Financial Management and Consumer Protection Flashcards
7 cards from real MHIC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Management and Consumer Protection flashcards as text
Upon receiving final payment for a completed home improvement project, a Maryland contractor should provide the homeowner with:
Answer: A lien release or lien waiver covering the completed work
A lien release upon final payment confirms that no mechanics lien will be filed against the property, protecting the homeowner's clear title.
A Maryland home improvement contractor who begins work without the required written contract may face:
Answer: Civil liability and administrative penalties including possible license suspension
Performing work without a required written contract violates Maryland Home Improvement Law and exposes the contractor to civil liability and administrative sanctions.
Which of the following types of work is generally EXCLUDED from the definition of 'home improvement' under Maryland Home Improvement Law?
Answer: New residential construction on a vacant lot
Maryland's home improvement definition covers alterations, repairs, and additions to existing structures; new residential construction is generally excluded.
A Maryland contractor who misappropriates funds paid by a homeowner for a specific home improvement project may face:
Answer: Both criminal charges for misappropriation and administrative penalties
Using consumer funds designated for a specific project for other purposes can constitute criminal fraud or misappropriation under Maryland law, in addition to MHIC administrative penalties.
When must a Maryland home improvement contractor provide the homeowner with a copy of the signed contract?
Answer: At the time the contract is signed
Maryland law requires the contractor to deliver a copy of the signed contract to the homeowner at the time of signing so the consumer has immediate access to the agreement.
As a condition of obtaining an MHIC license, a Maryland home improvement contractor must post a surety bond in the amount of:
Answer: $20,000
Maryland requires all MHIC license applicants to post a $20,000 surety bond, which provides a financial guarantee to consumers in the event of contractor default.
Under Maryland Home Improvement Law, which statement about the Home Improvement Guaranty Fund is TRUE?
Answer: Claims are only available to homeowners whose contractors held a valid MHIC license at the time of the contract
The Guaranty Fund only compensates homeowners when the contractor held a valid MHIC license at the time the contract was executed; claims against unlicensed contractors are not eligible.