Which of the following is an acceptable alternative to a surety bond for meeting California's contractor license bond requirement under B&P Code Section 7071.5?
Correct Answer
C) A cash deposit with the CSLB
California B&P Code Section 7071.5 allows contractors to deposit cash with the CSLB in lieu of a surety bond. The cash deposit must equal the required bond amount ($25,000). Certificates of deposit, insurance policies, or personal guarantees do not satisfy the statutory bond requirement.
Why This Is the Correct Answer
California B&P Code Section 7071.5 explicitly permits a contractor to deposit cash with the CSLB in lieu of a surety bond. The cash deposit must equal the required bond amount ($25,000). This is the only non-surety-bond substitute expressly authorized by this specific statute.
Why the Other Options Are Wrong
Option A: General liability insurance with equivalent coverage
General liability insurance does not satisfy the surety bond requirement. These are separate financial instruments serving different purposes — liability insurance covers third-party claims from negligence, while the contractor license bond protects consumers from contractor misconduct. They are not interchangeable.
Option B: A personal guarantee from the qualifying individual
A personal guarantee from the qualifying individual is not an acceptable substitute. It provides no guaranteed collectible security and is not authorized under B&P Code Section 7071.5. The statute requires a financial instrument, not a personal promise.
Option D: A certificate of deposit in the contractor's name
A certificate of deposit in the contractor's own name does not satisfy Section 7071.5. The cash deposit must be made directly with the CSLB, not held in the contractor's personal account. A CD in the contractor's name remains under their control and does not provide the same consumer protection as a CSLB-held deposit.
Memory Technique
For the standard license bond (B&P 7071.5), the ONLY cash alternative is: cash deposited WITH the CSLB. Think of it as handing money directly to the state. CDs in your own name or savings accounts don't count here — that's a different bond type (disciplinary bond).
More law-business Questions
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