Which of the following is an acceptable alternative to a surety bond for meeting California contractor license bond requirements under B&P Code Section 7071.9?
Correct Answer
B) Cash deposit or deposit in a savings account in a California bank
Business and Professions Code Section 7071.9 allows contractors to substitute the required surety bond with either a cash deposit or a deposit in a savings account, but only in a bank located in California. The deposit must equal the bond amount and be assigned to the Contractors' State License Board for the benefit of persons damaged by the contractor's violations.
Why This Is the Correct Answer
Business and Professions Code Section 7071.9 allows contractors to substitute the required surety bond with either a cash deposit or a deposit in a savings account, but only in a bank located in California. The deposit must equal the bond amount and be assigned to the Contractors' State License Board for the benefit of persons damaged by the contractor's violations.
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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?