Contracts and Estimating Flashcards

A Maryland licensed contractor signs a home improvement contract for $18,500. The homeowner pays a $5,000 deposit. Three days later, the homeowner exercises the right of rescission. Under Maryland law, within how many days must the contractor refund the deposit?

Answer: 10 days

Under Maryland's Home Improvement Law, once a homeowner properly rescinds a contract, the contractor must refund any payments within 10 days of receiving the rescission notice. The 3-business-day rescission window is separate from the 10-day refund obligation.

A MHIC contractor's written estimate states 'all work per local code.' During construction, an inspector requires an unanticipated $2,800 egress window upgrade not discussed with the homeowner. Which statement best describes the contractor's legal position regarding payment for this work?

Answer: The contractor cannot charge extra because 'per local code' language in the original estimate incorporates all code-required work into the contract price.

When a contractor's written estimate or contract includes language such as 'all work per local code' or 'to code,' Maryland courts and the MHIC have held that this language incorporates all code-mandated work into the agreed price. The contractor bears the risk of underbidding when using such blanket compliance language.

Under the Maryland Home Improvement Law, which of the following items is NOT required to appear in a home improvement contract valued over $1,000?

Answer: The contractor's federal Employer Identification Number (EIN)

Maryland's Home Improvement Law mandates specific disclosures including the contractor's MHIC license number, start and completion dates, description of work, total price, and payment schedule. The contractor's EIN or tax identification number is not a statutorily required element of a home improvement contract.

A homeowner contracts a MHIC licensee for a $45,000 kitchen remodel. The contract requires a 30% deposit ($13,500). The contractor collects the deposit but then experiences financial difficulty and cannot purchase materials. Under Maryland law, this scenario most directly implicates which provision?

Answer: Maryland's prohibition on collecting payment substantially in excess of the value of work completed

Maryland Home Improvement Law explicitly prohibits a contractor from collecting or accepting payment that is 'substantially in excess of the value of the work performed.' Taking a large deposit without performing corresponding work exposes the contractor to criminal misappropriation charges and MHIC license revocation, not merely a contract dispute.

A Maryland contractor provides a detailed written estimate for a bathroom renovation. The homeowner does not sign it, but emails the contractor saying 'Looks good, go ahead.' The contractor performs $9,200 of work. The homeowner later disputes the amount owed. In estimating damages recoverable by the contractor, which doctrine most likely applies?

Answer: Quantum meruit — the contractor may recover the reasonable value of services rendered even without a signed MHIC-compliant contract

While Maryland's Home Improvement Law requires a written, signed contract and the absence of one is a violation, courts have applied quantum meruit to allow contractors to recover the reasonable value of work actually performed. The contractor does not recover the full contract price as of right, and may face licensing penalties, but is not left with zero recovery for completed work.

When preparing an estimate for a home improvement project in Maryland, a contractor discovers the job requires asbestos abatement by a licensed abatement firm before work can begin. The contractor is NOT licensed for asbestos work. Which approach is correct under Maryland law and sound estimating practice?

Answer: The contractor may include the asbestos abatement cost in the overall estimate and subcontract it, provided the licensed abatement firm's name and license number appear in the contract.

Under Maryland law, a home improvement contractor may subcontract specialty work such as asbestos abatement to appropriately licensed firms and include that cost in the overall project estimate. However, the subcontractor's identity and license information must be disclosed in the contract. The contractor remains responsible to the homeowner for the subcontracted work's proper completion.