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Section 1 of 7

CSLB Licensing Requirements Practice Questions

10 free practice questions on licensing requirements, 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

  1. Business Organization and Licensing

    1. A drywall company works only as a subcontractor. It never contracts directly with property owners. Under section 7026, is it a "contractor" that needs a license?

    • A. No, because only prime contractors need a license
    • B. Yes, because the law's definition includes subcontractors
    • C. No, because the prime contractor's license covers it
    • D. Yes, but only when it works on public projects
    Show answer

    Correct answer: B

    • A. No, because only prime contractors need a license

      The license law is not limited to prime contractors. Section 7026 says "contractor" includes subcontractor and specialty contractor.

    • B. Yes, because the law's definition includes subcontractors

      Correct answer

      Correct. Section 7026 says "contractor" includes subcontractor, so a company that works only as a subcontractor still needs its own license.

    • C. No, because the prime contractor's license covers it

      The prime contractor's license does not cover a separate subcontracting business. The drywall company is itself a contractor under section 7026 and needs its own license.

    • D. Yes, but only when it works on public projects

      The rule is not limited to public projects. It applies on private jobs as well as public ones.

    Explanation

    Section 7026 defines "contractor" very broadly and says that "contractor" includes subcontractor and specialty contractor. So a company that works only as a subcontractor is still a contractor and needs its own license. The prime contractor's license does not cover a separate subcontracting business. The rule applies on private jobs as well as public ones.

    Source

  2. Business Organization and Licensing

    2. A person is convicted for the first time of contracting without a license. What is the maximum penalty under section 7028?

    • A. A $1,000 fine, 30 days in county jail, or both
    • B. A $5,000 fine, six months in county jail, or both
    • C. A $10,000 fine, one year in county jail, or both
    • D. A $15,000 fine, one year in state prison, or both
    Show answer

    Correct answer: B

    • A. A $1,000 fine, 30 days in county jail, or both

      These figures understate the maximum. A first conviction under section 7028 is punishable by a fine of up to $5,000, up to six months in county jail, or both.

    • B. A $5,000 fine, six months in county jail, or both

      Correct answer

      Correct. Section 7028 says a first conviction is punishable by a fine of up to $5,000, up to six months in county jail, or both.

    • C. A $10,000 fine, one year in county jail, or both

      The $10,000 fine and one year in county jail belong to the penalty for a third or later conviction, not a first one.

    • D. A $15,000 fine, one year in state prison, or both

      A first conviction carries at most a $5,000 fine and six months in county jail, not a $15,000 fine and state prison.

    Explanation

    Section 7028 says a first conviction for contracting without a license is punishable by a fine of up to $5,000, up to six months in county jail, or both. Larger fines and longer jail time apply to second and third convictions. The $10,000 and one-year figures belong to the penalty for a third or later conviction, not a first one.

    Source

  3. Business Organization and Licensing

    3. A company only sets up lane closures and does flagging (traffic control) for road work. It builds and repairs nothing. Under section 7026, is the company a "contractor"?

    • A. No, because it does not build or repair any structure
    • B. No, because only work on a building needs a license
    • C. Yes, but only if it also paves part of the roadway
    • D. Yes, because the definition includes lane closures and flagging
    Show answer

    Correct answer: D

    • A. No, because it does not build or repair any structure

      Building or repairing is not required. Section 7026 names lane closures and flagging in the definition of a contractor.

    • B. No, because only work on a building needs a license

      The definition is not limited to buildings. It names the preparation and removal of roadway construction zones, lane closures, flagging, and traffic diversions.

    • C. Yes, but only if it also paves part of the roadway

      Paving is not required. Lane closures and flagging are named on their own in the section 7026 definition.

    • D. Yes, because the definition includes lane closures and flagging

      Correct answer

      Correct. Section 7026 defines a contractor to include the preparation and removal of roadway construction zones, lane closures, flagging, or traffic diversions.

    Explanation

    Business and Professions Code section 7026 defines a contractor very broadly. The definition names the preparation and removal of roadway construction zones, lane closures, flagging, and traffic diversions. So a company that only does this traffic control work is a contractor, even if it builds nothing. The definition is not limited to buildings or to people who build or pave something.

    Source

  4. Business Organization and Licensing

    4. Kim's license expires on June 30. On June 20, she sends a renewal application, but it is incomplete, so CSLB returns it with the reasons. She files a corrected, acceptable application on July 20. Under section 7141, does the delinquency (late) fee apply?

    • A. Yes, because the license expired before the corrected application came in
    • B. No, because the corrected application came within the 30-day grace period
    • C. Yes, because the grace period covers only the license status, not fees
    • D. No, because any renewal within 60 days of expiration has no late fee
    Show answer

    Correct answer: B

    • A. Yes, because the license expired before the corrected application came in

      Wrong. The license expiring before the correction came in does not matter; the delinquency fee applies only if the corrected, acceptable application is not returned within 30 days after expiration, and July 20 is only 20 days after June 30.

    • B. No, because the corrected application came within the 30-day grace period

      Correct answer

      Correct. Kim sent her application before the expiration date, and her corrected, acceptable application came in on July 20, 20 days after June 30, which is inside the 30-day grace period, so the delinquency fee does not apply.

    • C. Yes, because the grace period covers only the license status, not fees

      Wrong. This turns the rule around: section 7141 says the 30-day grace period applies only to the delinquency fee, so it is a fee rule, not a rule about license status.

    • D. No, because any renewal within 60 days of expiration has no late fee

      Wrong. Section 7141 gives a 30-day grace period, not 60 days; there is no 60-day rule.

    Explanation

    Business and Professions Code section 7141 says an incomplete renewal application sent on or before the expiration date is returned to the licensee with the reasons. The delinquency fee applies only if the corrected, acceptable application is not returned within 30 days after the expiration date. July 20 is 20 days after June 30, so the delinquency fee does not apply. The law says this grace period applies only to the delinquency fee, so it is not a rule about license status. There is no 60-day rule, and the expiration before the correction does not matter inside the 30 days.

    Sources

  5. Business Organization and Licensing

    5. A company has held a Nevada contractor license for 15 years. It has never held a California license. It finished a $60,000 job in California and was not paid. It acted in good faith and applied for a California license as soon as it learned it needed one. Under section 7031, may a court find substantial compliance (that it met the license rules closely enough)?

    • A. Yes, because it acted in good faith and fixed the problem promptly
    • B. Yes, because it held a valid contractor license in another state
    • C. No, unless it gets its California license before the trial begins
    • D. No, because it has never been licensed as a contractor in California
    Show answer

    Correct answer: D

    • A. Yes, because it acted in good faith and fixed the problem promptly

      Good faith and prompt correction help only a contractor that was licensed in California before the work. Substantial compliance does not apply to one never licensed in California.

    • B. Yes, because it held a valid contractor license in another state

      A license from another state does not count. The rule asks whether it has ever been a licensed contractor in California, and it has not.

    • C. No, unless it gets its California license before the trial begins

      Getting a California license later does not cover work already done, and substantial compliance does not apply to one never licensed in this state.

    • D. No, because it has never been licensed as a contractor in California

      Correct answer

      Right. Section 7031 says substantial compliance does not apply when the contractor has never been licensed in California, and this company never was.

    Explanation

    Business and Professions Code section 7031 says substantial compliance does not apply when the contractor has never been licensed in California. A court may find substantial compliance only if the contractor was licensed in California before the work, acted reasonably and in good faith, and fixed the problem promptly. This company was never licensed in California, so good faith and quick action do not help. A license from another state does not count, and getting a California license later does not cover work already done.

    Source

  6. Business Organization and Licensing

    6. Under section 7076.5, for how long is an inactive contractor license valid from its due date?

    • A. One year
    • B. Two years
    • C. Three years
    • D. Four years
    Show answer

    Correct answer: D

    • A. One year

      One year is not a period the law uses; section 7076.5 says inactive licenses are valid for four years from their due date.

    • B. Two years

      Two years is the period for an active license, a common mix-up. Inactive licenses are valid for four years from their due date.

    • C. Three years

      Three years is not a period the law uses for license terms; inactive licenses are valid for four years.

    • D. Four years

      Correct answer

      Correct. Section 7076.5 says inactive licenses are valid for a period of four years from their due date.

    Explanation

    Business and Professions Code section 7076.5 says inactive licenses are valid for four years from their due date. Two years is the period for an active license, which is a common mix-up. One and three years are not periods the law uses for license terms.

    Source

  7. Business Organization and Licensing

    7. Jin applies for a contractor license. Earlier, CSLB gave him a citation, and the citation is now final. Jin has not complied with it. Under section 7099.6, what is his failure to comply a ground for?

    • A. Only a warning letter from the registrar
    • B. A new citation, but not a denial
    • C. Nothing, because he is not yet licensed
    • D. Denial of his license application
    Show answer

    Correct answer: D

    • A. Only a warning letter from the registrar

      The law names denial of the license, not only a warning letter.

    • B. A new citation, but not a denial

      The law makes failure to comply a ground for denial of the license, not just a new citation.

    • C. Nothing, because he is not yet licensed

      Being an applicant does not protect Jin; section 7099.6 makes an applicant's failure to comply with a final citation a ground for denial.

    • D. Denial of his license application

      Correct answer

      Correct. Section 7099.6 says an applicant's failure to comply with a citation after it is final is a ground for denial of the license.

    Explanation

    Business and Professions Code section 7099.6 says an applicant's failure to comply with a citation after it is final is a ground for denial of the license. For a licensee, the same failure is a ground for suspension or revocation. Being an applicant does not protect Jin, so it is wrong to say nothing happens. The law names denial, not only a warning letter or a new citation.

    Source

  8. Business Organization and Licensing

    8. A contractor's license is suspended. Its expiration date arrives while it is still suspended. Under section 7143, which statement is true?

    • A. It need not be renewed until the suspension ends
    • B. Renewing it ends the suspension and allows contracting again
    • C. It cannot be renewed and is canceled when it expires
    • D. It must be renewed, but renewal does not allow contracting
    Show answer

    Correct answer: D

    • A. It need not be renewed until the suspension ends

      A suspended license is still subject to expiration and must be renewed. The licensee should not wait until the suspension ends.

    • B. Renewing it ends the suspension and allows contracting again

      Renewal does not end the suspension. The licensee still may not do any contracting while the license stays suspended and until it is reinstated.

    • C. It cannot be renewed and is canceled when it expires

      A suspended license can be renewed. Section 7143 says it is subject to expiration and shall be renewed.

    • D. It must be renewed, but renewal does not allow contracting

      Correct answer

      Correct. A suspended license must still be renewed, but renewal does not allow any contracting while it stays suspended and until it is reinstated.

    Explanation

    Business and Professions Code section 7143 says a suspended license is still subject to expiration and must be renewed. But renewal does not let the licensee do any contracting while the license stays suspended and until it is reinstated. So renewal does not end the suspension. A suspended license can be renewed, and the licensee should not wait until the suspension ends.

    Source

  9. Business Organization and Licensing

    9. A homeowner wants to use the owner-builder exemption to improve her own home without a license. Under section 7044, how long must she have lived in the home before the work is completed?

    • A. 3 months
    • B. 6 months
    • C. 12 months
    • D. 24 months
    Show answer

    Correct answer: C

    • A. 3 months

      Section 7044 requires the homeowner to have lived in the home for 12 months before the work is completed, not 3 months.

    • B. 6 months

      Six months is only half the time. Section 7044 requires 12 months of actual residence before the work is completed.

    • C. 12 months

      Correct answer

      Correct. Section 7044 requires that the homeowner actually lived in the residence for the 12 months before the work is completed.

    • D. 24 months

      Section 7044 requires 12 months of residence before completion, not 24. This choice doubles the required time.

    Explanation

    Section 7044 lets a homeowner improve her principal place of residence (main home) without a license if certain conditions are met. One condition is that she has actually lived in the home for the 12 months before the work is completed. The work must also be done before sale, and she may not use the exemption on more than two structures more than once in three years. The other time periods are not in the law.

    Source

  10. Business Organization and Licensing

    10. A handyman with no license repairs a fence. The total price for labor and materials is $850. The work needs no building permit. He works alone and does not advertise. Does he need a contractor license?

    • A. Yes, because all paid construction work needs a license
    • B. Yes, because the job costs more than $500
    • C. No, because the job is under $1,000 and needs no permit
    • D. No, because fence work is never covered by the license law
    Show answer

    Correct answer: C

    • A. Yes, because all paid construction work needs a license

      Not all paid work needs a license. Section 7048 exempts work on one project when the total price is less than $1,000 and no building permit is required.

    • B. Yes, because the job costs more than $500

      $500 is the older figure and is no longer the limit in section 7048. The limit is less than $1,000, and this $850 job is under it.

    • C. No, because the job is under $1,000 and needs no permit

      Correct answer

      Correct. Section 7048 exempts a job when the total price for labor, materials, and all other items is less than $1,000 and no building permit is needed. This $850 job needs no permit, and he works alone without advertising.

    • D. No, because fence work is never covered by the license law

      Fence work is not always outside the license law; it can be covered when the job is larger. This job is exempt because it is under $1,000 and needs no permit.

    Explanation

    Section 7048 says the license law does not apply to work on one project when the total price for labor, materials, and all other items is less than $1,000 and the work does not need a building permit. This job is $850, needs no permit, and the handyman does not advertise or hire help, so the exemption applies. The older $500 figure is no longer the limit in section 7048. Fence work can be covered by the license law when the job is larger.

    Source

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