensation coverage if:

Corporate officers may elect to exclude themselves from workers' comp coverage by completing the required exclusion form. This election must be made in writing and kept on file.

23. What penalty may an employer face for not posting the required workers' compensation notice in the workplace?

Employers are required to post the DWC "Notice to Employees" poster in a conspicuous location. Failure to post can result in fines up to $7,000 and expanded employer liability for claims.

24. Under California workers' compensation, which body system injury typically qualifies for a vocational rehabilitation benefit?

Supplemental Job Displacement Benefits (SJDB) are available when an injured worker cannot return to their usual job due to permanent partial disability and the employer doesn't offer regular, modified, or alternative work.

25. The "exclusive remedy" doctrine in workers' compensation means:

Workers' comp is the exclusive remedy against the employer for work injuries. Employees generally cannot sue their employer in civil court, though exceptions exist for serious and willful employer misconduct.

26. A contractor must obtain workers' compensation coverage before:

WC coverage must be in place before the first day any employee begins work. There is no grace period — employing workers without coverage even for one day is a violation.

27. Return-to-work programs in workers' compensation are designed to:

Return-to-work programs benefit both employees (income continuation, faster recovery) and employers (reduced claims costs, retained experienced workers). Offering modified duty can significantly reduce WC costs.

28. A subcontractor works on a general contractor's job site without workers' compensation insurance. If the subcontractor's employee is injured, who may be liable?

When an uninsured subcontractor's employee is injured, the general contractor (as statutory employer) may be liable for workers' comp benefits. This is why GCs should verify WC certificates before allowing subs on site.

29. A contractor hires their very first employee, a part-time helper. When must the contractor carry workers' compensation insurance?

Labor Code §3700 requires every California employer to secure workers' compensation coverage, even for a single part-time employee. There is no minimum-hours or minimum-headcount exemption.

30. A contractor with employees knowingly operates without workers' compensation insurance. Under California law, this failure to insure is:

Labor Code §3700.5 makes it a misdemeanor for an employer to be unlawfully uninsured for workers' compensation. It is punishable by a fine, imprisonment in county jail, or both.

31. Cal/OSHA's Division of Labor Standards Enforcement discovers a contractor employing uninsured workers. What immediate action can it take at the job site?

Under Labor Code §3722, the state may issue a stop order halting use of employees until the employer secures workers' compensation coverage. Penalties for being uninsured can reach up to $100,000.

32. Workers' compensation in California is described as a "no-fault" system. What does this mean for an injured employee?

Labor Code §3600 establishes workers' compensation as a no-fault system: an employee injured in the course of employment receives benefits without having to prove the employer was at fault, and even if the employee was partly at fault.

33. An employee covered by workers' compensation is injured on the job. Generally, the employee's exclusive remedy against the employer is:

Labor Code §3602 makes workers' compensation the exclusive remedy for an employee against the employer for a work-related injury. In exchange for guaranteed benefits, the employee generally cannot sue the employer in civil court.

34. A roofing corporation has two shareholders who are also its only officers, and no other workers. Regarding workers' compensation coverage for themselves, they may:

Under Labor Code §3351, qualifying corporate officers and directors who own stock may elect, in writing, to be excluded from workers' compensation coverage. The exclusion is not automatic; it requires a signed waiver filed with the insurer.

35. After an employee reports a work injury, within what time must the employer provide a workers' compensation claim form (DWC-1)?

Labor Code §5401 requires the employer to provide the DWC-1 claim form to the injured employee within one working day after the employer knew or should have known of the injury.

36. While a workers' compensation claim is being investigated and has not yet been accepted or denied, the employer's insurer must authorize medical treatment up to:

Labor Code §5402 requires the insurer to authorize and pay for medical treatment up to $10,000 while the claim is being investigated, so the injured worker is not left without care during the decision period.

37. An employee is unable to work while recovering from a job injury. Temporary disability benefits generally replace approximately what portion of the worker's lost wages?

Temporary total disability benefits generally equal two-thirds of the worker's average weekly wages, subject to statutory minimums and maximums. They replace lost income while the worker recovers.

38. An injured worker's doctor finds the worker can no longer return to their old job, and the employer offers no alternative work. The worker may be entitled to a supplemental job displacement benefit, which is:

Labor Code §4658.7 provides a supplemental job displacement benefit in the form of a voucher that helps pay for retraining or skill enhancement when an injured worker does not return to work and is not offered suitable alternative employment.

39. Every California employer subject to workers' compensation must, in the workplace, do what regarding coverage?

Labor Code §3550 requires employers to post a notice, in a conspicuous location, informing employees that the employer carries workers' compensation insurance and explaining basic employee rights.

40. A general contractor hires an unlicensed "subcontractor" who brings their own crew to the job site. If one of that crew is injured, who is most likely treated as the employer for workers' compensation purposes?

Under Labor Code §2750.5, a person performing work requiring a contractor's license without one is presumed to be an employee, not an independent contractor. The general contractor can therefore be liable as the employer for the unlicensed sub and its workers.

41. A contractor's workers' compensation policy is cancelled and the contractor has not filed an exemption certificate. What is the consequence for the CSLB license?

Under Bus. & Prof. Code §7125, a contractor with employees must keep a valid workers' compensation certificate on file with the CSLB. If coverage lapses and no exemption is on file, the license is automatically suspended.

42. A property owner is injured when a wall built by the contractor's crew collapses on her. Which of the contractor's policies is designed to respond to this third-party bodily injury claim?

Commercial general liability (CGL) insurance covers third-party bodily injury and property damage caused by the contractor's operations. Workers' compensation covers the contractor's own employees, not third parties.

43. Which type of insurance is specifically designed to cover a structure and its materials against fire, theft, and weather damage WHILE it is still under construction?

Builder's risk insurance (also called course-of-construction insurance) protects the building project and its materials from physical loss such as fire, theft, vandalism, and certain weather events during construction.

44. Which statement best describes the key difference between an insurance policy and a surety bond?

Insurance is a two-party contract between the insurer and the insured that transfers risk of loss. A surety bond involves three parties (principal, obligee, surety) and guarantees the principal's performance or obligations; the surety can seek reimbursement from the principal for amounts it pays out.

45. A general contractor requires each subcontractor to provide proof that they currently carry liability and workers' compensation insurance. The document the subcontractor's insurer issues to verify this coverage is called a:

A certificate of insurance is a document issued by an insurer summarizing the existence, types, and limits of a policyholder's coverage. General contractors routinely require certificates from subcontractors before allowing them on the job.

46. A project owner asks to be named an "additional insured" on the general contractor's liability policy. What does this accomplish for the owner?

Naming a party as an additional insured extends the policyholder's liability coverage to that party for covered claims connected to the named insured's work. Owners commonly require this so they are protected if a third party sues over the contractor's operations.

47. A contractor's employee causes an accident while driving a company truck to a job site. Which policy is primarily intended to respond to the resulting third-party vehicle and injury claims?

Commercial auto insurance covers liability and damage arising from vehicles used in the contractor's business. Personal auto policies generally exclude vehicles used for business purposes.

48. A design-build contractor makes a professional design error that causes a client financial loss but no bodily injury or property damage. Which coverage is specifically intended for this kind of claim?

Errors and omissions (E&O), or professional liability, insurance covers financial losses to clients arising from negligent professional services such as design errors. A standard CGL policy typically excludes purely professional negligence.

49. Which of the following parties is generally NOT entitled to record a mechanics' lien on a private construction project?

Mechanics' lien rights belong to those who furnish labor, services, equipment, or materials that improve the property, such as contractors, subcontractors, laborers, suppliers, and equipment lessors. A lender that merely provided financing has no mechanics' lien right.

50. On a private project where NO Notice of Completion or Cessation is recorded, what deadline applies to ALL claimants for recording a mechanics' lien?

When no Notice of Completion or Cessation is recorded, every claimant, whether the prime contractor or a subcontractor, has 90 days after actual completion of the work of improvement to record a mechanics' lien. The shorter 30/60-day periods only apply once such a notice is recorded.

51. A subcontractor served a proper preliminary notice but the owner never paid. Before recording a mechanics' lien, the subcontractor should make sure the lien claim states an amount that is:

A mechanics' lien may only secure the reasonable value of the work, services, equipment, or materials actually furnished and not yet paid for. Willfully overstating the lien amount can render the entire lien unenforceable.

52. On a private project, an owner who wants to shorten the time claimants have to record liens should:

Recording a Notice of Completion shortens the lien-recording period: the direct contractor then has 60 days and subcontractors/suppliers have 30 days, instead of the 90-day period that applies when no such notice is recorded.

53. A contractor recorded a valid mechanics' lien but, 100 days later, has neither been paid nor filed a foreclosure lawsuit. What is the status of the lien?

Under Civil Code §8460, a recorded mechanics' lien must be enforced by filing a foreclosure lawsuit within 90 days of recording. Because more than 90 days passed with no lawsuit, the lien has expired and become unenforceable.

54. A subcontractor signs a lien waiver in exchange for a progress payment that has not yet actually cleared. Which type of waiver is appropriate so the waiver only takes effect once payment is received?

A conditional waiver and release becomes effective only when the claimant actually receives the payment. An unconditional waiver releases lien rights immediately and should not be signed until payment has truly cleared.

55. A subcontractor records a $40,000 mechanics' lien on a home that the owner is trying to sell. To clear title so the sale can close, the owner records a lien release bond. The bond amount must be:

Under Civil Code §8424, a lien release bond must be 125% of the claimed lien amount. For a $40,000 lien, that is $50,000. The bond substitutes as security so the claimant's recovery shifts from the property to the bond.

56. An owner of a private residential project withholds final payment because of disputed change-order work. Absent a genuine good-faith dispute, the owner must generally pay the direct contractor the final retention within how long after completion?

Under Civil Code §8800, on a private work the owner must pay the direct contractor any retention within 45 days after completion of the work of improvement, unless there is a good-faith dispute. Wrongful withholding can expose the owner to a penalty plus the amount withheld.

57. On a private work of improvement, a supplier serves a stop payment notice on the construction lender. To make the notice "bonded" so the lender is obligated to withhold funds, the supplier should provide a bond equal to:

Under Civil Code §8506, a stop payment notice served on a construction lender must be accompanied by a bond of 125% of the claim amount to obligate the lender to withhold funds. The bond protects the lender if the claim is later found invalid.

58. A contractor abandons a private project before it is finished and the owner records a Notice of Cessation after work stops for a continuous period. The Notice of Cessation primarily serves to:

When a project stalls, a recorded Notice of Cessation (after work has ceased for a continuous statutory period) triggers the same shortened lien-recording deadlines as a Notice of Completion, giving the owner certainty even though the work was never finished.