MHIC NASCLA Contractors Practice Exam

What is required from a subcontractor before a contractor can make payment?

1. A signed contract

2. Proof of completed work

3. A valid license

4. No documentation required

The correct answer is: A valid license

Before a contractor can process payment to a subcontractor, it is essential to have a valid license. This requirement ensures that the subcontractor is legally authorized to perform the work they were contracted for, adhering to regulatory standards and maintaining industry professionalism. Having a valid license also provides a level of assurance to the contractor that the subcontractor meets necessary qualifications and complies with state and local laws, which can impact the overall integrity of the project. A signed contract, while important for formalizing the agreement between the contractor and subcontractor, does not necessarily guarantee that the subcontractor is licensed to perform the work. Proof of completed work is required for payment, but it does not serve as a prerequisite for payment in the scope of licensure matters. Lastly, the idea that no documentation is required contradicts standard business practices, where documentation typically underpins contractual and legal obligations.