Which of the following may be used as an alternative to a surety bond for the contractor license bond requirement in California?
Correct Answer
B) Cash deposit of $25,000 with the CSLB
Business and Professions Code Section 7071.6 allows contractors to deposit $25,000 in cash with the CSLB as an alternative to a surety bond. However, certificates of deposit and savings accounts are not acceptable alternatives under California law. The cash deposit must be made directly with the Contractors' State License Board.
Why This Is the Correct Answer
B&P Code Section 7071.6 explicitly authorizes a cash deposit of $25,000 made directly with the CSLB as a permissible substitute for the standard surety bond. The deposit must match the bond amount and be held by the Board, not by a bank.
Why the Other Options Are Wrong
Option A: All of the above are acceptable alternatives
This question presents a narrower set of alternatives than a sister question (ID 45bc0804) that uses a broader statute (7071.5). Under Section 7071.6 specifically, only the cash deposit with CSLB is named, making 'all of the above' incorrect here because not all listed options qualify under that particular code section.
Option C: A certificate of deposit in a California bank
A certificate of deposit held in a California bank is not an authorized alternative under B&P Code Section 7071.6. The cash must be deposited directly with the CSLB, not placed in a private financial institution in the contractor's name.
Option D: A savings account with $25,000 balance
A savings account balance, even if it holds $25,000, cannot substitute for the surety bond under this code section. The CSLB must hold the funds directly to have the ability to disburse them to claimants if needed.
Memory Technique
The mnemonic 'CASH TO THE BOARD' captures the two key elements: it must be cash (not a CD or savings account) and it must go directly to the Board (CSLB), not to a bank.
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