Contract and Lien Laws Flashcards
6 cards from real CSLB practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Contract and Lien Laws flashcards as text
Which California code section governs the required elements of a valid home improvement contract?
Answer: Business and Professions Code 7159
Business and Professions Code Section 7159 specifies all mandatory provisions, disclosures, and format requirements for valid home improvement contracts.
What is a 'pay-if-paid' clause in a construction subcontract?
Answer: A clause making the subcontractor's payment contingent on the general contractor actually receiving payment from the owner
A pay-if-paid clause shifts the risk of owner non-payment to the subcontractor, making sub payment contingent on the GC receiving owner payment.
Under California law, what happens if a required written home improvement contract is missing key statutory elements?
Answer: The contractor may be subject to discipline and the homeowner may have grounds to rescind
Contracts missing required statutory elements expose the contractor to CSLB disciplinary action, and homeowners may be entitled to rescind the contract.
In California, what tool reveals recorded mechanics' liens and other encumbrances on a property to buyers and lenders?
Answer: A preliminary title report
A preliminary title report reveals all recorded encumbrances including mechanics' liens, enabling buyers and lenders to evaluate title risk.
What is a 'joint check agreement' in construction and why is it used?
Answer: A payment arrangement making checks payable jointly to the GC and subcontractor or supplier to ensure funds reach the lower-tier party
A joint check agreement ensures that a subcontractor or supplier is included as a co-payee on checks, preventing the GC from diverting funds owed to them.
Under California's licensing law, can a contractor legally sue to collect payment if the license lapsed during the project?
Answer: No — a contractor who was unlicensed at any time during the project generally cannot sue for compensation
Under BPC Section 7031, a contractor who was unlicensed at any point during the project generally cannot sue to recover compensation, regardless of work quality.