Financial Management and Consumer Protection Flashcards

A Maryland homeowner signed a home improvement contract on a Tuesday at their residence. By when must they exercise their right to cancel?

Answer: Within 3 business days of signing

Maryland's Home Improvement Law grants homeowners a 3-business-day right of rescission for contracts signed at their residence.

Which of the following must be included in a Maryland home improvement contract to protect both parties financially?

Answer: A clear payment schedule tied to project milestones

A milestone-based payment schedule ensures money is released as work progresses, protecting consumers from prepaying and contractors from non-payment.

What happens to a Maryland home improvement contractor's license if they are found guilty of collecting money and abandoning a project?

Answer: Their license may be suspended or revoked and they may face criminal charges

Collecting money and abandoning a project is a serious violation that can result in license suspension or revocation and potential criminal prosecution under Maryland law.

A contractor finishes a job and the homeowner disputes the final payment amount. Under MHIC, what is the preferred first step for resolution?

Answer: Attempt mediation or negotiation using the written contract terms

MHIC encourages parties to resolve disputes through the written contract terms and mediation before pursuing legal remedies.

Which scenario correctly describes a contractor's obligation under Maryland's mechanics lien law as it relates to consumer protection?

Answer: Subcontractors and suppliers can lien a homeowner's property if the general contractor fails to pay them

Unpaid subcontractors and suppliers may file a mechanics lien against the homeowner's property even if the homeowner paid the general contractor in full.

A Maryland MHIC licensee wants to advertise a special financing offer to homeowners. What must the advertisement comply with?

Answer: Federal Truth in Lending Act (Regulation Z) disclosure requirements

Any contractor advertising financing must comply with the federal Truth in Lending Act (Regulation Z), which requires clear disclosure of APR and credit terms.

Under Maryland law, a homeowner may file a claim against the Home Improvement Guaranty Fund for a maximum of how much per contractor?

Answer: $20,000

Maryland's Home Improvement Guaranty Fund provides a maximum recovery of $20,000 per contractor for eligible consumer claims.