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ND General Contractor practice questions

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Question 1General contractor licensing and registration

Under North Dakota law, which entity is responsible for issuing a contractor's license before that contractor may legally bid on a project in the state?

  1. The city or county building department where the work occurs
  2. The North Dakota Secretary of State
  3. The North Dakota Secretary of State's Business Division Correct answer.
  4. The North Dakota State Electrical Board

Explanation

Contractor licensing in North Dakota is administered through the Secretary of State's Business Division, which reviews applications, issues licenses, and maintains the public license lookup. The Secretary of State is the constitutional office, but the licensing function is delegated to its Business Division. Local building departments issue permits, not state contractor licenses.

Question 2General contractor licensing and registration

A contractor licensed in North Dakota wants to add a specialty classification to an existing general contractor license. Which statement correctly addresses this request?

  1. Wait for the next automatic renewal cycle to add the classification
  2. Request a scope change from the State Electrical Board
  3. General contractor classes set contract-value limits; separately regulated trades may require their own licenses Correct answer.
  4. Notify the local building official in writing only

Explanation

North Dakota's general contractor classes establish contract-value limits rather than specialty categories that can be added to a general contractor license. A separately regulated trade may require its own license. An application to add a generic specialty classification is therefore not the applicable process.

Question 3General contractor licensing and registration

A North Dakota contractor's license is issued to a sole proprietor. If the owner dies, what generally happens to the license?

  1. It automatically transfers to the owner's spouse
  2. It remains valid until the next renewal date
  3. It converts to a partnership license automatically
  4. It terminates with the licensee and cannot be transferred Correct answer.

Explanation

A contractor license is issued to a specific person or entity and is not transferable to another party, so it ends when the named licensee ceases to exist. Licenses cannot be inherited by a spouse or converted to another entity type without a new application.

Question 4General contractor licensing and registration

Which of the following best describes the threshold that triggers North Dakota contractor licensing requirements for a project?

  1. Any project where the total contract price exceeds the statutory dollar threshold Correct answer.
  2. Only projects involving public funds
  3. Only projects that require a building permit
  4. Only projects exceeding $100,000 in value

Explanation

North Dakota's licensing statute is triggered by a dollar threshold tied to the total contract price for the project, so even private work above that amount requires a license. Public funding, permit requirements, and a fixed $100,000 figure are not the operative test.

Question 5General contractor licensing and registration

A contractor holds a North Dakota license but has not renewed it and the renewal deadline has passed. What is the contractor's status while working?

  1. The contractor may continue working because licenses are perpetual
  2. The contractor may work if a building permit has been issued
  3. The contractor may work if the client signs a waiver
  4. The contractor is unlicensed and subject to penalties for unlicensed contracting Correct answer.

Explanation

A license must be renewed to remain active; once the renewal deadline lapses, the contractor is treated as unlicensed and may face penalties for contracting without a valid license. Client waivers and issued permits do not cure the licensing defect.

Question 6General contractor licensing and registration

What is the primary purpose of North Dakota's contractor licensing requirement as applied to consumers?

  1. To set maximum prices contractors may charge
  2. To require contractors to join a trade association
  3. To guarantee that all work will be completed on schedule
  4. To protect the public by ensuring contractors meet minimum qualifications Correct answer.

Explanation

The licensing scheme exists to protect the public by verifying that contractors meet minimum standards of qualification and responsibility before offering construction services. It does not guarantee scheduling, cap pricing, or mandate association membership.

Question 7General contractor licensing and registration

A North Dakota contractor's license lists a qualifying party who leaves the company. What must the business generally do to keep its license in good standing?

  1. Surrender the license permanently
  2. Report the change and designate a replacement qualifying party who meets requirements Correct answer.
  3. Transfer the license to the departing party
  4. Nothing, because the qualifying party is only a formality

Explanation

The qualifying party is the individual whose qualifications support the entity's license, so when that person leaves, the business must notify the state and designate a replacement who meets the requirements. The role is substantive, and the license cannot simply be surrendered to the departing individual.

Question 8General contractor licensing and registration

A contractor licensed in another state wants to work in North Dakota. Which statement about reciprocity is accurate?

  1. Any out-of-state license is automatically accepted in North Dakota
  2. Out-of-state contractors are exempt from licensing for projects under one year
  3. Reciprocity exists only where North Dakota has an agreement recognizing the other state's license Correct answer.
  4. Out-of-state contractors may work if they hire a North Dakota resident

Explanation

North Dakota does not automatically accept out-of-state licenses; recognition depends on a reciprocity agreement between North Dakota and the other jurisdiction. Absent such an agreement, the contractor must qualify under North Dakota requirements. Hiring a resident or working a short project does not create an exemption.

Question 9General contractor licensing and registration

A North Dakota contractor is cited for working without a license on a project above the statutory threshold. Which consequence is consistent with the licensing statute?

  1. The contractor is only subject to a warning for a first offense
  2. The contractor may continue working if the client signs a release
  3. The contractor may cure the violation by paying the client's permit fees
  4. The contractor may face civil penalties and be barred from enforcing the contract Correct answer.

Explanation

Unlicensed contracting exposes the contractor to civil penalties and can affect the contractor's ability to enforce the contract in court. Paying permit fees or obtaining a client release does not resolve the licensing violation, and a first offense is not limited to a warning.

Question 10General contractor licensing and registration

A North Dakota contractor is forming a limited liability company to conduct construction work. How does the entity's license relate to the individuals who manage it?

  1. The LLC must obtain a separate license for each employee
  2. The LLC is licensed in its own name, with an experience and qualification statement and required insurance Correct answer.
  3. The LLC cannot be licensed; only individuals may hold licenses
  4. The LLC license is issued automatically upon filing articles of organization

Explanation

North Dakota licenses the named LLC through the contractor application process, which includes an experience and qualification statement and insurance requirements. A manager's signature on the application does not create a separate qualifying-party credential, and filing articles of organization alone does not confer a contractor license.

Question 11General contractor licensing and registration

A contractor's license lapses mid-project because a renewal payment was missed. The contractor continues working to finish the job. How should this be characterized?

  1. Permissible, because finishing an existing contract is exempt
  2. Permissible, because the work began while licensed
  3. Permissible, because the client consented in writing
  4. Unlicensed contracting, because the license must be active while work is performed Correct answer.

Explanation

The license must be active whenever the contractor performs work; a lapse mid-project means continued work is unlicensed contracting. Beginning the project while licensed and client consent do not cure the lapse, and there is no completion exemption.

Question 12General contractor licensing and registration

A North Dakota contractor wants to bid on a public school construction project. Which licensing requirement applies?

  1. The contractor must hold only a local business license
  2. The contractor must be licensed only after the contract is awarded
  3. The contractor must hold a valid North Dakota contractor license appropriate to the work Correct answer.
  4. The contractor must be bonded but need not be licensed

Explanation

Public projects require the contractor to hold a valid North Dakota contractor license appropriate to the scope of work, and licensing must be in place before bidding. A local business license or bond is not a substitute, and licensing cannot be deferred until after award.

Question 13General contractor licensing and registration

A contractor's license application includes a disclosure question about prior convictions. The contractor omits a prior felony conviction. What is the likely consequence?

  1. The omission is harmless if the conviction was old
  2. The omission is excused if the contractor was not represented by counsel
  3. The license may be denied or disciplined for misrepresentation Correct answer.
  4. The omission is cured automatically at renewal

Explanation

Applications require truthful disclosure, and a material misrepresentation such as omitting a prior conviction can support denial or disciplinary action even if the underlying conviction might not have barred licensing. Age of the conviction and lack of counsel do not excuse the omission.

Question 14General contractor licensing and registration

A property owner hires an unlicensed contractor for a $40,000 remodeling job. What risk does the owner face?

  1. The owner is automatically liable for the contractor's penalties
  2. The owner's homeowners insurance must cover all defects
  3. The owner has no recourse if the work is defective because a contract existed
  4. The owner may have limited remedies and the contractor may be unable to enforce the contract Correct answer.

Explanation

Hiring an unlicensed contractor can leave the owner with limited remedies, and the unlicensed contractor may be barred from enforcing the contract. The owner is not automatically liable for the contractor's penalties, and insurance coverage is not guaranteed.

Question 15General contractor licensing and registration

A contractor licensed in North Dakota changes the business name from a sole proprietorship to a different trade name. What should the contractor do regarding the license?

  1. Apply for a completely new license and abandon the old one
  2. Nothing, because the license follows the owner regardless of name
  3. Update the license records to reflect the current business name Correct answer.
  4. Notify only the bonding company

Explanation

License records should reflect the contractor's current business identity, so a name change should be reported and the records updated. The license does not silently follow a new trade name, and notifying only a bonding company leaves the state records inaccurate.

Question 16General contractor licensing and registration

A general contractor subcontracts electrical work on a North Dakota project. Which statement about licensing responsibility is correct?

  1. The electrical subcontractor must hold the required electrical license, and the general contractor should verify it Correct answer.
  2. The general contractor is responsible for licensing the electrical subcontractor
  3. The electrical subcontractor may work unlicensed if supervised by the general contractor
  4. The general contractor's license covers the electrical work, so the subcontractor need not be licensed

Explanation

Electrical work requires the appropriate electrical license held by the subcontractor, and a prudent general contractor verifies that credential before awarding the subcontract. The general contractor's license does not extend to electrical work, and supervision does not substitute for the subcontractor's own license.

Question 17General contractor licensing and registration

A contractor's license is suspended for failure to maintain required insurance. The contractor continues to advertise and accept new jobs. What is the correct characterization?

  1. The suspension is automatically lifted when insurance is reinstated
  2. The suspension only affects public projects
  3. Advertising is permitted while suspended as long as no work begins
  4. Accepting new jobs while suspended constitutes unlicensed contracting Correct answer.

Explanation

A suspended license is not an active license, so advertising and accepting new work during suspension constitutes unlicensed contracting. The suspension applies broadly, not only to public projects, and reinstatement requires action rather than occurring automatically.

Question 18General contractor licensing and registration

A contractor is asked to sign a contract that requires arbitration of all disputes. Which statement about the licensing implications is accurate?

  1. The license is only required if arbitration is invoked
  2. Arbitration clauses eliminate the need for a contractor license
  3. Arbitration clauses are prohibited in construction contracts
  4. A valid license is still required regardless of the dispute resolution clause Correct answer.

Explanation

Dispute resolution terms such as arbitration clauses do not affect the statutory licensing requirement; the contractor must still hold a valid license. Arbitration clauses are not prohibited, and licensing is not contingent on whether arbitration is later invoked.

Question 19General contractor licensing and registration

A North Dakota contractor's license is held by a partnership. One partner withdraws. What is the effect on the license?

  1. The license remains unchanged because the partnership continues
  2. The change in the qualifying party or ownership may require the license to be updated or reissued Correct answer.
  3. The license is void and the partnership must dissolve
  4. The license automatically transfers to the withdrawing partner

Explanation

A change in the partnership's ownership or qualifying party can affect the basis on which the license was issued, so the contractor should report the change and update or reissue the license as required. The license does not automatically transfer to the departing partner, and the partnership need not dissolve.

Question 20General contractor licensing and registration

A contractor licensed in North Dakota is accused of abandoning a project after taking a large deposit. Which regulatory response is most consistent with the licensing framework?

  1. The state may only refer the matter to small claims court
  2. The state may investigate and pursue disciplinary action against the license Correct answer.
  3. The state has no role because the dispute is purely contractual
  4. The state may revoke the client's right to sue

Explanation

The licensing authority can investigate complaints of abandonment or improper handling of funds and pursue discipline, including suspension or revocation. The matter is not purely contractual, and the state cannot extinguish a client's right to sue.

Question 21General contractor licensing and registration

A contractor licensed in North Dakota wants to perform work in a neighboring state. Which statement about license portability is accurate?

  1. The contractor must satisfy the other state's licensing requirements unless reciprocity applies Correct answer.
  2. The contractor may work in the other state if the project is federally funded
  3. The North Dakota license is valid nationwide under federal law
  4. The North Dakota license automatically authorizes work in any state

Explanation

Licensing is state-specific, so a North Dakota license does not authorize work elsewhere unless the other state recognizes it through reciprocity or the contractor otherwise qualifies there. There is no nationwide contractor license, and federal funding does not override state licensing.

Question 22General contractor licensing and registration

A contractor applies for a North Dakota license while a prior license revocation is still in effect. What is the likely outcome?

  1. The application is likely to be denied because the revocation remains in effect Correct answer.
  2. The application will be granted if the contractor changes the business name
  3. The application will be granted because a new application is a fresh start
  4. The application will be granted if the contractor pays a higher fee

Explanation

A revocation remains effective until the state lifts it or the contractor satisfies reinstatement requirements, so a new application during the revocation period is generally denied. A higher fee or a name change does not erase the revocation.

Question 23General contractor licensing and registration

A general contractor on a North Dakota project discovers that a subcontractor's license lapsed after the subcontract was signed. What is the most appropriate response?

  1. Assume the general contractor's license covers the subcontractor's work
  2. Continue work and address the lapse at final payment
  3. Terminate the project entirely without further inquiry
  4. Require the subcontractor to stop work until the license is reinstated Correct answer.

Explanation

Because the subcontractor must be licensed while performing work, the general contractor should require the subcontractor to stop until the license is reinstated or replace the subcontractor. Continuing work leaves the project exposed to unlicensed contracting, and the general contractor's license does not cover the subcontractor's scope.

Question 24General contractor licensing and registration

A contractor's license lists a qualifying party who never actually supervises the work and holds no real role in the business. What risk does this arrangement create?

  1. The license may be subject to discipline for a sham qualifying party arrangement Correct answer.
  2. The arrangement is permitted if the qualifying party signs an annual affidavit
  3. The arrangement is permitted if the qualifying party lives in North Dakota
  4. No risk, because the qualifying party only needs to be named

Explanation

The qualifying party must genuinely support the license through a real role in the business; a nominal or sham arrangement can support disciplinary action. Residency or a signed affidavit does not validate a qualifying party who does not actually function in that capacity.

Question 25General contractor licensing and registration

A contractor is licensed but performs work outside the scope of the classifications on the license. How is this treated under the licensing framework?

  1. It is permitted if the client approves the expanded scope
  2. It is permitted because the contractor holds a valid license
  3. It is treated the same as unlicensed contracting for the out-of-scope work Correct answer.
  4. It is permitted if the contractor hires a licensed subcontractor for the entire project

Explanation

A license authorizes only the classifications it lists, so performing work outside those classifications is treated as unlicensed contracting for that work. Holding a license generally and client approval do not expand the authorized scope.

Question 26General contractor licensing and registration

A North Dakota contractor is preparing to submit a license application. Which item is most directly tied to the state's requirement that the applicant demonstrate financial responsibility?

  1. A notarized statement listing every employee's Social Security number
  2. A letter from a bank confirming the contractor has no outstanding personal loans
  3. A surety bond or other proof of financial responsibility filed with the application Correct answer.
  4. A copy of the contractor's federal income tax return for the prior three years

Explanation

North Dakota ties licensing to financial responsibility, and applicants generally demonstrate it by filing a surety bond or equivalent proof in the amount the board requires. Tax returns and bank letters are not the mechanism the licensing law uses. Employee personal data is not part of the responsibility showing.

Question 27General contractor licensing and registration

A North Dakota contractor holds a license and wants to know how long it remains valid before renewal is required. What is the standard license term under state contractor licensing rules?

  1. Three years, renewed on a rolling basis
  2. Two years, renewed in even-numbered years
  3. Five years, renewed at the board's discretion
  4. One year, renewed annually Correct answer.

Explanation

North Dakota contractor licenses run on an annual cycle, so the contractor must renew each year to stay licensed. Longer terms such as two, three, or five years do not match the annual renewal structure. Missing the annual renewal is what triggers lapse and possible disciplinary consequences.

Question 28General contractor licensing and registration

A North Dakota contractor is told that a license is required only for projects over a certain dollar amount. Which statement best describes the threshold concept in the state's licensing law?

  1. Only projects involving public funds are subject to the threshold
  2. A statutory dollar threshold exists, and projects at or above it require a licensed contractor Correct answer.
  3. The threshold applies only to residential remodeling, never to new construction
  4. Any paid work of any size requires a state contractor license

Explanation

North Dakota's licensing statute uses a dollar threshold, and work at or above it must be performed by a licensed contractor. It is not true that every small job requires a license, nor that only public work is covered. The threshold is not limited to remodeling.

Question 29General contractor licensing and registration

A North Dakota contractor wants to verify whether a particular individual or business holds a valid license. What is the most reliable way to confirm current license status?

  1. Ask the contractor's supplier whether the account is in good standing
  2. Accept a photocopy of a license certificate the contractor provides
  3. Check the licensing board's official license lookup or contact the board directly Correct answer.
  4. Rely on the contractor's website and social media advertising

Explanation

Current status is verified through the licensing board's official records, which reflect suspensions, lapses, and reinstatements. Advertising, photocopies, and supplier relationships can be outdated or fabricated. A license certificate alone does not show whether the license is currently active.

Question 30General contractor licensing and registration

A North Dakota contractor operates as a sole proprietor and later incorporates. What generally happens to the contractor license when the business structure changes?

  1. A new license application is generally required because the licensed entity has changed Correct answer.
  2. The license is void and cannot be reissued for two years
  3. The existing license automatically transfers to the corporation without any filing
  4. The license converts to a subcontractor-only license until renewal

Explanation

A license is issued to a specific legal entity, so changing from a sole proprietorship to a corporation creates a different licensee and generally requires a new application. The license does not transfer automatically, and it is not converted to a restricted category. There is no blanket two-year bar on reissuance.

Question 31General contractor licensing and registration

A North Dakota contractor is reviewing the scope of work described on its license. Which statement best describes how the license's classifications function?

  1. The license authorizes all trades except electrical and plumbing, which need no state license
  2. The license authorizes all trades on residential projects but restricts commercial projects
  3. The license authorizes only the classifications shown, and work outside them is treated as unlicensed activity Correct answer.
  4. The license authorizes any construction trade as long as the contractor carries general liability insurance

Explanation

License classifications define the work a contractor may legally perform, and exceeding them is treated like working without a license for that scope. Insurance does not expand the authorized scope. The electrical and plumbing carve-out and the residential/commercial split described here are not accurate statements of the rule.

Question 32General contractor licensing and registration

A North Dakota contractor is required to notify the board of certain changes. Which change most clearly triggers a notification obligation?

  1. A change in the contractor's preferred lumber supplier
  2. A change in the contractor's standard markup percentage
  3. A change in the contractor's business address or telephone contact information Correct answer.
  4. A change in the contractor's office cleaning service

Explanation

Licensing boards need current contact information so notices, renewals, and complaints reach the licensee, so address and phone changes must be reported. Supplier, pricing, and janitorial changes have no bearing on licensing records. Failing to keep contact data current can cause a licensee to miss important board communications.

Question 33General contractor licensing and registration

A North Dakota contractor is asked what a license fundamentally represents in the construction marketplace. Which description is most accurate?

  1. State recognition that the holder met the qualifications set by law to offer or perform construction work Correct answer.
  2. A guarantee issued by the state that the contractor's workmanship will be defect-free
  3. A warranty backed by the state that covers the contractor's debts
  4. A federal certification that allows work in any state without further licensing

Explanation

A license is a regulatory credential confirming the holder satisfied statutory qualifications such as financial responsibility and, where applicable, examination. It is not a workmanship guarantee, a nationwide certification, or a debt warranty. Consumers still rely on contracts, warranties, and insurance for those protections.

Question 34General contractor licensing and registration

A North Dakota contractor's license is issued to a business whose qualifying party later dies. What is the most likely consequence for the license?

  1. The license becomes permanent and no further qualifying party is ever needed
  2. The license is affected because the qualifying party is no longer available, and the business must address the vacancy Correct answer.
  3. The license converts into a license held by the contractor's largest client
  4. The license passes automatically to the qualifying party's estate

Explanation

The qualifying party is central to the license, so losing that person affects the license's validity and the business must act to fill the role. The license does not become permanent, does not pass to an estate, and cannot be reassigned to a client. The board generally must be notified and a replacement qualified.

Question 35General contractor licensing and registration

A North Dakota contractor is preparing a bid for a private commercial project valued well above the licensing threshold. What is the cleanest way to avoid a licensing challenge to the bid?

  1. Confirm the license is active and covers the classifications the project requires before submitting the bid Correct answer.
  2. Submit the bid under a subcontractor's license number with that subcontractor's permission
  3. Submit the bid and obtain the license only after the contract is signed
  4. Rely on the project owner to obtain a contractor license for the job

Explanation

Bidding and contracting on covered work require an appropriate active license, so the contractor should verify status and scope before bidding. Obtaining a license after signing does not cure unlicensed contracting at the time of the contract. Owners cannot license themselves as contractors for the project, and borrowing another licensee's number misrepresents the licensee.

Question 36General contractor licensing and registration

A North Dakota contractor's license shows a classification for residential work only. The contractor is offered a commercial project within the same trade. What is the best course of action?

  1. Decline or first obtain the classification needed for commercial work before contracting Correct answer.
  2. Accept the project and note the classification gap only in the contract
  3. Accept the project and have the owner sign a waiver of licensing requirements
  4. Accept the project because the trade is the same regardless of building type

Explanation

Classifications are scope limits, and the same trade performed on a different building type may fall outside the license. The contractor should obtain the proper classification or decline. An owner cannot waive statutory licensing requirements by contract.

Question 37General contractor licensing and registration

A North Dakota contractor receives a board inquiry about a consumer complaint alleging defective work and failure to refund a deposit. What is the contractor's best response?

  1. Respond to the board in writing within the required time and provide the relevant contract and payment records Correct answer.
  2. Continue working on other projects and respond only if a court summons arrives
  3. Ignore the inquiry because the dispute is a private civil matter
  4. Contact the complainant directly and ask them to withdraw the complaint before responding

Explanation

Board inquiries are part of the regulatory process and require a timely written response with supporting records. Ignoring the board can itself lead to discipline. Pressuring a complainant to withdraw does not satisfy the response obligation, and waiting for a court summons risks default-type consequences at the board level.

Question 38General contractor licensing and registration

A North Dakota contractor is a corporation and its president, who served as qualifying party, resigns from the company. What should the corporation do to protect its license?

  1. Transfer the license to the president's new employer
  2. Suspend all operations permanently and surrender the license
  3. Continue operating indefinitely because the corporation itself remains licensed
  4. Designate a replacement qualifying party who meets the board's requirements and notify the board Correct answer.

Explanation

When the qualifying party leaves, the license is at risk unless a qualified replacement is designated and the board is notified. The corporate license does not float free of the qualifying party requirement. Transfer to another employer is not permitted, and permanent surrender is not required if a replacement is arranged.

Question 39General contractor licensing and registration

A North Dakota contractor's license lapsed for nonrenewal, and the contractor now wants to resume work. What is generally required before the contractor may lawfully contract again?

  1. Nothing, because a lapsed license revives automatically once the contractor decides to resume
  2. Reinstatement or reissuance through the board, including payment of required fees and any conditions imposed Correct answer.
  3. Only a written notice to the contractor's last client
  4. Only a new surety bond, with the license reviving on the bond's effective date

Explanation

A lapsed license does not reactivate on its own; the contractor must go through the board's reinstatement or reissuance process and satisfy any conditions. A bond alone does not revive the license. Notice to a former client has no effect on licensing status.

Question 40General contractor licensing and registration

A North Dakota contractor is a nonresident business with no in-state office. Which statement about its ability to obtain a North Dakota contractor license is accurate?

  1. It may work without a license because licensing applies only to resident businesses
  2. It may be licensed if it satisfies the same requirements as resident applicants, including any registered agent or service-of-process arrangements Correct answer.
  3. It may be licensed only if a North Dakota resident owns a majority interest
  4. It cannot be licensed in North Dakota unless it maintains a staffed office in the state

Explanation

Out-of-state businesses can be licensed by meeting the same substantive requirements as residents, along with any service-of-process or registered agent arrangements the board requires. A staffed in-state office is not the test, and licensing is not limited to residents. Resident ownership is not a condition of licensure.

Question 41General contractor licensing and registration

A North Dakota contractor signs a contract that includes a clause stating the owner waives all rights to file a licensing complaint. How should the contractor view that clause?

  1. The clause is fully enforceable and permanently bars any board complaint
  2. The clause is enforceable only if the contractor's license is current
  3. The clause does not prevent the owner from complaining to the board because licensing is a regulatory matter Correct answer.
  4. The clause shifts the complaint to the contractor's insurance carrier

Explanation

Licensing and discipline are governed by state regulation, and private parties cannot contract away the board's authority or a consumer's ability to report conduct. The clause's enforceability does not depend on license status. Insurance carriers do not receive licensing complaints in place of the board.

Question 42General contractor licensing and registration

A North Dakota contractor is bidding work and learns that a competitor is using an expired license number on bid documents. What is the most appropriate action for the contractor?

  1. Confront the competitor privately and demand a share of the work
  2. Use the same expired number to stay competitive on the bid
  3. Report the apparent unlicensed bidding to the licensing board rather than ignore it Correct answer.
  4. Post the competitor's expired number on social media as proof

Explanation

Unlicensed bidding undermines the licensing scheme, and the board is the proper body to investigate and act. Copying the conduct compounds the violation. Private demands and public posting are not regulatory remedies and can create legal exposure.

Question 43General contractor licensing and registration

A North Dakota contractor's license application asks whether the applicant has ever had a license disciplined in another state. The applicant had a suspension in another state five years ago. What is the proper approach?

  1. Disclose a different, unrelated violation instead to appear forthcoming
  2. Disclose the out-of-state suspension truthfully and provide the requested details Correct answer.
  3. Disclose it only if the board asks a follow-up question
  4. Omit it because the other state's records are not accessible to North Dakota

Explanation

Application disclosures must be truthful and complete, and prior discipline in another jurisdiction is the kind of information boards rely on. Assuming records are inaccessible is risky because boards share information. Substituting an unrelated matter is still a misrepresentation.

Question 44General contractor licensing and registration

A North Dakota contractor's license is current, but the contractor has not maintained the insurance the board requires. What is the likely regulatory outcome if the board discovers the gap?

  1. The license may be suspended or subjected to conditions until the required coverage is restored Correct answer.
  2. The license is transferred to the contractor's insurer
  3. The license remains fully valid because insurance is a private contract matter
  4. The license is automatically upgraded to a broader classification

Explanation

Maintaining required coverage is a condition of licensure, so a gap can lead to suspension or conditions until coverage is restored. Insurance is not merely private when the board requires it. A coverage gap neither broadens the license nor transfers it to an insurer.

Question 45General contractor licensing and registration

A North Dakota contractor is offered a job that requires work in a trade the contractor's license does not cover. The contractor plans to hire a properly licensed subcontractor for that portion. How should the arrangement be structured?

  1. The owner performs the uncovered trade and the contractor supervises as an agent
  2. The general contractor performs the uncovered trade and lists the subcontractor as a consultant
  3. The licensed subcontractor contracts for and performs the uncovered trade under its own license Correct answer.
  4. The general contractor performs the trade under the subcontractor's license number

Explanation

The entity performing the work must hold the license for that scope, so the licensed subcontractor should contract for and perform the uncovered trade. Performing it while listing another firm as a consultant does not change who is doing the work. Using another's license number misrepresents the licensee, and routing work through the owner to avoid licensing is a sham.

Question 46General contractor licensing and registration

A North Dakota contractor has been licensed for years and is expanding into a new trade. Which step best protects the contractor before advertising the new service?

  1. Advertise the service but write contracts only under the existing classification
  2. Begin advertising immediately and add the classification at the next annual renewal
  3. Apply to add the appropriate classification and wait for approval before advertising or contracting that work Correct answer.
  4. Advertise the service and rely on the subcontractor who will actually perform it

Explanation

Advertising and contracting work outside the license's classifications can be treated as unlicensed activity, so the classification should be added before marketing the service. Waiting until renewal leaves a period of noncompliance. Writing contracts under the wrong classification or relying on a subcontractor does not authorize the contractor to offer that work.

Question 47General contractor licensing and registration

A North Dakota contractor's license is revoked. The owner of the business forms a new corporation with a different name and applies for a license while the revocation is outstanding. How is the board most likely to treat the application?

  1. The board may deny it by looking through the new entity to the persons behind the revoked license Correct answer.
  2. The board must grant it if the new corporation posts a larger surety bond
  3. The board must grant it because a corporation is legally distinct from its owners
  4. The board has no authority to consider prior revocations in any application

Explanation

Boards can examine who controls an applicant and deny licensure where the new entity is a device to avoid an outstanding revocation. Corporate separateness does not shield applicants from regulatory review of the individuals involved. A larger bond does not erase the revocation, and prior discipline is squarely within the board's consideration.

Question 48General contractor licensing and registration

A North Dakota contractor's license lists a qualifying party who is also the qualifying party for three other licensed contractors. What concern does this arrangement most likely raise?

  1. The arrangement automatically merges the four licenses into one
  2. No concern arises because a qualifying party may serve unlimited licensees without restriction
  3. The arrangement is permitted only if all four contractors share one surety bond
  4. The board may question whether the individual can genuinely supervise each licensee's operations Correct answer.

Explanation

The qualifying party role is meant to ensure real supervision and responsibility, so serving many licensees can raise questions about whether that oversight is genuine. There is no unlimited-service rule, no requirement of a shared bond, and no automatic merger of licenses. The board evaluates substance over paperwork.

Question 49General contractor licensing and registration

A North Dakota general contractor is licensed and hires a subcontractor whose license is valid at hiring but lapses during the project. What is the general contractor's most prudent course?

  1. Require the subcontractor to restore its license promptly or stop its work until the license is current Correct answer.
  2. Continue the subcontractor's work because the license was valid when the subcontract was signed
  3. Assume the subcontractor's lapsed license becomes the owner's responsibility
  4. Reassign the subcontractor's workers to the general contractor's payroll without any license review

Explanation

Unlicensed work during the project can expose both the subcontractor and the general contractor to regulatory consequences, so the subcontractor should restore its license or pause work. A license valid at signing does not cover later unlicensed performance. The owner is not responsible for the subcontractor's license, and payroll changes do not resolve the licensing gap.

Question 50General contractor licensing and registration

A North Dakota contractor is accused of collecting a large deposit and then failing to perform or refund. Beyond any civil claim, what regulatory exposure does the contractor face?

  1. No regulatory exposure because deposit disputes are exclusively civil matters
  2. Board discipline, potentially including suspension, revocation, or conditions on the license Correct answer.
  3. Loss of the license only if the owner first obtains a civil judgment
  4. Automatic criminal conviction without any board proceeding

Explanation

Failure to perform after taking a deposit is conduct the licensing board can investigate and discipline, up to suspension or revocation. The board's process is independent of civil litigation, so a judgment is not a prerequisite. Criminal liability, if any, requires its own proceeding rather than being automatic.