Business and Labor Practices Flashcards

A licensed MHIC contractor solicits a homeowner at a home and garden expo. The homeowner later visits the contractor's showroom and signs a $15,000 contract there. Under Maryland's Home Improvement Law, which statement about the right of rescission is MOST accurate?

Answer: The homeowner has no right of rescission because the contract was signed at the contractor's place of business, not the homeowner's residence

The Maryland and FTC right of rescission for home improvement contracts applies when the sale is solicited and signed at the consumer's residence or certain temporary locations (like trade shows where the seller is present). When the homeowner travels to the contractor's permanent business location and signs there, the right of rescission does not apply — regardless of where initial contact was made.

A licensed MHIC general contractor hires a specialty electrical subcontractor who works exclusively for that general contractor and never contracts directly with homeowners. The subcontract value is $12,000. Under Maryland's Home Improvement Law, what licensing is required of the subcontractor?

Answer: The subcontractor does not need an MHIC license because they contract only with a licensed contractor, not directly with the homeowner

Maryland's Home Improvement Law requires MHIC licensure for those who contract directly with homeowners for home improvement work. A subcontractor whose contractual relationship is solely with a licensed MHIC contractor — and who has no direct contract with the homeowner — is not required to hold an MHIC license. The general contractor assumes responsibility for the subcontractor's work.

An MHIC licensee's license has been placed on inactive status. A friend asks the licensee to oversee a $3,000 bathroom renovation at the friend's home, agreeing to pay the licensee a management fee. The licensee agrees but does not pull permits or sign contracts under their name. Which statement BEST describes the legal risk?

Answer: The licensee may be subject to disciplinary action and criminal penalties for engaging in home improvement contracting with an inactive license

An inactive MHIC license does not authorize the holder to engage in home improvement contracting activity. Supervising, managing, or receiving compensation for a home improvement project — even indirectly — constitutes contracting under Maryland law. Violations can result in administrative penalties, license denial or revocation, and criminal charges under the Home Improvement Law.

A Maryland home improvement contractor completes a major addition and the homeowner refuses to pay the $22,000 final balance, claiming defective workmanship. The contractor wants to protect their right to a mechanic's lien. What is the filing deadline under Maryland's lien law?

Answer: 180 days after the contractor's last day of work on the project

Under Maryland's Mechanics' Lien Law (Real Property Article §9-104), a contractor must file a petition to establish a mechanic's lien within 180 days (6 months) after the work is completed or the last materials are furnished. Missing this deadline permanently extinguishes the lien right, leaving the contractor to pursue only contract or collection remedies.

A Maryland MHIC licensee consistently classifies all on-site workers as independent contractors, issuing 1099s rather than W-2s. One worker suffers a serious fall injury. The Maryland Workers' Compensation Commission investigates and applies the 'economic reality' test. Which factor would MOST strongly support reclassifying the worker as an employee?

Answer: The contractor controls the manner and method of how the work is performed and provides all major equipment

Under Maryland's economic reality test, behavioral control is the most telling factor: if the hiring party controls not just the result but HOW the work is done — including supervision, methods, sequencing, and provision of major tools/equipment — the relationship resembles employment regardless of the label used. Owning basic hand tools or having some scheduling flexibility are common among both employees and contractors and do not resolve the classification question.

An MHIC contractor operates under a trade name ('BrightHome Renovations') that differs from their legal entity name. They run a local radio advertisement promoting a spring sale. Under Maryland's Home Improvement Law, what disclosure is REQUIRED in the advertisement?

Answer: The MHIC license number must be included in all advertising regardless of medium, even audio-only formats like radio

Maryland's Home Improvement Law requires that a licensee's MHIC license number appear in ALL advertising, including radio, television, print, digital, and signage. There is no medium-based exemption. While a legal entity name disclosure is good practice, the hard legal requirement is the MHIC license number itself — the trade name used in the ad does not substitute for this disclosure.