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Questions on Contracts & Laws
Take this quiz to see if you know the laws that can protect you.
1. What is the maximum down payment a contractor can legally request for a home improvement project?
A) 25% of the total contract price
B) $1,000 or 10% of the contract price, whichever is less
C) 50% of labor costs
D) No limit
2. A written contract is required for all home improvement jobs that exceed what dollar amount?
A) $200
B) $500
C) $1,000
D) $5,000
3. If a contractor wants to charge extra for unexpected work discovered during the project, what must be done?
A) Nothing — contractors can increase prices if necessary
B) A verbal agreement is sufficient
C) A written and signed change order is required
D) Approval from CSLB is needed
4. A homeowner hires a contractor, and the contractor asks the homeowner to pull the permit. Who would be legally responsible for jobsite safety and compliance?
A) The contractor
B) The homeowner (owner-builder)
C) The city inspector
D) Both contractor and homeowner equally
5. How much is a contractor’s license bond in California, and what is its purpose?
A) $10,000 – to insure the contractor’s tools
B) $25,000 – to protect homeowners, employees, and subcontractors
C) $50,000 – to guarantee job completion
D) No bond is required
6. How long does a homeowner have to file a claim against a contractor’s bond?
A) 6 months
B) 1 year
C) 4 years
D) 10 years
7. Which of the following must be included in a home improvement contract?
A) The contractor’s license number
B) Payment schedule and total price
C) Notice of the 3-day right to cancel
D) All of the above
8. If a contractor advertises their services, what must appear in the ad?
A) License number
B) Years in business
C) Free consultation notice
D) The contractor’s bond company
9. When can an unlicensed contractor legally advertise or perform work?
A) On any project under $500 total (labor + materials)
B) On projects up to $5,000
C) On any project if they tell the homeowner they’re unlicensed
D) Never
10. If a contractor violates licensing law and harms a homeowner, what can CSLB do?
A) Revoke or suspend the license
B) Require additional bonds (disciplinary bond)
C) Fine the contractor or refer for criminal prosecution
D) All of the above
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Answer Key
B) $1,000 or 10% of the contract price, whichever is less to prevent large losses if the contractor disappears.
B) Contracts must be in writing if the total cost of labor and materials is $500 or more.
C) All changes must be in written, signed change orders — verbal approvals are not enforceable.
B) If the homeowner pulls the permit, they become the “owner-builder” and assume liability for safety, compliance, and potential injuries.
B) Every licensed contractor in California must have a $25,000 license bond, which helps cover damages from violations, unpaid workers, or fraud.
C) 4 years
D) Contracts must include all of these details to be valid under CSLB regulations.
A) By law, contractors must list their license number in all advertising.
A) Unlicensed contractors may only work on projects under $500 total and must clearly state they are not licensed if advertising.
D) All of the above
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