California Supplemental (CSE) Practice Exam

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Study for the California Supplemental Exam (CSE) with flashcards and multiple-choice questions. Each question includes hints and explanations to prepare you and enhance your understanding for the exam.

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What must a contractor do to protect the owner from liens on a project?

Receive signed lien releases from suppliers
Purchase a performance bond and payment bond
Hire a lawyer to oversee the construction
Employ a financial advisor

The correct answer is: Purchase a performance bond and payment bond

To protect the owner from liens on a project, a contractor must obtain a performance bond and a payment bond. A payment bond guarantees that the contractor will pay all subcontractors and suppliers for their labor and materials. This is crucial because if these payments are not made, those unpaid parties can place a lien on the property, which would put the owner at risk for additional costs and complications. A performance bond ensures that the contractor will fulfill the terms of the contract. By securing these bonds, the owner is significantly protected against potential legal claims arising from unpaid contractors or laborers, thus maintaining the integrity of the project's financial structure and safeguarding their investment in the property. In contrast, the other options may not provide the necessary protection against liens. While receiving signed lien releases from suppliers can be helpful, it is not a guarantee against liens. Hiring a lawyer or a financial advisor might provide general advice but does not directly address lien protection in the same way that payment and performance bonds do.