Passing the Home Improvement Contractor Exam is a mandatory step to getting your NYC DCWP Home Improvement Contractor License. The exam is not hard, but it’s strict: it tests whether you understand core NYC consumer-protection laws. If you don’t know the rules, you’ll fail. This guide gives you the exact material the City expects you to know.

1. Home Improvement Business Law

What counts as “Home Improvement”

NYC defines home improvement VERY broadly:

construction, repair, remodeling, alteration, renovation, conversion, modernization, additions, etc. including basements, driveways, fences, garages, patios, porches, pools, terraces, storm windows, central HVAC, central vacuums, communication systems.

If the work is over $200 total, a license is required.

What does not count

Home improvement does not include:

• New home construction

• Selling materials without installation

• Work on government-owned residences

• Painting/decorating if unrelated to other home improvement work

Who needs a license?

• Anyone who solicits, canvasses, sells, performs, or obtains a home improvement contract.

• Subcontractors must also be licensed.

Important: Home Improvement Salesperson licenses were abolished in 2020.

Who does NOT need a license?

• Employees of a contractor

• Jobs under $200

• Licensed plumbers, electricians, architects, engineers

Where must you post your license?

In your office, visible to consumers, or shown on request.

Contractor responsibilities

You must:

• Obtain all required permits

• Keep 6 years of records

• Use payments ONLY for the job they were paid for

• Not start work or take payment until the 3-day cancellation period passes

Prohibited actions

You cannot:

• Misrepresent or lie

• Publish deceptive advertising

• Act as a lender or arrange loans

• Operate under a name not on your license

• Violate building, fire, health, or safety laws

2. Contracts & Cancellations

This is the biggest section of the exam. NYC is extremely strict.

Every home improvement contract must be:

• In writing

• Signed by contractor AND consumer

• Provided to consumer at signing

• Plain English (plus any language used in the sales conversation)

Mandatory contract contents

Your contract MUST include:

1. Date of transaction

2. Contractor name, address, phone, DCWP license number

3. Start + substantial completion dates

4. Any conditions that may delay completion

5. Whether completion date is “of the essence”

6. Detailed work description

7. Detailed materials list (brands, model numbers, quantities)

8. Itemized pricing for materials + labor

9. Payment schedule tied to actual work milestones

10. Lien law notices

11. Statement that contractor will obtain all permits

12. Statement that contractor will provide a Workers’ Comp certificate

13. All warranties and advertised representations

14. Change orders must be written and signed by both parties

Required: Notice of Cancellation (3-day right to cancel)

Contract must include this exact statement, in bold, minimum 10-point font:

"YOU, THE BUYER, MAY CANCEL THIS TRANSACTION AT ANY TIME PRIOR TO MIDNIGHT OF THE THIRD BUSINESS DAY AFTER THE DATE OF THIS TRANSACTION. SEE THE ATTACHED NOTICE OF CANCELLATION FORM FOR AN EXPLANATION OF THIS RIGHT."

You must also give the consumer:

• Two copies of a separate detachable Notice of Cancellation

• In English and any language used in negotiation

If the consumer cancels:

You must, within 10 business days:

• Return all payments

• Cancel security interests

• Return documents

• State whether you will pick up delivered materials

3. Advertising & Selling Practices

NYC is brutal about advertising violations.

Your ads must:

• Include your DCWP license number

• Be truthful, not misleading

• Accurately represent materials

• Not exaggerate (“factory direct,” “lifetime warranty,” etc.)

You cannot:

• Claim savings/discounts that aren’t real

• Claim warranties longer than the reasonable life of the item

• Say “lifetime” unless it means lifetime of the product

• Imply you are a manufacturer unless you actually are

4. General NYC Industry Knowledge

Who obtains permits?

The contractor — always.

You cannot shift responsibility to the consumer.

Common permits

• DOB: plumbing, electrical, pointing, home extensions, structural work

• DOT: sidewalk work, dumpsters on street

• BIC: hauling construction debris

Electrical work

Must be done by a DOB-licensed electrician.

Subcontractors

Must be licensed HICs (except licensed plumbers/electricians).

Sales tax

You must collect sales tax for repair work.

Capital improvements are NOT taxable.

Record-keeping

Keep contracts and business records for six years.

Workers’ Compensation

Required unless exempt (CE-200).

Must give consumer the certificate before work starts.

Lead requirements

If not RRP-certified, you must complete the DCWP “Lead Affirmation.”

If your work disturbs lead paint (pre-1978 buildings), you MUST be EPA-certified.

5. Change Orders

Change orders MUST be:

• Written

• Signed by both parties

• Include new price

• Include new total contract price

• Include when payment is due

6. Payments, Escrow & Financing Rules

Reminder: No work before 3-day cancellation period expires

Progress payments must:

• Be tied to work performed

• Have a reasonable relationship to work completed

• Not exceed $15,000 or 20% per milestone, whichever is lower (from the Consumer Bill of Rights)

Progress payments must be deposited into an escrow account

Required under NY Lien Law §71-a

Contractors may not:

• Arrange financing

• Act as a lender

7. Penalties for Violations

NYC penalties are severe.

Misrepresentation

Up to $500 per violation.

Operating without a license

• Misdemeanor

• Up to 6 months jail

• Up to $1,000 per offense

• $100/day civil penalties

• Tools and vehicles can be seized

Contract violations

Each missing contract requirement = separate violation.

8. Trust Fund vs. Bond

For licensing, you must either:

• Pay $200 into the DCWP Trust Fund (every 2 years)—most contractors choose this

• Or obtain a bond

If a consumer wins a case and you disappear, the Trust Fund may pay the consumer.

9. Age-Friendly Requirements (Seniors)

The exam includes basic questions about ethical obligations with older adults:

• Never pressure seniors

• Always show ID

• Provide clear written estimates

• Provide Notice of Cancellation

Exam Details

The exam covers four areas:

1. Home Improvement Business Law

2. Contracts & Cancellations

3. Advertising & Selling Rules

4. General Industry + NYC-Specific Requirements

The questions are straightforward. They’re testing whether you understand your legal obligations when working in NYC.

Number of Questions & Passing Score

The exam contains 30 questions.

You must answer at least 21 questions correctly to pass (70% minimum).

Exam Delivery

Once DCWP processes your application, they send instructions to take the exam through ExamBuilder, their online testing system.

Deadline to Take the Exam

You must take and pass the exam within 60 days of receiving ExamBuilder instructions.

Exam Fee

The exam requires a $50 exam fee.

Identification Requirements

You must bring a valid, government-issued ID that matches your application.