CR Legal & Regulatory Compliance Flashcards

What is the primary purpose of a contractor's license bond in the United States?

Answer: To protect consumers from financial harm caused by a contractor's failure to complete work or comply with laws

A contractor's license bond protects consumers financially if the contractor fails to perform or violates licensing laws.

Which federal law requires contractors to follow lead-safe work practices when renovating pre-1978 homes?

Answer: The EPA's Renovation, Repair, and Painting (RRP) Rule

The EPA's RRP Rule mandates lead-safe practices for renovations in pre-1978 housing to protect occupants from lead dust.

A homeowner asks a remodeler to start work before the permit is issued to avoid delays. The remodeler should:

Answer: Refuse and explain that starting without a permit is illegal and risks fines, stop-work orders, and required demolition

Working without a required permit is illegal and can result in fines, stop-work orders, and mandatory removal of completed work.

What does a mechanic's lien protect in a construction context?

Answer: A contractor's right to claim payment against a property when not paid for labor or materials

A mechanic's lien gives contractors and suppliers a security interest in the property to recover unpaid labor and material costs.

What is the purpose of a lien waiver in a remodeling project?

Answer: To confirm that a contractor or supplier has been paid and waives their right to file a lien

A lien waiver confirms payment has been received and releases the right to file a mechanic's lien against the property.

Under the FTC's Cooling-Off Rule, a homeowner who signs a remodeling contract in their home has how many business days to cancel?

Answer: 3 business days

The FTC's Cooling-Off Rule gives consumers 3 business days to cancel contracts signed at their home for purchases over $25.