CR Legal & Regulatory Compliance Flashcards

What is the purpose of a certificate of occupancy (CO) in a remodeling context?

Answer: To certify that the renovated space meets building codes and is safe for occupancy

A certificate of occupancy confirms that a newly renovated or constructed space complies with building codes and is safe to use.

Under the Truth in Lending Act (TILA), what must a remodeler who offers financing disclose to homeowners?

Answer: The annual percentage rate (APR), total finance charges, and total payment amount

TILA requires lenders and contractors offering financing to disclose APR, total finance charges, and total repayment amount.

What is the primary legal risk of using unlicensed subcontractors on a remodeling project?

Answer: The general contractor may be held liable for damages, fines, and lack of insurance coverage from the subcontractor

Using unlicensed subs exposes the general contractor to liability for damages, regulatory fines, and gaps in insurance coverage.

Which contract clause protects a remodeler from liability due to delays caused by factors outside their control, such as extreme weather or material shortages?

Answer: Force majeure clause

A force majeure clause excuses contract performance when delays are caused by unforeseeable events beyond the contractor's control.

What is the correct procedure when a building inspector issues a notice of violation during a remodeling project?

Answer: Stop the affected work immediately, correct the violation, and schedule a re-inspection before continuing

A notice of violation requires halting affected work, correcting the issue, and passing re-inspection before proceeding.

Why must remodelers maintain accurate project records including contracts, permits, change orders, and invoices?

Answer: To defend against legal claims, demonstrate compliance, and support accurate tax reporting

Accurate records provide legal protection, prove regulatory compliance, and support tax obligations for the remodeling business.