C7 C7 Contractor Licensing & Business Requirements 2 — Questions and Answers
Question 1: How long must a California C7 contractor retain project records and contracts after project completion?
- 1 year
- 3 years
- 5 years (Correct answer)
- 10 years
Correct answer: 5 years
California contractors are generally required to keep project records, contracts, and financial documents for a minimum of 5 years to comply with CSLB and tax requirements.
Question 2: A C7 licensee's license number must be displayed on which business materials under California law?
- Business cards only
- Contracts only
- All contracts, bids, and advertising (Correct answer)
- Only on the company vehicle
Correct answer: All contracts, bids, and advertising
California Business and Professions Code Section 7030.5 requires contractors to include their license number on all contracts, bids, and advertising.
Question 3: Under California law, which of the following actions constitutes 'acting in the capacity of a contractor' requiring a C7 license?
- Installing a single doorbell for a neighbor for free
- Bidding on or performing low-voltage construction work for compensation exceeding $500 including labor and materials (Correct answer)
- Replacing a broken low-voltage outlet in your own home
- Advising a friend on a security system layout
Correct answer: Bidding on or performing low-voltage construction work for compensation exceeding $500 including labor and materials
California Business and Professions Code defines contracting as performing or bidding on construction work for compensation that exceeds $500 in combined labor and materials.
Question 4: What is the consequence for a C7 contractor found guilty of abandoning a construction project in California?
- A written warning from CSLB
- A fine of up to $5,000
- License suspension or revocation and possible criminal charges (Correct answer)
- Mandatory continuing education only
Correct answer: License suspension or revocation and possible criminal charges
Project abandonment is a serious violation under California Business and Professions Code that can result in license suspension or revocation, civil penalties, and criminal prosecution.
Question 5: Which document must a California C7 contractor provide to a homeowner before starting a home improvement contract valued at $500 or more?
- A verbal agreement is sufficient
- A written contract containing all required statutory disclosures (Correct answer)
- Only a signed change order
- A copy of the CSLB license wallet card
Correct answer: A written contract containing all required statutory disclosures
California Business and Professions Code Section 7159 mandates a written contract with specific disclosures including the 3-day right to cancel for home improvement work at or above $500.
Question 6: What happens to a C7 contractor's license if their workers' compensation insurance lapses while employees are on payroll in California?
- Nothing until the next renewal period
- The license is automatically suspended (Correct answer)
- A $500 fine is assessed
- The contractor must post a bond
Correct answer: The license is automatically suspended
The CSLB automatically suspends a contractor's license upon receiving notice of workers' compensation insurance cancellation when employees are on payroll.
C7 C7 Contractor Licensing & Business Requirements 2
How long must a California C7 contractor retain project records and contracts after project completion?