Which of the following can be substituted for the required contractor license bond in California?
Correct Answer
C) All of the above
California Business and Professions Code Section 7071.6 allows contractors to substitute the required bond with a cash deposit, certificate of deposit, or irrevocable letter of credit from a California bank or savings and loan association, all in the same amount as the required bond ($25,000).
Why This Is the Correct Answer
BPC Section 7071.6 explicitly authorizes three substitutes for the standard contractor license bond: (1) a cash deposit with the CSLB, (2) a certificate of deposit at a California bank or savings and loan, and (3) an irrevocable letter of credit from a California financial institution — all in the amount of the required bond ($25,000). Since options A, B, and D are all valid substitutes, 'All of the above' is the correct answer.
Why the Other Options Are Wrong
Option A: Certificate of deposit in a California bank
A certificate of deposit is indeed a valid substitute under BPC 7071.6, but selecting only option A is incomplete. The question asks which 'can be substituted,' and since all three listed items qualify, the comprehensive answer is 'All of the above.'
Option B: Irrevocable letter of credit from a California financial institution
An irrevocable letter of credit from a California financial institution is a valid substitute under BPC 7071.6, but selecting only option B is incomplete. Choosing B alone misses the other two equally valid substitutes.
Option D: Cash deposit with the Contractors' State License Board
A cash deposit with the CSLB is a valid substitute under BPC 7071.6, but selecting only option D is incomplete. When an 'All of the above' option is present and multiple individual options are all correct, the comprehensive answer must be chosen.
Memory Technique
Think of the three substitutes as 'Cash, CD, Letter' — three ways to prove financial backing without purchasing a surety bond. All three put real money at risk (or promise it), satisfying the CSLB's consumer protection goal. If you remember 'Cash, CD, Letter = All the above,' you'll never pick a single option when all three appear.
More law-business Questions
Under B&P Code Section 7071.9, a contractor may deposit cash or securities instead of obtaining a surety bond. If a contractor chooses this option, where must the deposit be maintained and what happens to interest earned?
Under California's AB 5 law (Dynamex decision), which factor is NOT part of the ABC test for determining independent contractor status?
According to Business and Professions Code Section 7031, what is required when a licensed contractor supervises work performed by unlicensed employees on a construction project?
Under California Building Standards Code Title 24, which entity has the authority to issue building permits for most residential and commercial construction projects?
According to B&P Code 7159.5, service and repair contracts must include specific provisions. Which statement is correct regarding these contracts?
Which of the following activities is exempt from California contractor licensing requirements under Business and Professions Code Section 7048?
Under Cal/OSHA regulations in Title 8 CCR Section 5192, Safety Data Sheets (SDS) for hazardous chemicals used on construction sites must be readily accessible to employees during which hours?
Under California Business and Professions Code Section 7071.9, in lieu of a surety bond, what alternative security may a contractor provide to satisfy the contractor license bond requirement?
According to Cal/OSHA regulations, which of the following is NOT a required element of a written Injury and Illness Prevention Program (IIPP)?
A homeowner requests that a B-General Building Contractor provide a certificate of insurance naming the homeowner as an additional insured on the contractor's general liability policy. Under California law, what is the contractor's obligation?
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