Mixed Deck — All NASCLA Topics Flashcards

If a property owner pays the general contractor in full but the general contractor fails to pay subcontractors, in most states:

Answer: Unpaid subcontractors may still file mechanic's liens against the owner's property if they followed proper procedures

In most states, unpaid subcontractors who properly preserved their lien rights can still lien the owner's property even if the owner paid the general contractor in full.

Which financial statement shows a company's revenues, expenses, and net profit over a period of time?

Answer: Income statement (Profit and Loss statement)

The income statement, also called a Profit and Loss statement, summarizes revenues and expenses over a specific period to show the company's net profit or loss.

A 'payment bond' on a construction project primarily protects which parties?

Answer: Subcontractors and material suppliers who may not be paid by the contractor

A payment bond guarantees that subcontractors and material suppliers will be paid for their work and materials, even if the general contractor fails to pay them.

What form must employers use to verify an employee's eligibility to work in the United States?

Answer: I-9

The I-9 Employment Eligibility Verification form must be completed for all new hires to verify their identity and authorization to work in the U.S.

A contractor's 'markup' on a project covers which of the following?

Answer: Overhead expenses and profit added to direct costs to determine the contract price

Markup is the percentage added to direct project costs to cover the contractor's overhead expenses and desired profit margin, resulting in the final contract price.

Each employee on a scaffold more than ______ above a lower level shall be protected from falling to that lower level.

Answer: 10 feet

Explanation: According to safety regulations, each employee on a scaffold more than 10 feet above a lower level must be protected from falling to that lower level. This protection typically involves the use of guardrails, safety nets, personal fall arrest systems, or other appropriate fall protection measures. Understanding and adhering to safety regulations is crucial for contractors to ensure a safe working environment and prevent accidents on construction sites.

What is the primary purpose of job cost accounting in construction?

Answer: To track costs by individual project to monitor profitability and budget compliance

Job cost accounting tracks all labor, material, equipment, and overhead costs by project, allowing contractors to compare actual costs against estimates and manage project profitability.

What is the purpose of a contractor's 'schedule of values' submitted with a pay application?

Answer: A breakdown of the contract amount allocated to specific work items for progress billing purposes

A schedule of values allocates the total contract price across specific work items, forming the basis for calculating progress payments as each item is completed.

What is a 'stop payment notice' in construction law?

Answer: A statutory remedy allowing unpaid subcontractors and suppliers to demand that funds be withheld from the general contractor until they are paid

A stop payment notice is a statutory tool available in some states that allows unpaid subcontractors and suppliers to direct the owner or lender to withhold contract funds from the general contractor.

When submitting a bid for a public project, what is a 'bid bond' designed to ensure?

Answer: That the bidder will not withdraw or modify the bid and will execute the contract if awarded

A bid bond guarantees that if a contractor is the low bidder, they will not withdraw their bid and will enter into the contract at the bid price, protecting the owner from re-bidding costs.

What is a 'subcontract flow-down clause'?

Answer: A clause that passes specific prime contract terms and obligations down to subcontractors

A flow-down clause incorporates specific prime contract terms into the subcontract, ensuring subcontractors are bound by the same obligations as the general contractor.

Which law prohibits employers from discriminating against employees or applicants based on race, color, religion, sex, or national origin?

Answer: Title VII of the Civil Rights Act of 1964

Title VII of the Civil Rights Act of 1964 is the primary federal law prohibiting employment discrimination based on race, color, religion, sex, or national origin.

How long must employers retain completed I-9 forms for a terminated employee?

Answer: 1 year after termination or 3 years after date of hire, whichever is later

Federal law requires I-9 retention for 3 years from the date of hire OR 1 year after termination, whichever date is later.

What is a 'certificate of insurance' and why is it required?

Answer: A document from an insurer verifying that coverage exists, required by owners before contractors can start work

A certificate of insurance is a summary document issued by an insurer that verifies coverage types, limits, and effective dates, typically required by project owners before work begins.

Which document formally establishes the scope of work, materials, and construction methods for a project?

Answer: The project specifications

Project specifications are detailed written documents that define the quality, materials, workmanship standards, and construction methods required for the project.

What is a 'performance bond' in construction?

Answer: A surety guarantee that the contractor will complete the project according to contract terms

A performance bond is a three-party guarantee by a surety company that the contractor will perform all contract obligations, protecting the owner if the contractor defaults.

What is the purpose of an 'additional insured' endorsement on a contractor's general liability policy?

Answer: To extend liability coverage to another party (such as the project owner) for claims arising from the contractor's work

An additional insured endorsement extends the contractor's liability coverage to protect another party (typically the owner or general contractor) against claims arising from the insured's operations.

What is the purpose of a 'retainage' provision in a construction contract?

Answer: To withhold a percentage of payment as security until project completion

Retainage is a percentage (typically 5–10%) of each progress payment withheld by the owner to ensure the contractor completes the project and corrects deficiencies.

What type of insurance protects the contractor from design errors and omissions caused by the Architect or Engineer?

Answer: Professional Liability Insurance

Explanation: Professional Liability Insurance, also known as Errors and Omissions (E&O) Insurance, is specifically designed to protect contractors from design errors and omissions caused by architects or engineers. This insurance provides coverage for legal costs and damages associated with claims of professional negligence, helping contractors mitigate financial risks associated with design-related issues on construction projects. Understanding the different types of insurance coverage is crucial for contractors to protect their businesses and manage risks effectively.

How does recording a mechanic's lien affect the property owner's ability to sell or refinance the property?

Answer: It clouds the title, making it difficult to sell or refinance until the lien is resolved or bonded off

A recorded mechanic's lien creates a cloud on the property title, which must typically be resolved, paid, or bonded before the owner can sell or obtain new financing.