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 (working capital)vsIntermediate License (working capital)

Limited requires current assets exceeding current liabilities by $17,000; Intermediate requires $75,000; Unlimited requires $150,000.

Appendix F, 21 NCAC 12A .0204(c)(2)
Limited License (surety bond alternative)vsUnlimited License (surety bond alternative)

A limited license applicant may post a $175,000 surety bond, an intermediate license $500,000, and an unlimited license $1,000,000 as an alternative to working capital.

Appendix F, 21 NCAC 12A .0204(e)
Intermediate License (project value cap)vsUnlimited License (project value cap)

An intermediate license limits a contractor to single projects valued up to $1,500,000, while an unlimited license carries no such cap.

NASCLA Contractors Guide, Chapter 3 (Becoming a Licensed Contractor); G.S. 87-10(a1)
NC Building Code project (licensing limit)vsNC Residential Code project (licensing limit)

For Building Code projects, all structures and units on the same parcel are treated as one project; for Residential Code projects, only structures (not individual units) on the same parcel are treated as one project.

NASCLA Contractors Guide, Appendix F, 21 NCAC 12A .0211(a)
Active License statusvsInactive License status

Active licensees must complete 8 hours of continuing education annually; inactive licensees skip CE but must pay the same annual renewal fee and cannot bid or undertake new contracts.

Appendix E, G.S. 87-10.2(a) and (b)
Reinstatement within 2 years of inactive statusvsReinstatement more than 2 years after inactive status

Reinstatement within two years requires a standard CE cycle, while reinstatement after more than two years requires 16 hours of continuing education including the mandatory course.

Appendix E, G.S. 87-10.2(h)(2)
Stop-Work OrdervsNotice of Violation

Under sedimentation rules, a stop-work order issued under the Sedimentation Pollution Control Act legally serves as a notice of violation for purposes of assessing a civil penalty.

15A NCAC 04C .0107(b)
Qualifier notification duty (separation)vsLicensee notification duty (separation)

Both the qualifier and the licensee must notify the Board in writing within 10 days after the qualifier ceases to be connected with the licensee.

Appendix F, 21 NCAC 12A .0205(c)
Chapter 22C (subcontractor payment law) — covered projectsvsChapter 22C — exempt projects

Chapter 22C applies to most construction projects but explicitly exempts improvements to real property intended for residential purposes consisting of 12 or fewer residential units.

NASCLA Contractors Guide, Appendix L, Page L-2
Homeowners Recovery Fund — recoverable damagesvsHomeowners Recovery Fund — excluded damages

The Fund covers only actual losses incurred; attorneys' fees, court costs, special, consequential, and punitive damages are specifically excluded.

NASCLA Contractors Guide, Chapter 3 (Becoming a Licensed Contractor) — Homeowners Recovery Fund section
Unclassified License classificationvsIndividual classifications (Building, Residential, Highway, etc.)

The Unclassified classification encompasses all other general contractor classifications combined; it is awarded only when an applicant qualifies for all individual classifications.

NASCLA Contractors Guide, Chapter 3 (Becoming a Licensed Contractor); 21 NCAC 12A .0202(b)
Class 2 misdemeanor (unlicensed contracting)vsBoard injunction (unlicensed contracting)

A person who falsely claims licensure or practices without a license commits a Class 2 misdemeanor under G.S. 87-13, while an unlicensed person not subject to license discipline may also face a Board-sought permanent injunction in Superior Court under G.S. 87-13.1.

Appendix E, G.S. 87-13

Key Terms

Qualifier Archival (21 NCAC 12A .0205(a)) Appendix F, 21 NCAC 12A .0205(a)
A qualifier's examination credentials are archived automatically if the qualifier does not serve as qualifier for an active licensee for four consecutive years, requiring the exam to be retaken.
Responsible Managing — minimum hours (21 NCAC 12A .0205(e)) Appendix F, 21 NCAC 12A .0205(e)
A qualifier must be engaged in the licensee's work at least 20 hours per week, or a majority of the hours the licensee operates, whichever is less.
Maximum Qualifier Limit (21 NCAC 12A .0205(a)) Appendix F, 21 NCAC 12A .0205(a)
A single person may serve as qualifier for no more than two licensed general contracting firms simultaneously.
Misconduct — license lending (21 NCAC 12A .0201(3)) Appendix F, 21 NCAC 12A .0201(3)
Allowing an unlicensed person or entity to use a license or examination credential on a project requiring licensure is expressly defined as misconduct under Board rules.
Character Reference Requirements (21 NCAC 12A .0308(a) and .0308(c)) Appendix F, 21 NCAC 12A .0308(a)
An applicant must submit three written character references, each dated no more than 12 months before submission to the Board.
Military Spouse Licensure — clean record standard (21 NCAC 12A .0309(a)(4)) Appendix F, 21 NCAC 12A .0309(a)(4)
A military spouse applicant must document that they have not committed any act in any jurisdiction that would constitute grounds for license refusal, suspension, or revocation in North Carolina.
Erosion Plan Expiration (15A NCAC 04B .0129) 15A NCAC 04B .0129
An approved erosion and sedimentation control plan expires three years from the date of approval if no land-disturbing activity has begun on the site.
HQW Sediment Basin Dewatering Time (15A NCAC 04B .0124(c)(4)) 15A NCAC 04B .0124(c)(4)
Sediment basins located in High Quality Water zones that discharge to those areas must have a minimum dewatering time of 48 hours.
Trout Water Buffer Disturbance Limit (15A NCAC 04B .0125(c)) 15A NCAC 04B .0125(c)
Temporary and minimal land-disturbing activity within a buffer zone adjacent to designated trout waters is limited to a maximum of 10 percent of the total buffer zone length within the tract.
Homeowners Recovery Fund — Board subrogation (G.S. 87-15.9) Appendix E, G.S. 87-15.9
When the Board reimburses a homeowner from the Recovery Fund, the Board is subrogated to the homeowner's rights in the amount paid and may sue the contractor whose conduct caused the loss.
Continuing Education Deadline (G.S. 87-10.2(g)) Appendix E, G.S. 87-10.2(g)
Annual continuing education must be completed between January 1 and November 30 of each calendar year, after which the Board provides a 90-day grace period.
Subcontractor Payment Interest Rate (NCGS 22C-5) NASCLA Contractors Guide, Appendix L, Page L-2
If a contractor delays payment to a subcontractor beyond seven days after receiving payment, the contractor owes interest at 1% per month (or fraction thereof) on the unpaid balance.
Erosion Plan Filing Deadline (NCGS 113A-57(4)) NCGS 113A-57(4)
An erosion and sedimentation control plan must be filed with and approved by the appropriate authority at least 30 days before initiating land-disturbing activity on tracts over one acre.
Homeowners Recovery Fund — per-unit fee split (G.S. 87-15.6(b)) Appendix E, G.S. 87-15.6(b)
A $10 fee is collected per dwelling unit at permit issuance; $9 is forwarded to the Board and $1 is retained by the local inspector.
License Revocation Reissuance Vote (G.S. 87-11(d)) Appendix E, G.S. 87-11(d)
The Board may reissue a revoked license only if five or more Board members vote in favor of reissuance.
Residential Contractor Classification (21 NCAC 12A .0202(a)(2)) Appendix F, 21 NCAC 12A .0202(a)(2)
The Residential Contractor classification covers construction and demolition of residential units conforming to the Residential Building Code, including the installation of solar panels on such units.

Formulas to Know

Working CapitalWorking Capital = Current Assets − Total Current Liabilities
Limited License Working Capital ThresholdCurrent Assets − Current Liabilities ≥ $17,000 (or Net Worth ≥ $80,000)
Intermediate License Working Capital ThresholdCurrent Assets − Current Liabilities ≥ $75,000 (or Surety Bond = $500,000)
Unlimited License Working Capital ThresholdCurrent Assets − Current Liabilities ≥ $150,000 (or Surety Bond = $1,000,000)
Subcontractor Late-Payment InterestInterest Owed = Unpaid Balance × 1% × (number of months or partial months delayed beyond 7-day deadline)
License Late Renewal PenaltyLate Fee = $10 × (number of months or partial months after January 1)
Homeowners Recovery Fund Fee SplitFee collected per unit = $10; Board receives $9; Local inspector retains $1
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