General Contractor License General Contractor License Law 5 — Questions and Answers
Question 1: A contractor is performing work on a project and discovers the job will exceed their license monetary limit. They should:
- Continue working since the limit is rarely enforced
- Stop work and refer the project to a contractor with an appropriate license limit (Correct answer)
- Apply for a higher limit retroactively after project completion
- Subcontract the excess value to themselves under a different business name
Correct answer: Stop work and refer the project to a contractor with an appropriate license limit
Exceeding a license's monetary limit is a licensing violation; the contractor must either obtain an appropriate license or defer to one who holds it.
Question 2: Which statement about contractor licensing and insurance is most accurate?
- Licensing and insurance are the same thing and satisfy each other's requirements
- A license proves a contractor is insured; no separate policy is needed
- Licensing and insurance are separate requirements; each must be independently maintained (Correct answer)
- Insurance replaces the need for a surety bond in all states
Correct answer: Licensing and insurance are separate requirements; each must be independently maintained
A contractor's license and liability insurance are independent legal requirements; holding a license does not prove adequate insurance coverage.
Question 3: Under most state contractor licensing laws, advertising as a contractor without a license is:
- Allowed as long as no contract is signed
- A violation subject to fines even if no work is performed (Correct answer)
- Permitted for estimates only
- Legal if the ad states 'license pending'
Correct answer: A violation subject to fines even if no work is performed
Most states prohibit advertising contracting services without a license, and violations can result in fines regardless of whether any work is actually contracted or performed.
Question 4: A public works project worth $500,000 requires bidders to be licensed. An unlicensed contractor submits the lowest bid. The awarding agency should:
- Award the contract since the lowest bid saves taxpayer money
- Reject the bid as non-responsive due to lack of licensure (Correct answer)
- Award the contract contingent on the contractor obtaining a license within 60 days
- Allow the contractor to subcontract all work to a licensed firm
Correct answer: Reject the bid as non-responsive due to lack of licensure
A bid from an unlicensed contractor on a project requiring licensure is non-responsive and must be rejected, regardless of bid price.
Question 5: What continuing education requirement do many states impose on licensed contractors?
- No continuing education is required once a license is issued
- Completion of approved courses as a condition of license renewal (Correct answer)
- A one-time 40-hour course taken within the first year of licensure
- Annual OSHA 10-hour certification regardless of trade
Correct answer: Completion of approved courses as a condition of license renewal
Many state licensing boards require contractors to complete a specified number of approved continuing education hours as a condition of renewing their license.
Question 6: An owner files a complaint against a contractor alleging shoddy workmanship. The licensing board's primary role in this dispute is to:
- Award monetary damages to the homeowner
- Determine whether the contractor violated licensing laws or standards of conduct (Correct answer)
- Enforce the construction contract on behalf of either party
- Order the contractor to redo the work at no charge
Correct answer: Determine whether the contractor violated licensing laws or standards of conduct
Licensing boards adjudicate whether a contractor's conduct violated licensing statutes or standards; awarding contract damages is a civil court function.
Question 7: Which of the following best describes 'willful or fraudulent misrepresentation' as a licensing violation?
- Accidentally omitting a small project from a license application
- Knowingly providing false information to obtain or maintain a license (Correct answer)
- Disagreeing with a licensing board's interpretation of the law
- Failing to update a business address within 90 days of moving
Correct answer: Knowingly providing false information to obtain or maintain a license
Willful or fraudulent misrepresentation involves intentionally providing false information to a licensing authority, which is a serious violation warranting revocation.
General Contractor License General Contractor License Law 5
A contractor is performing work on a project and discovers the job will exceed their license monetary limit.
They should: