XYZ Construction, a Class B contractor, has annual gross receipts of $12 million. What is their required contractor license bond amount?
Correct Answer
D) $100,000
Per B&P Code Section 7071.6, contractors with gross receipts over $10 million must maintain a $100,000 bond.
Why This Is the Correct Answer
B&P Code Section 7071.6 establishes a tiered bond requirement. For contractors with annual gross receipts exceeding $10 million, the required contractor license bond is $100,000. XYZ Construction's $12 million in receipts places them in this highest tier.
Why the Other Options Are Wrong
Option A: $25,000
$25,000 is the standard bond amount for most contractors below the $10 million threshold. It does not apply here because XYZ's receipts exceed that threshold.
Option B: $50,000
$50,000 does not correspond to any standard tier in Section 7071.6's bond schedule. It may seem like a logical midpoint but has no statutory basis at this revenue level.
Option C: $15,000
$15,000 is below even the standard bond requirement and is not a valid bond amount under current CSLB requirements for any contractor at this revenue level.
Memory Technique
Bond tiers scale with size: standard contractors = $25K bond; contractors over $10M in receipts = $100K bond. Remember '10 million earns a 100K bond' — the bond amount is 1% of the $10M threshold.
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