Section 1 of 7
CSLB Advertising and Subcontracting Practice Questions
10 free practice questions on advertising and subcontracting, part of the Business Organization and Licensing section (about 13% of the exam). Try each one, then open the answer: every choice is explained and the law is quoted.
Questions and answers
- Business Organization and Licensing
1. A company holds only a C-10 electrical license. It wants to paint "General Contractor" on its trucks. Under Business and Professions Code section 7027.1, may it advertise this way?
- A. Yes, because any licensed contractor may use that title
- B. Yes, but only if the truck also shows the C-10 class
- C. No, because a truck is never allowed to carry advertising
- D. No, because only general building or engineering licensees may
Show answerHide answer
Correct answer: D
A. Yes, because any licensed contractor may use that title
Not every licensee may use this title. Section 7027.1 lets only a licensed building or engineering contractor advertise as a general contractor, and a C-10 electrical contractor is a specialty contractor.
B. Yes, but only if the truck also shows the C-10 class
Showing the C-10 class does not fix the problem. A C-10 contractor is a specialty contractor, so it still may not advertise as a general contractor.
C. No, because a truck is never allowed to carry advertising
Signs on business vehicles are a normal form of advertising. The problem here is the classification being advertised, not the truck.
D. No, because only general building or engineering licensees may
Correct answer
Section 7027.1 requires a valid license in the classification advertised, and only a licensed building or engineering contractor may advertise as a general contractor. A C-10 specialty contractor does not qualify.
Explanation
Section 7027.1 makes it a misdemeanor to advertise unless the person holds a valid license in the classification advertised. The only exception is that a licensed building or engineering contractor may advertise as a general contractor. A C-10 electrical contractor is a specialty contractor, so it may not advertise as a general contractor, even if it also shows its C-10 class. Signs on business vehicles are a normal form of advertising; the problem here is the classification, not the truck.
Source
Bus. & Prof. Code §7027.1
It is a misdemeanor for any person to advertise for construction or work of improvement covered by this chapter unless that person holds a valid license under this chapter in the classification so advertised, except that a licensed building or engineering contractor may advertise as a general contractor.
View source: Bus. & Prof. Code §7027.1Official site for Bus. & Prof. Code §7027.1 (opens in a new tab)
- Business Organization and Licensing
2. A "B" general building contractor has no electrical license. It wants a prime contract for a job with only framing work and electrical work. Under section 7057, what must it do for the electrical part?
- A. Nothing, because framing and electrical are two unrelated trades
- B. Nothing, because the electrical work is under half of the job
- C. Get written permission from the owner before doing the work
- D. Hold the electrical license or subcontract to a licensed electrician
Show answerHide answer
Correct answer: D
A. Nothing, because framing and electrical are two unrelated trades
Framing does not count toward the two unrelated trades. Without framing, this job has only one other trade, electrical.
B. Nothing, because the electrical work is under half of the job
The size of the electrical part does not change the rule. The B contractor still must hold the electrical class or subcontract the work.
C. Get written permission from the owner before doing the work
The owner's permission does not change the rule. The B contractor must hold the electrical class or subcontract to a properly licensed contractor.
D. Hold the electrical license or subcontract to a licensed electrician
Correct answer
Section 7057 says framing is not counted, so this job has only one other trade, electrical. The B contractor must hold the electrical classification or subcontract that work to a properly licensed contractor.
Explanation
Section 7057 says a general building contractor may not count framing or carpentry when it counts the two unrelated trades it needs. Without framing, this job has only one other trade, electrical. So the B contractor must either hold the right electrical classification or subcontract the electrical work to a properly licensed contractor. The size of the electrical part and the owner's permission do not change the rule.
Sources
Bus. & Prof. Code §7057
The general building contractor shall not count framing or carpentry in calculating the two unrelated trades necessary in order for the general building contractor to be able to take a prime contract or subcontract for a project involving other trades.
View source: Bus. & Prof. Code §7057Official site for Bus. & Prof. Code §7057 (opens in a new tab)
Bus. & Prof. Code §7057
or unless the general building contractor holds the appropriate license classification or subcontracts with an appropriately licensed contractor to perform the work.
View source: Bus. & Prof. Code §7057Official site for Bus. & Prof. Code §7057 (opens in a new tab)
- Business Organization and Licensing
3. A contractor holds only a C-33 painting license. It signs a separate contract to replace a home's roof. Under section 7117.6, what is the result?
- A. Nothing, because the contractor holds a valid license
- B. Nothing, if a painter's crew does the roofing work
- C. It is allowed if the contractor later paints the roof
- D. It is a cause for disciplinary action against the license
Show answerHide answer
Correct answer: D
A. Nothing, because the contractor holds a valid license
Holding a valid painting license does not cover roofing work. Acting as a contractor in a classification other than the one held is a cause for disciplinary action.
B. Nothing, if a painter's crew does the roofing work
Who does the work does not change the rule. Taking a separate roofing job outside the painting classification is still a cause for disciplinary action.
C. It is allowed if the contractor later paints the roof
Painting the roof later does not change the rule. The roof replacement is a separate roofing job, not work incidental to painting.
D. It is a cause for disciplinary action against the license
Correct answer
Section 7117.6 says acting as a contractor in a classification other than the one currently held is a cause for disciplinary action. Replacing a roof is roofing work, not painting.
Explanation
Section 7117.6 says acting as a contractor in a classification other than the one the licensee currently holds is a cause for disciplinary action. Replacing a roof is roofing work, not painting, and here it is a separate job, not incidental to painting. Holding a valid license in another class does not cover this work. Who does the work or later painting does not change the rule.
Source
Bus. & Prof. Code §7117.6
Acting in the capacity of a contractor in a classification other than that currently held by the licensee constitutes a cause for disciplinary action.
View source: Bus. & Prof. Code §7117.6Official site for Bus. & Prof. Code §7117.6 (opens in a new tab)
- Business Organization and Licensing
4. A contractor's license was suspended twice in the last five years for violations of the Contractors State License Law. Both suspensions were stayed (put on hold). It now bids on a single-family home remodel. Under section 7030.1, must it disclose the suspensions?
- A. Yes, because stayed suspensions must also be disclosed
- B. No, because stayed suspensions do not count for this rule
- C. No, because only license revocations must be disclosed
- D. Yes, but only if the owner asks about its license history
Show answerHide answer
Correct answer: A
A. Yes, because stayed suspensions must also be disclosed
Correct answer
Correct. Two suspensions within five years falls within the rule's eight-year period, and section 7030.1 requires disclosure whether or not the suspension or revocation was stayed.
B. No, because stayed suspensions do not count for this rule
Stayed suspensions do count. Section 7030.1 requires disclosure whether or not the suspension or revocation was stayed.
C. No, because only license revocations must be disclosed
Section 7030.1 covers license suspensions as well as license revocations. Suspensions must be disclosed, not only revocations.
D. Yes, but only if the owner asks about its license history
The duty does not depend on the owner asking. The contractor must give the notice before the contract, and it may be in a bid, estimate, or other document.
Explanation
Business and Professions Code section 7030.1 applies when a license was suspended or revoked two or more times within eight years. The contractor must disclose each such suspension or revocation from the last eight years, whether or not it was stayed. Suspensions must be disclosed, not only revocations. The duty does not depend on the owner asking, and the notice may be given in a bid, estimate, or other document before the contract.
Sources
Bus. & Prof. Code §7030.1(a)
any disciplinary license suspension, or license revocation during the last eight years resulting from any violation of this chapter by the contractor, whether or not the suspension or revocation was stayed
View source: Bus. & Prof. Code §7030.1(a)Official site for Bus. & Prof. Code §7030.1(a) (opens in a new tab)
Bus. & Prof. Code §7030.1(b)
The disclosure notice required by this section may be provided in a bid, estimate, or other document prior to entering into a contract.
View source: Bus. & Prof. Code §7030.1(b)Official site for Bus. & Prof. Code §7030.1(b) (opens in a new tab)
- Business Organization and Licensing
5. A person with no contractor license puts up signs that advertise patio building jobs of $5,000 and up. Under section 7027.1, what is the range of the fine for this misdemeanor?
- A. $100 to $500
- B. $700 to $1,000
- C. $1,000 to $5,000
- D. $1,500 to $15,000
Show answerHide answer
Correct answer: B
A. $100 to $500
This range does not appear in section 7027.1. The fine is not less than $700 and not more than $1,000.
B. $700 to $1,000
Correct answer
Correct. Section 7027.1 makes unlicensed advertising a misdemeanor punishable by a fine of not less than $700 and not more than $1,000.
C. $1,000 to $5,000
This range does not appear in section 7027.1. The misdemeanor fine tops out at $1,000, with a minimum of $700.
D. $1,500 to $15,000
$1,500 to $15,000 is the civil penalty in a registrar citation under section 7028.7, a separate remedy. The section 7027.1 fine is $700 to $1,000.
Explanation
Business and Professions Code section 7027.1 makes it a misdemeanor to advertise construction work without a license in the class advertised. The fine is not less than $700 and not more than $1,000, in addition to any other punishment. The range of $1,500 to $15,000 is the civil penalty in a registrar citation under section 7028.7, which is a separate remedy. The other ranges do not appear in section 7027.1.
Source
Bus. & Prof. Code §7027.1(c)
A violation of this section is punishable by a fine of not less than seven hundred dollars ($700) and not more than one thousand dollars ($1,000)
View source: Bus. & Prof. Code §7027.1(c)Official site for Bus. & Prof. Code §7027.1(c) (opens in a new tab)
- Business Organization and Licensing
6. A "B" general building contractor holds no other license. It takes a prime contract to build a new office building. The job uses many unrelated trades and includes a fire protection system. Under section 7057, what must it do for the fire protection work?
- A. Nothing more, because the job uses at least two unrelated trades
- B. Get written approval from the local fire department before starting
- C. Hold the right license class or subcontract to a licensed contractor
- D. Do the work itself, if the fire system is incidental to the job
Show answerHide answer
Correct answer: C
A. Nothing more, because the job uses at least two unrelated trades
The fire protection rule applies even when the job uses two or more unrelated trades. The multi-trade rule does not let the B contractor do this work itself.
B. Get written approval from the local fire department before starting
Section 7057 does not mention fire department approval. It requires the right license class or a subcontract with a properly licensed contractor.
C. Hold the right license class or subcontract to a licensed contractor
Correct answer
Correct. Section 7057(c) bars a general building contractor from contracting for a project with a fire protection system unless it holds the right license class or subcontracts with a properly licensed contractor.
D. Do the work itself, if the fire system is incidental to the job
Section 7057(c) does not let a B contractor without the right license do the fire protection work itself. It must hold the right license class or subcontract the work to a properly licensed contractor.
Explanation
Business and Professions Code section 7057(c) says a general building contractor may not contract for a project that includes a fire protection system unless it holds the right license class or subcontracts with a properly licensed contractor. This rule applies even when the job uses two or more unrelated trades. So the multi-trade rule does not let the B contractor do this work itself. Section 7057 does not mention fire department approval.
Source
Bus. & Prof. Code §7057(c)
A general building contractor shall not contract for any project that includes a fire protection system as provided for in Section 7026.12 or 7026.13, or the “C-57” Well Drilling classification as provided for in Section 13750.5 of the Water Code, unless the general building contractor holds the appropriate license classification, or subcontracts with the appropriately licensed contractor.
View source: Bus. & Prof. Code §7057(c)Official site for Bus. & Prof. Code §7057(c) (opens in a new tab)
- Business Organization and Licensing
7. A licensed roofer runs an ad for a new roof at $6,000. It plans to refuse every job at that price and sell a costlier roof instead. Under section 7161, what is this?
- A. Allowed, because an ad price is only an invitation to talk
- B. A misdemeanor and a cause for disciplinary action
- C. A cause for discipline only, but not a crime
- D. A crime only if a buyer pays and loses money
Show answerHide answer
Correct answer: B
A. Allowed, because an ad price is only an invitation to talk
Wrong. Section 7161 makes it a misdemeanor to advertise work with the intent not to accept contracts at the advertised price.
B. A misdemeanor and a cause for disciplinary action
Correct answer
Correct. Section 7161 makes advertising with the intent not to accept contracts at the advertised price a misdemeanor, and the same act is cause for disciplinary action against a licensee.
C. A cause for discipline only, but not a crime
Wrong. This act is not discipline only; section 7161 also makes it a misdemeanor.
D. A crime only if a buyer pays and loses money
Wrong. The law does not require a buyer to first pay or lose money; advertising with the intent not to accept contracts at that price is itself the offense.
Explanation
Business and Professions Code section 7161 makes it a misdemeanor to advertise work to the public with the intent not to accept contracts at the advertised price. The same section says this act is also cause for disciplinary action against a licensee. So it is both a crime and a ground for discipline. The law does not require that a buyer first pay or lose money.
Sources
Bus. & Prof. Code §7161
It is a misdemeanor for any person to engage in any of the following acts, the commission of which is cause for disciplinary action against any licensee or applicant
View source: Bus. & Prof. Code §7161Official site for Bus. & Prof. Code §7161 (opens in a new tab)
Bus. & Prof. Code §7161(e)
by any means advertising or purporting to offer to the general public this improvement work with the intent not to accept contracts for the particular work or at the price that is advertised or offered to the public
View source: Bus. & Prof. Code §7161(e)Official site for Bus. & Prof. Code §7161(e) (opens in a new tab)
- Business Organization and Licensing
8. To get a homeowner to sign a remodel contract, a contractor promises her $300 for each neighbor who later signs a contract with it. Under section 7157, is this promise allowed?
- A. Yes, because referral rewards are a normal sales practice
- B. No, it is a misdemeanor and a cause for discipline
- C. Yes, but only if the reward is written in the contract
- D. No, unless each reward is worth $5 or less
Show answerHide answer
Correct answer: B
A. Yes, because referral rewards are a normal sales practice
Wrong. Section 7157(a) says no person may promise or offer to pay an owner a reward for getting home improvement business placed with others.
B. No, it is a misdemeanor and a cause for discipline
Correct answer
Correct. Section 7157(a) bars promising an owner a reward for getting home improvement business placed with others, and section 7157 makes any prohibited act a misdemeanor and a cause for discipline.
C. Yes, but only if the reward is written in the contract
Wrong. Writing the reward into the contract does not make it legal; the promise itself is prohibited by section 7157(a).
D. No, unless each reward is worth $5 or less
Wrong. The $5 limit is for promotional gifts that do not depend on a contract, so it does not apply to referral rewards.
Explanation
Business and Professions Code section 7157(a) says no person may promise or offer to pay an owner a reward for getting home improvement business placed with others, as part of inducing a contract. Section 7157 also says any act it prohibits is a misdemeanor and a cause for disciplinary action. Writing the reward into the contract does not make it legal. The $5 limit is for promotional gifts that do not depend on a contract, so it does not apply to referral rewards.
Sources
Bus. & Prof. Code §7157(a)
no person may promise or offer to pay, credit, or allow to any owner, compensation or reward for the procurement or placing of home improvement business with others
View source: Bus. & Prof. Code §7157(a)Official site for Bus. & Prof. Code §7157(a) (opens in a new tab)
Bus. & Prof. Code §7157
Commission of any act prohibited by this section is a misdemeanor and constitutes a cause for disciplinary action.
View source: Bus. & Prof. Code §7157Official site for Bus. & Prof. Code §7157 (opens in a new tab)
- Business Organization and Licensing
9. A handyman has no contractor license. Under section 7027.2, when may he advertise for construction work?
- A. Only if each job is under $1,000, with no statement about licensing
- B. Only if each job is under $1,000 and the ad says he is not licensed
- C. Only if each job is under $5,000 and the ad says he is not licensed
- D. Never, because only licensed contractors may advertise for any kind of work
Show answerHide answer
Correct answer: B
A. Only if each job is under $1,000, with no statement about licensing
The under-$1,000 limit is right, but it is only half the rule. The ad must also state that the person is not licensed, and leaving that out breaks the rule.
B. Only if each job is under $1,000 and the ad says he is not licensed
Correct answer
Section 7027.2 requires both conditions: the total price for labor, material, and all other items on the project is less than $1,000, and the ad states that the person is not licensed.
C. Only if each job is under $5,000 and the ad says he is not licensed
This raises the limit too high. The total job price must be less than $1,000, not $5,000.
D. Never, because only licensed contractors may advertise for any kind of work
Section 7027.2 makes a narrow exception. An unlicensed person may advertise if the job totals less than $1,000 and the ad says the person is not licensed.
Explanation
Section 7027.2 lets an unlicensed person advertise only if two conditions are both met. First, the total price for labor, material, and all other items on a project is less than $1,000. Second, the ad states that the person is not licensed. Leaving out the statement breaks the rule, and $5,000 is not the limit. It is also wrong to say an unlicensed person can never advertise, because section 7027.2 makes this narrow exception.
Source
Bus. & Prof. Code §7027.2
a person who is not licensed pursuant to this chapter may advertise for construction work or a work of improvement covered by this chapter only if the aggregate contract price for labor, material, and all other items on a project or undertaking is less than one thousand dollars ($1,000) and the person states in the advertisement that the person is not licensed under this chapter.
View source: Bus. & Prof. Code §7027.2Official site for Bus. & Prof. Code §7027.2 (opens in a new tab)
- Business Organization and Licensing
10. A person with no contractor license posts ads for kitchen remodels of $20,000 and up. The ads appear only on a social media page, not in print. Does section 7027.1 apply to these ads?
- A. Yes, because electronic ads count as advertising
- B. No, because the ads do not list any prices
- C. No, because only printed ads count as advertising
- D. Yes, but only if the person paid for the ads
Show answerHide answer
Correct answer: A
A. Yes, because electronic ads count as advertising
Correct answer
Section 7027.1 defines "advertise" to include any electronic transmission. A social media post is an electronic transmission, so these ads count as advertising.
B. No, because the ads do not list any prices
The definition of advertising does not depend on prices, so whether the ads list prices makes no difference.
C. No, because only printed ads count as advertising
Advertising is not limited to print. The definition also covers airwave and any electronic transmission, which includes a social media post.
D. Yes, but only if the person paid for the ads
The definition of advertising does not depend on paying for the ad. An electronic post counts whether or not it was paid for.
Explanation
Section 7027.1 defines "advertise" very broadly. It includes cards, signs, newspapers, magazines, and any airwave or electronic transmission. An online social media post is an electronic transmission, so it is advertising under the law. The law does not limit advertising to print, and it does not depend on prices or on paying for the ad. The jobs are $20,000 and up, so the small-job exception for unlicensed advertising does not help this person.
Source
Bus. & Prof. Code §7027.1
“Advertise,” as used in this section, includes, but not by way of limitation, the issuance of any card, sign, or device to any person, the causing, permitting, or allowing of any sign or marking on or in any building or structure, or in any newspaper, magazine, or by airwave or any electronic transmission
View source: Bus. & Prof. Code §7027.1Official site for Bus. & Prof. Code §7027.1 (opens in a new tab)
Keep studying
Read the Section 1 study notes: Business Organization and Licensing