Business FinancesQuestion 632 of 690
A consumer wins a final judgment of $50,000 against a licensed contractor for fraudulent home improvement work. The CSLB license bond is $25,000. What is the most the claimant can recover from the bond itself?
a.The full judgment of $50,000, because the bond is secondary security
b.$10,000, because that is the consumer-fraud sub-limit
c.Up to the $25,000 bond penalty (shared with any other valid claimants against the same bond)
d.Nothing, because consumer claims must instead go to the CSLB Recovery Fund
Explanation
Bus. & Prof. Code §7071.6 caps recovery on the contractor's $25,000 license bond at the bond's penal sum, and §7071.11 governs priority of claims when claims exceed available bond proceeds. A bond is not 'secondary' to the judgment — it is a fixed pool of money. There is no $10,000 consumer-fraud sub-limit on the license bond. California does not have a CSLB Recovery Fund for general consumer claims (some other states do). The consumer can still pursue the contractor personally for the balance above $25,000, but bond recovery itself is capped.
Law Reference: Bus. & Prof. Code §7071.11Practice all 690 questions free — no signup required.
Related questions on this topic
- The primary purpose of a bid bond on a California public works project is to:
- Under California home improvement contract law, the down payment a contractor may collect from an owner before any work is done or materials are delivered is limited to:
- On a residential swimming pool contract, what is the maximum down payment a contractor may receive before work begins?
- Under Bus. & Prof. Code §7071.11, when claims against a contractor's $25,000 license bond exceed the bond's penal sum, the bond proceeds are distributed in which order of priority?
- Instead of filing a contractor's license bond, a licensee may deposit cash or equivalent securities with the State Treasurer under Bus. & Prof. Code §7071.12. To replace the $25,000 license bond entirely with cash, the licensee must deposit:
- A Responsible Managing Employee (RME) differs from a Responsible Managing Officer (RMO) in that an RME must:
Last reviewed: · editorial process
PrepPass Editorial Team · Verified against California CSLB Contractor License Law & Business Exam · How we review