Under California regulations, which of the following may be used as an alternative to a surety bond for the contractor license bond requirement?
Correct Answer
B) Cash deposit or savings account meeting specific requirements
California Code of Regulations Title 16, Section 830 allows contractors to substitute a cash deposit or savings account meeting specific CSLB requirements in lieu of a surety bond. The cash deposit or savings account must be in the same amount as the required bond and must be properly assigned to the CSLB for consumer protection purposes.
Why This Is the Correct Answer
California Code of Regulations Title 16, Section 830 explicitly permits a cash deposit or savings account assigned to the CSLB as a lawful substitute for the required surety bond. The deposit must equal the full bond amount and be properly pledged for consumer protection, making it a recognized and accepted alternative.
Why the Other Options Are Wrong
Option A: Personal guarantee from the contractor
A personal guarantee from the contractor is not an accepted substitute under CSLB rules. Personal guarantees are informal arrangements with no regulatory standing and do not provide the consumer protection mechanism that the bond requirement is designed to ensure.
Option C: Irrevocable letter of credit from any financial institution
An irrevocable letter of credit from any financial institution is not listed as an accepted bond alternative under California Code of Regulations Title 16, Section 830. The CSLB requires specifically a cash deposit or qualifying savings account, not a letter of credit.
Option D: Certificate of deposit in a California bank
While a certificate of deposit (CD) might seem similar to a savings account, simply holding a CD in a California bank does not satisfy the requirement. The deposit must be specifically assigned to the CSLB in the proper form — a general CD does not automatically meet this requirement.
Memory Technique
Think 'Cash Assigned to CSLB' as the only acceptable bond alternative. The CSLB wants real, liquid money under their control — not promises (personal guarantee), banking instruments (letter of credit), or just a CD sitting in a bank.
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Which of the following activities is exempt from California contractor licensing requirements under Business and Professions Code Section 7048?
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