C7 C7 Contractor Licensing & Business Requirements 5 — Questions and Answers
Question 1: A C7 contractor's license has been expired for 6 years. What is their reinstatement option?
- Pay a reinstatement fee and the license is immediately restored
- Take and pass the C7 trade exam again before reinstatement
- Apply as a new applicant — licenses expired over 5 years cannot be reinstated (Correct answer)
- Submit a notarized affidavit of continuous industry employment
Correct answer: Apply as a new applicant — licenses expired over 5 years cannot be reinstated
A license expired for more than 5 years cannot be reinstated; the individual must apply as a new applicant and meet all current requirements.
Question 2: Under the California Prompt Payment Act, how many days after invoice does a general contractor have to pay a C7 subcontractor on a private project?
- 7 days
- 10 days (Correct answer)
- 30 days
- 60 days
Correct answer: 10 days
On private projects, the Prompt Payment Act requires general contractors to pay subcontractors within 10 days of receiving payment from the owner.
Question 3: A C7 contractor discovers that a subcontractor they hired is unlicensed. Under California law, the C7 contractor:
- Bears no responsibility as long as the sub signed a contract
- May be disciplined by CSLB and is jointly liable for damages (Correct answer)
- Must report the sub to CSLB within 24 hours or face suspension
- Is only liable if the work causes property damage over $1,000
Correct answer: May be disciplined by CSLB and is jointly liable for damages
Hiring an unlicensed subcontractor exposes the C7 contractor to CSLB discipline and potential joint liability for the subcontractor's defective work.
Question 4: What is the minimum retention percentage a public agency may withhold from a C7 contractor's progress payments on a public works contract?
- 10% until project completion
- 5% unless the contract specifies otherwise (Correct answer)
- There is no statutory minimum — it is fully negotiable
- 2% for contracts under $1 million
Correct answer: 5% unless the contract specifies otherwise
California Public Contract Code limits retention on public works to 5%, with the contractor able to substitute securities in lieu of cash retention.
Question 5: A C7 contractor is convicted of a crime substantially related to contracting. CSLB's most likely disciplinary action is:
- An automatic $500 fine with no license impact
- Revocation or suspension of the license after a formal hearing (Correct answer)
- A mandatory continuing education requirement only
- Placement on probation without any hearing
Correct answer: Revocation or suspension of the license after a formal hearing
A conviction substantially related to the contractor's qualifications triggers formal disciplinary proceedings that can result in suspension or revocation of the license.
Question 6: Which of the following is NOT a valid form of contractor's bond for a C7 licensee in California?
- A surety bond issued by an admitted surety insurer
- A cash deposit with the State Treasurer
- A personal guarantee from a licensed attorney (Correct answer)
- An irrevocable letter of credit from a state-chartered bank
Correct answer: A personal guarantee from a licensed attorney
CSLB accepts surety bonds, cash deposits, or irrevocable letters of credit — a personal attorney guarantee is not a recognized bond substitute.
Question 7: A homeowner cancels a home improvement contract with a C7 contractor within the statutory rescission period. The contractor may:
- Charge a cancellation fee of up to 10% of the contract price
- Retain any deposit paid since work was scheduled
- Charge only for materials specially ordered and non-returnable before cancellation (Correct answer)
- Sue for lost profits immediately upon cancellation
Correct answer: Charge only for materials specially ordered and non-returnable before cancellation
During the rescission period, the contractor may only retain costs for non-returnable special-order materials; all other deposits must be refunded.
C7 C7 Contractor Licensing & Business Requirements 5
A C7 contractor's license has been expired for 6 years.
What is their reinstatement option?