CONTRACT REQUIREMENTS AND EXECUTION
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Questions and Answers

What is the maximum penalty for abandonment of a job?

  • Revocation (correct)
  • Suspension
  • 1-year probation
  • 2-year probation

    • Where can details be found that determine the type of materials used in construction?

  • In the addendum
  • On the third page of the blueprint
  • In the site plan
  • In the specifications (correct)

    • A contractor enters into a home improvement contract with a homeowner to remodel a kitchen for $4,700. What is the MAXIMUM down payment collected on this job before work begins?

  • $470 (correct)
  • $500
  • $1,000
  • $1,470

    • Which of the following is not required when executing a change order?

    <p>Make the owner aware of any extra problems this will cause your accounting</p> Signup and view all the answers

    How many days does a PRIME CONTRACTOR have to record a notice of completion after the actual completion of work?

    <p>10</p> Signup and view all the answers

    If an unauthorized deviation from regulations or building standards is discovered, then the law allows _______ to become compliant.

    <p>90 days</p> Signup and view all the answers

    Can a homeowner give a contractor money if the contractor hasn’t started work?

    <p>Yes, as a down payment</p> Signup and view all the answers

    The owner complains about workmanship on a completed project which is not critical to the timely completion of the whole project. However, the contractor is involved in the middle of the project which is critical to the timely completion of all of the phases. If the complaint is reasonable and requires correction, then which of the following is a best response?

    <p>Tell the owner that the complaint is valid and correction will be made after the critical phase is completed</p> Signup and view all the answers

    The notice of cessation is filed _________________.

    <p>After labor has ceased for 30 days</p> Signup and view all the answers

    Notice of Cessation cannot be filed for the first 30 days.

    <p>Describe in nontechnical language the pertinent provisions of California’s Mechanics’ Lien Law</p> Signup and view all the answers

    A customer accepts a bid, however, the contractor then realizes that they made an error in the price. Which of the following best describes what the contractor should do in this instance?

    <p>The contractor should perform the work according to their original bid and price</p> Signup and view all the answers

    Of the following, who would potentially meet the qualifications for a PACE loan?

    <p>Homeowner</p> Signup and view all the answers

    Which of the following is a violation of the contractor’s law?

    <p>Unlicensed contractor signs two separate contracts in the amount of $500 each</p> Signup and view all the answers

    The price for a service and repair contract using a “not to exceed” clause may only be increased so long as:

    <p>The final price does not exceed $750</p> Signup and view all the answers

    Who is responsible for halting a job during a declared state of emergency?

    <p>Contractor</p> Signup and view all the answers

    When the customer is signing a contract, what is required next to the customer’s signature?

    <p>Date</p> Signup and view all the answers

    The Contract Notice must be included in:

    <p>All prime contracts</p> Signup and view all the answers

    What can a contractor do if the client doesn’t understand the contract or its contents?

    <p>Review the contract line by line with the client explaining any difficult language</p> Signup and view all the answers

    Which of the following needs a contractor’s license?

    <p>Moving a general manufactured home</p> Signup and view all the answers

    What is the first thing that must happen when a home improvement contract is involved?

    <p>The owner should sign the contract</p> Signup and view all the answers

    How long is the contractor liable for patent or visible defects?

    <p>4 years</p> Signup and view all the answers

    What is the PACE loan primarily for?

    <p>Solar projects and energy efficiency upgrades</p> Signup and view all the answers

    What should you have on the first page of a contract?

    <p>Name and address of the contractor</p> Signup and view all the answers

    In small claims court ______________.

    <p>You cannot be represented by an attorney</p> Signup and view all the answers

    One of the first steps a contractor should take before bidding on a project is to:

    <p>Make sure his license will qualify for the project</p> Signup and view all the answers

    If a home solicitation presentation is made in Spanish, then the contract language:

    <p>Must be in Spanish</p> Signup and view all the answers

    Contractor advertisements must contain:

    <p>The contractor’s state license number</p> Signup and view all the answers

    A home improvement contract will contain progress payments written:

    <p>In dollars and cents</p> Signup and view all the answers

    What is a contractor prohibited from doing if there was an issue on the contract?

    <p>Obtain a release or waiver in exchange for repair work</p> Signup and view all the answers

    Why do contractors implement a schedule of values as a management tool?

    <p>To determine how much-estimated money was spent on each task and the total costs</p> Signup and view all the answers

    If a subcontractor that has been paid already for his work, causes damage to the property, who is responsible for the damages?

    <p>The prime contractor</p> Signup and view all the answers

    Bob owns a property with 3 acres of land. The driveway to Bob’s residence gets wet during the winter season and is hazardous. Bob hires Frank to change the entrance location to the opposite end of the property. Who will Frank contact to get permission for such a task?

    <p>Local building department</p> Signup and view all the answers

    A legal term that describes the direct relationship that exists between parties in the same contract (i.e., the Owner and the General contractor) is called:

    <p>Privity of Contract</p> Signup and view all the answers

    Which of the following does NOT pertain to a service and repair contract?

    <p>The contractor initiates contact with the homeowner</p> Signup and view all the answers

    Pre-contract conditions include:

    <p>Privity of Contract, Mutual Agreement, Time is of the Essence, Capacity, and Lawful Object.</p> Signup and view all the answers

    When preparing a bid, which of the following costs is considered overhead?

    <p>Vehicle insurance</p> Signup and view all the answers

    Once a prime contractor sends payment to their subcontractor and the check is cashed, how is it possible for the subcontractor to give a stop notice to the awarding authority?

    <p>The stop notice is unlawful in this situation</p> Signup and view all the answers

    What should be done before the inspector arrives?

    <p>Inspect the job</p> Signup and view all the answers

    Bob is bidding on a job and his direct costs are $35,000, overhead is 13% and profit is 5% of the bid. What will Bob’s bid be?

    <p>$42,682.93</p> Signup and view all the answers

    What is a “defects liability period”?

    <p>During this period, the prime contractor and subcontractors have to make good any defects in the works</p> Signup and view all the answers

    Everything must be included in a change order, except:

    <p>How the change order will affect the contract</p> Signup and view all the answers

    If Eric is selling or negotiating contracts at a client’s home and does not hold a Home Improvement Salesperson Registration, what kind of charge can the Registrar of Contractors impose on Eric?

    <p>Misdemeanor</p> Signup and view all the answers

    If the homeowner discovers a defect in a new residential, single-family dwelling, they must?

    <p>Contact the home builder first before taking any legal action</p> Signup and view all the answers

    Home improvement contracts must include, among other things:

    <p>All the above</p> Signup and view all the answers

    If the homeowner cancels the home improvement contract negotiated at a client’s home within three days, how much time does a contractor have to pick up the material?

    <p>Within 20 days of the notice of cancellation date</p> Signup and view all the answers

    Which of the following is NOT included in a notice of completion?

    <p>Social Security number of the owner</p> Signup and view all the answers

    ____________________, then the contractor shall NOT be charged a fee for a re-inspection.

    <p>If the job was ready when the inspector arrived</p> Signup and view all the answers

    A licensed contractor enters into a verbal agreement with a customer for home improvement work. The total price for this project is $450. After reviewing the agreement, the contractor does not want to do the work at this price. Which of the following statements are true in this situation?

    <p>The contractor is not allowed to cancel or change this contract without the consent of the customer</p> Signup and view all the answers

    A home improvement salesperson violates provisions set by California law without telling the contractor. Who is subject to disciplinary action by the Contractors State License Board (CSLB)?

    <p>The contractor and the salesperson</p> Signup and view all the answers

    When is the best time to respond to an owner’s complaint regarding materials?

    <p>As soon as the owner can be contacted</p> Signup and view all the answers

    Which of the following defines a contractor engaging in the business of remodeling or improving homes on a full-time or part-time basis?

    <p>Home improvement contractor</p> Signup and view all the answers

    What should a contractor do if the client is not satisfied with the work?

    <p>If possible, they should attempt to take care of the issue immediately</p> Signup and view all the answers

    Which of the following is required on a change order?

    <p>The cost to be added or subtracted from the contract</p> Signup and view all the answers

    If the owner makes numerous changes during the course of a job, when should the contractor bill the customer for the changes?

    <p>After the change has been made</p> Signup and view all the answers

    Can a service and repair contract be canceled?

    <p>Yes, before the contractor begins working</p> Signup and view all the answers

    What is the proper course of action if a set of blueprints or schematics contains discrepancies or contradictions?

    <p>Review all the bid documents including architectural drawings</p> Signup and view all the answers

    Who is responsible for an employee’s poor workmanship?

    <p>Contractor</p> Signup and view all the answers

    If the home improvement contract was legally canceled on September 8th, by what date must a contractor return the down payment?

    <p>September 18</p> Signup and view all the answers

    When the total price of a bid is over ___, the contractor must be licensed.

    <p>$500</p> Signup and view all the answers

    Who would be responsible for $2300 in cost overruns that the owner agreed to, but did not sign an additional contract for?

    <p>The contractor would be responsible for cost over-runs</p> Signup and view all the answers

    If materials cost $2.50 per linear foot and the labor cost is $1.50 per linear foot, how much is the installation of 250 linear feet?

    <p>$1000</p> Signup and view all the answers

    How long is the contractor liable for latent or structural defects?

    <p>10 years</p> Signup and view all the answers

    When writing a home solicitation contract, the buyer signs the contract at a place other than the contractor’s place of business. What form must be included with the contract?

    <p>Notice of cancellation</p> Signup and view all the answers

    Jurisdictional strikes are:

    <p>Illegal in California</p> Signup and view all the answers

    What is the benefit of arbitration over litigation?

    <p>The cost of arbitration is cheaper than litigation</p> Signup and view all the answers

    Where is “Mechanics Lien Warning” located on a contract?

    <p>On the top by the business name</p> Signup and view all the answers

    Within how many days must an “agreement to arbitrate” be returned by the participants after being mailed by CSLB’s Registrar?

    <p>Within 30 calendar days</p> Signup and view all the answers

    Retention is when:

    <p>Monies are withheld until the project is complete and the contract is satisfied</p> Signup and view all the answers

    If a contractor’s salesperson makes an oral bid to a prospective customer in Spanish, the written home solicitation contract:

    <p>Must be in Spanish</p> Signup and view all the answers

    Which clause requires a subcontractor to be bound by the same obligations as a general contractor?

    <p>flow-down clause</p> Signup and view all the answers

    What is a good way for a contractor to decrease outsourced labor costs?

    <p>Develop a schedule and monitor work progress daily</p> Signup and view all the answers

    In construction agreements, what are the most common methods of construction?

    <p>Design/Build, Turnkey, Traditional, Fast Track, Construction Management</p> Signup and view all the answers

    If work on a job was completed two years ago and the owner noticed some problems, who should the owner contact?

    <p>The prime contractor</p> Signup and view all the answers

    Can a contractor tell a homeowner that he or she does not have workers’ compensation insurance?

    <p>Yes, if the contractor qualifies for an exemption</p> Signup and view all the answers

    Why is binding arbitration better than a regular lawsuit?

    <p>It’s faster</p> Signup and view all the answers

    What document is used when the homeowner decides to revise the original contract?

    <p>A change order</p> Signup and view all the answers

    Which of the following will protect the contractor from making a mistake during the bidding process?

    <p>Inspecting the job site</p> Signup and view all the answers

    If a contractor completes a project after the agreed completion date, what type of damages does the contractor pay the owner?

    <p>Liquidated damages</p> Signup and view all the answers

    Holding up retention creates a problem that is relatively serious for:

    <p>Subcontractors who complete their work early in the project</p> Signup and view all the answers

    Who typically escorts the city inspector around the job site?

    <p>Competent individual</p> Signup and view all the answers

    Which of the following is true regarding contracts and payments?

    <p>A payment schedule is included in dollars and cents</p> Signup and view all the answers

    Which of the following is considered a PACE-approved upgrade?

    <p>Tightening seismic foundation bolts</p> Signup and view all the answers

    On April 7th, the contractor negotiated a home solicitation contract with a homeowner which gave a small down payment. The homeowner changed his mind and was able to successfully cancel the contract on April 10. Of the options provided, what is the latest date the contractor had to return the down payment?

    <p>April 18</p> Signup and view all the answers

    When should the Home Improvement Salesperson include a Notice of Cancellation form?

    <p>It should be included in the contract to be signed</p> Signup and view all the answers

    If all work on a project has been completed, a copy of the final inspection report should be given to:

    <p>The County Assessor</p> Signup and view all the answers

    The Department of Building and Safety

    <p>It shows what materials will be used and gain acceptance before work begins</p> Signup and view all the answers

    What is a “Certificate of Making Good Defects”?

    <p>When a contractor passes another inspection after remedying any defects after the defect's liability period ends</p> Signup and view all the answers

    In a non-emergency situation, a contractor must give a customer at least ____ to cancel a home solicitation contract.

    <p>3 business days</p> Signup and view all the answers

    If a client fails to keep up on progress payments, what can the contractor do?

    <p>Make an honest attempt to resolve the issue without involving liens</p> Signup and view all the answers

    A contractor will not hire a subcontractor based on their:

    <p>Business name</p> Signup and view all the answers

    What is the maximum value of a gift, which the home improvement salesperson can give to a potential customer?

    <p>$5</p> Signup and view all the answers

    What happens if a subcontractor signs a contract that contains an indemnity agreement?

    <p>The prime contractor is held harmless in the event of a lawsuit</p> Signup and view all the answers

    Who must sign and date the contract?

    <p>The client and the contractor</p> Signup and view all the answers

    A contractor constructs a building exactly according to the approved plan. During the inspection, the contractor finds out that the building does not meet the code due to an error by the Building and Safety Department. Who is liable?

    <p>Architect/Engineer</p> Signup and view all the answers

    Using a time card that allows a contractor to review and keep track of hours worked is part of:

    <p>Calculating federal tax rates on labor</p> Signup and view all the answers

    Prior to a bid, what is a contractor considering when reviewing the plans and specifications?

    <p>If the contractor can complete the contract</p> Signup and view all the answers

    Which of the following is required on a home improvement contract?

    <p>Finance charges</p> Signup and view all the answers

    Generally, what is the upper limit on the money amount that a party can claim in small claims court?

    <p>$10,000</p> Signup and view all the answers

    Which of the following defines a person having some title or interest in a parcel of real property?

    <p>Owner</p> Signup and view all the answers

    What is not recommended when being outbid by a lower bidder?

    <p>Lower the bid to match other offers</p> Signup and view all the answers

    A contractor and owner agree to a price of $20,000 for a home improvement project and sign a contract. What is the maximum down payment the contractor may require before beginning work?

    <p>$1,000</p> Signup and view all the answers

    A home solicitation contract was signed on Friday and the contractor received a written letter four days later, stating that the homeowner will not proceed with the contract. The letter was postmarked on Saturday, so what does the contractor do?

    <p>Cancel the contract and return the down payment since the customer postmarked the letter within 3 business days</p> Signup and view all the answers

    A contract provides for 90% payment by the time construction is completed for the final 10% after the lien period expires. This 10% retention:

    <p>This is important because retentions are usually greater than profit and are therefore a claim on working capital</p> Signup and view all the answers

    Which of the following project types are best avoided?

    <p>All of the above</p> Signup and view all the answers

    If the customer does not pay their invoice on time, what should the contractor do?

    <p>Start charging interest</p> Signup and view all the answers

    What is the typical percentage of retention withheld from the progress payments?

    <p>10%</p> Signup and view all the answers

    When should a contractor collect payment for the change order?

    <p>As soon as the contractor completes the change order</p> Signup and view all the answers

    Which of the following is not recommended when submitting a bid to a customer?

    <p>Lower the bid price to make it more in line with a competitor’s offer</p> Signup and view all the answers

    When should a contractor show proof of licensure?

    <p>Only when asked by an inspector or other government official</p> Signup and view all the answers

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