Exam Cheat Sheet · Quick Reference
North Carolina Business and Law Exam (General Contractors)
North Carolina · PSI Services Contractor
Verified, not estimated. Every figure below is drawn from the official exam structure we maintain — question counts, passing standard and topic weighting. Practice questions are grounded in the source law with statute citations. We omit any figure we can't verify rather than guess at it.
Total questions
40
Passing score
70%
Exam time
90 min
Administered by
PSI Services Contractor
Format
Reference materials allowed
North Carolina State Portion 40 questions
Erosion and Sedimentation Control
3 Q · 8%
Erosion and sedimentation control plan requirements and approval processMandatory standards for land-disturbing activity (buffer zones, grading slopes, ground cover timelines)Applicability and exemptions under the Sedimentation Pollution Control Act of 1973Design and performance standards for erosion control measures (10-year and 25-year storm design)Self-inspection requirements and documentation for land-disturbing activitiesCivil and criminal penalties, stop-work orders, and enforcement authorityLocal erosion and sedimentation control programs and ordinancesPractical erosion and sediment control measures on construction sites (silt fences, sediment basins, ground cover)
Licensing
21 Q · 52%
License classifications and scope of work (Building, Residential, Highway, Public Utilities, Specialty, Unclassified)License limitations (Limited, Intermediate, Unlimited) and working capital or surety bond requirementsQualifier roles, responsibilities, and examination requirementsApplication process, fees, and required documentation (character references, criminal background checks, financial statements)License renewal, continuing education requirements, and inactive/invalid statusDisciplinary actions, misconduct, unlicensed practice, and Board enforcement authorityHomeowners Recovery Fund eligibility, claims process, and payment limitationsReciprocity, military applicant licensure, and out-of-state licensing provisions
Subcontractor's Pay Requirements
3 Q · 8%
Seven-day payment rule after contractor receipt (NCGS 22C-3)Prohibition on pay-if-paid and pay-when-paid clauses (NCGS 22C-2)Permissible grounds for withholding subcontractor payment (NCGS 22C-4)Interest penalty on late payments to subcontractors (NCGS 22C-5)Retainage limits applicable to subcontractors (NCGS 22C-4)Exemptions from Chapter 22C payment requirements (NCGS 22C-6)Statutory definitions under Chapter 22C: contractor, subcontractor, owner, improve (NCGS 22C-1)
Liens and Bonds
8 Q · 20%
Mechanics' lien rights by contract tier (owner, first-tier, second-tier, third-tier, and remote subcontractors)Lien agent designation, notice to lien agent, and the NC lien agent systemFiling and perfecting a claim of lien on real property (contents, deadlines, and place of filing)Notice of contract and notice of subcontract requirements and formsLien foreclosure procedures, deadlines, and sale of property to satisfy a lienDischarge of a claim of lien (satisfaction, bonding around a lien, and other methods)Public construction bonds — performance and payment bond requirements under NCGS Chapter 44A, Article 3Payment bond claims procedure (notice requirements, deadlines, claimant eligibility, and surety liability limits)
One Call
5 Q · 12%
Excavator notification requirements and timing (three full working days, 3–12 working day window)Types of NC811 notifications (normal, update, retransmit, emergency, report of damage, destroyed marks, design/survey, three-hour)Positive response system and positive response codesAPWA uniform color code for facility markingTolerance zone rules and safe digging practices within the tolerance zoneReporting damage to underground facilities and emergency response proceduresExemptions from notification requirements (G.S. 87-124)Underground Damage Prevention Review Board, civil penalties, and enforcement
Key Distinctions
Limited license financial responsibilityvsIntermediate and unlimited license financial responsibility
Working capital (current assets exceeding total current liabilities) must be at least $17,000 for a limited license, $75,000 for an intermediate license, and $150,000 for an unlimited license.
NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Appendix F, 21 NCAC 12A .0204(c)(2)Working capital alternative for limited licensevsWorking capital alternative for intermediate/unlimited license
Only the limited license category allows an applicant to qualify with a total net worth of at least $80,000 instead of the $17,000 working capital figure.
NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Appendix F, 21 NCAC 12A .0204(b)(2)Surety bond in lieu of working capital — unlimitedvsSurety bond in lieu of working capital — intermediate and limited
An unlimited applicant lacking $150,000 working capital must post a $1,000,000 bond, while the bond is $500,000 for intermediate and $175,000 for limited.
NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Appendix F, 21 NCAC 12A .0204(e)North Carolina Building Code project (licensing limitation)vsResidential Code project (licensing limitation)
For Building Code projects all structures AND units on the same parcel count as a single project, while for Residential Code projects only the structures (not the units) on the same parcel are treated as one project.
NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Appendix F, 21 NCAC 12A .0211(a)Annual continuing education for active licensevsContinuing education to reinstate an inactive license after more than two years
Active building, residential, or unclassified licensees complete 8 hours annually (2 mandatory + 6 elective), whereas reinstatement sought more than two years after going inactive requires 16 hours including the mandatory course offered in the year of reinstatement.
NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Appendix E, G.S. 87-10.2(a) and (b)Active license statusvsInactive license status
An inactive licensee is excused from annual continuing education but must still pay the same annual renewal fee paid by active licensees to maintain the license.
NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Appendix E, G.S. 87-10.2(h)Notice deadline when qualifier leavesvsLicense validity period after qualifier leaves
The licensee (and the qualifier) must notify the Board in writing within 10 days of separation, while the license itself remains in force 90 days before being invalidated if no replacement qualifier is designated.
NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Appendix F, 21 NCAC 12A .0205(c)Discipline of a licensed contractorvsEnforcement against an unlicensed contractor
The Board may suspend/revoke and recover up to $5,000 in administrative costs from a licensee, but against an unlicensed person it may only seek a permanent injunction in Superior Court.
NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Appendix E, G.S. 87-11(e)Misconduct (Board rule violation)vsFalsely claiming to be licensed (criminal offense)
Allowing an unlicensed person to use your license or exam credential is "misconduct" under Board rules, while falsely claiming licensure or practicing without a license is a Class 2 misdemeanor.
NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Appendix F, 21 NCAC 12A .0201(3)Criminal background check — sole proprietorshipvsCriminal background check — limited liability company
For a sole proprietorship the sole proprietor and the qualifier must submit, while for an LLC all managers and members must submit in addition to the qualifier(s).
NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Appendix F, 21 NCAC 12A .0303(b)Reciprocity/NASCLA exam routevsFull North Carolina examination
Applicants using a reciprocal exam waiver or the NASCLA exam still must pass the North Carolina Law and Regulation Exam before a license is issued.
NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Chapter 3 (Becoming a Licensed Contractor); 21 NCAC 12A .0303(c)Subcontractor payment deadlinevsInterest penalty for late payment
The contractor must pay the subcontractor within 7 days of receiving each periodic or final payment; if delayed more than 7 days, interest of 1% per month (or fraction) accrues on the unpaid balance.
NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Appendix L, Page L-2Projects covered by Chapter 22CvsResidential projects exempt from Chapter 22C
Chapter 22C's subcontractor payment rules do not apply to improvements to real property intended for residential purposes consisting of 12 or fewer residential units.
NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Appendix L, Page L-2Erosion plan filing deadlinevsGround cover deadline after grading
An erosion and sedimentation control plan must be filed and approved 30 or more days before initiating land-disturbing activity disturbing more than one acre, while exposed slopes must receive ground cover within 21 calendar days of completing any phase of grading.
NCGS 113A-57(4)Increase in limitation to intermediate licensevsIncrease in limitation to unlimited license
The application fee is $100.00 for an increase to intermediate and $125.00 for an increase to unlimited.
NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Appendix F, 21 NCAC 12A .0304(a)(4)Key Terms
Intermediate license project limit NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Chapter 3 (Becoming a Licensed Contractor); G.S. 87-10(a1)
Per G.S. 87-10(a1), an intermediate license holder may act as general contractor on any single project valued up to $1,500,000, excluding the cost of land and ancillary costs to improve the land.
Unclassified classification NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Chapter 3 (Becoming a Licensed Contractor); 21 NCAC 12A .0202(b)
Per 21 NCAC 12A .0202(b), the designation given an applicant who meets the qualifications for all classifications — Building, Residential, Highway, Public Utilities, and Specialty.
Residential Contractor classification NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Appendix F, 21 NCAC 12A .0202(a)(2)
Per 21 NCAC 12A .0202(a)(2), covers all construction and demolition activity pertaining to residential units conforming to the Residential Building Code, and also covers installation of solar panels on residential units required to conform to that Code.
Single project (licensing limitation) NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Appendix F, 21 NCAC 12A .0211(a)
Per 21 NCAC 12A .0211(a), where a project consists of one or more buildings under the North Carolina Building Code, all structures and units on the same parcel of land are considered a single project.
Responsible managing NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Appendix F, 21 NCAC 12A .0205(e)
Per 21 NCAC 12A .0205(e), a person engaged in the work of the applicant a minimum of 20 hours per week or a majority of the hours the applicant operates, whichever is less.
Archived examination credentials NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Appendix F, 21 NCAC 12A .0205(a)
Per 21 NCAC 12A .0205(a), a qualifier's exam credentials archive if the qualifier does not serve as qualifier for an active licensee for four consecutive years, after which the exam must be retaken and passed.
Qualifier license limit NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Appendix F, 21 NCAC 12A .0205(a)
Per 21 NCAC 12A .0205(a), one person may serve as qualifier for no more than two licenses.
Misconduct NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Appendix F, 21 NCAC 12A .0201(3)
Per 21 NCAC 12A .0201(3), misconduct under G.S. 87-11 includes allowing an unlicensed person or entity to use a license or examination credential on an undertaking where a license is required.
Character references NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Appendix F, 21 NCAC 12A .0308(a)
Per 21 NCAC 12A .0308, each applicant must submit three written evaluations from character references attesting to the reference's knowledge of and experience with the applicant, completed and dated no more than 12 months before submission.
Homeowners Recovery Fund award basis NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Chapter 3 (Becoming a Licensed Contractor) — Homeowners Recovery Fund section
After the hearing, the Board determines assistance based on the actual loss the claimant incurred from the general contractor's actions, excluding attorneys' fees, court costs, special, consequential, and punitive damages.
Subrogation (Homeowners Recovery Fund) NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Appendix E, G.S. 87-15.9
Per G.S. 87-15.9, the Board is subrogated to a reimbursed applicant's rights in the amount reimbursed and may sue the general contractor whose conduct caused the loss.
Improve (Chapter 22C) NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Appendix L, Page L-1
Per NCGS 22C-1(2), to build, effect, alter, repair, or demolish any improvement upon real property, or to excavate, clear, grade, fill, or landscape any real property, among other listed activities.
Subcontractor entitlement to payment NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Appendix L, Page L-1
Per NCGS 22C-2, performance by a subcontractor in accordance with the provisions of its contract entitles it to payment from the party with whom it contracts.
Permissible grounds to withhold subcontractor payment NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Appendix L, Page L-2
Per NCGS 22C-4, a contractor may withhold payment for third-party claims filed or reasonable evidence a claim will be filed, damage to the contractor or another subcontractor, and reasonable evidence the subcontract cannot be completed for the unpaid balance of the subcontract sum.
Stop-work order (Sedimentation Pollution Control Act) 15A NCAC 04C .0107(b)
Per 15A NCAC 04C .0107(b), the stop-work order under G.S. 113A-65.1 serves as the notice of violation for assessing a civil penalty under G.S. 113A-64(a)(1).
Erosion control plan expiration 15A NCAC 04B .0129
Per 15A NCAC 04B .0129, an approved erosion control plan expires three years after the date of approval if no land-disturbing activity has been undertaken on the site.
High Quality Water (HQW) zone basin dewatering 15A NCAC 04B .0124(c)(4)
Per 15A NCAC 04B .0124(c)(4), sediment basins in HQW zones that discharge to those areas must have a minimum dewatering time of 48 hours.
Trout waters buffer disturbance exception 15A NCAC 04B .0125(c)
Per 15A NCAC 04B .0125(c), where temporary and minimal disturbance is permitted as an exception, land-disturbing activity in the buffer adjacent to designated trout waters is limited to a maximum of 10 percent of the total buffer length within the tract.
Design storm for erosion control measures 15A NCAC 04B .0108
Per 15A NCAC 04B .0108, except where otherwise specified, measures must be planned, designed, and constructed to provide protection from the runoff of a 10-year storm producing the maximum peak rate of runoff.
Class 2 misdemeanor (G.S. 87-13) NASCLA Contractors Guide, North Carolina General Contractors (10th ed.), Appendix E, G.S. 87-13
The offense for falsely claiming or suggesting licensure in Board-regulated business activities or attempting to practice general contracting without complying with the licensing provisions.
Formulas to Know
Limited license financial responsibility test
Current assets − total current liabilities ≥ $17,000, OR total net worth ≥ $80,000 (net worth option limited-license only), OR surety bond of $175,000Intermediate license financial responsibility test
Current assets − total current liabilities ≥ $75,000, OR surety bond of $500,000Unlimited license financial responsibility test
Current assets − total current liabilities ≥ $150,000, OR surety bond of $1,000,000Intermediate license single-project value cap
Project value ≤ $1,500,000, excluding cost of land and ancillary costs to improve the landAnnual continuing education for building/residential/unclassified licensees
8 hours per year = 2 hours mandatory course + 6 hours electives; completed between January 1 and November 30 (plus a 90-day grace period after November 30)Continuing education to reinstate an inactive license
If inactive more than 2 years: 16 hours, including the mandatory course offered during the year of reinstatementLate license renewal penalty
$10.00 late payment for each month or part of a month after January 1Subcontractor late-payment interest
1% per month (or fraction of a month) on the unpaid balance when payment is delayed more than 7 days after the contractor receives paymentHomeowners Recovery Fund permit fee split
$10.00 collected per dwelling unit permitted; inspector forwards $9.00 to the Board and retains $1.00Limitation-increase application fee
$100.00 for increase to intermediate; $125.00 for increase to unlimited