Business FinancesQuestion 659 of 1632

Claims against a contractor's $25,000 license bond total more than the full amount of the bond. Under Bus. & Prof. Code §7071.11, how are the bond proceeds distributed?

a.Pro rata: every valid claimant shares in proportion to its claim
b.First to the surety for its premium, then to the CSLB for any fines
c.First in time, first in right, by the date each claim was filed
d.Wage and benefit claims in full first, then everyone else pro rata

Explanation

B&P §7071.11(a) is one sentence: if the bond cannot pay all claims in full, "the sum of the bond shall be distributed to all claimants in proportion to the amount of their respective claims." There is no ladder — a homeowner, an unpaid framer and a supplier all take the same percentage of what they are owed (a). (d) is the trap, and it is seductive because the section DOES single out wages once: the surety's aggregate liability for wage and fringe-benefit claims on this bond is capped at $4,000. That is a ceiling on one category, not a head start for it. (b) inverts the purpose of a bond, which exists for claimants and not for the surety or the board. (c) is the rule for recording real-property interests, not for bond proceeds.

Law Reference: Bus. & Prof. Code §7071.11(a)

This topic, taught in full in the CSLB Law & Business guide. CSLB Law & Business — Complete Study Guide (2026) — PDF + EPUB, $24.99 · 14-day refund →

Practice all 1632 questions free — no signup required.

Own the complete CSLB Law & Business guide — PDF + EPUB, $24.99 →

Related questions on this topic

Last reviewed: · editorial process

PrepPass team · Verified against California CSLB Contractor License Law & Business Exam · How we review
Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)
Report