Contracts and Estimating Flashcards

A contractor signs a $21,000 kitchen remodel contract that includes custom imported tile fabricated overseas. The tile supplier requires the contractor to pay $8,000 upfront before beginning fabrication. Under MHIC regulations, how much may the contractor collect from the homeowner as an initial deposit?

Answer: Up to $8,000, provided the contract specifically identifies the materials as special-order and discloses the supplier's advance payment requirement in writing

MHIC regulations generally cap initial deposits at one-third of the contract price, but allow a higher initial payment when the contract specifically identifies materials as special-order and discloses the supplier's advance payment requirement in writing. The exception requires explicit written disclosure in the contract itself — it is not automatic simply because custom materials are involved.

A homeowner signs a $34,000 home addition contract at the contractor's display booth inside a home-and-garden trade show held at a convention center. The homeowner later tries to cancel on day 4. Under MHIC provisions and Maryland's Door-to-Door Sales Act, is the cancellation timely?

Answer: Yes — the right of rescission applies to any contract signed at a location other than the contractor's established place of business, including trade shows

Maryland's rescission right applies when a home improvement contract is signed anywhere other than the contractor's established, permanent place of business. A trade show booth does not qualify as an 'established place of business,' so the 3-business-day cancellation window applies. Day 4 is outside that window, making the cancellation untimely — but the key principle tested here is that the venue type (trade show vs. residence) does not change the analysis: neither is the contractor's established place of business.

A licensed electrical subcontractor completes all work on a residential project on March 10. The general contractor receives full payment from the homeowner on March 25 but never pays the subcontractor. The subcontractor files a mechanics lien petition on September 15 of the same year. What is the most accurate statement under Maryland mechanics lien law?

Answer: The lien is untimely because the 180-day window ran from March 10 and expired approximately September 6, before the petition was filed

Under Maryland's mechanics lien statute, a subcontractor must file a lien petition within 180 days of the date the work was last performed. Starting from March 10, 180 days expires around September 6. Filing on September 15 is outside the 180-day window, making the lien untimely and unenforceable. There is no grace period, and the clock runs from completion of work — not from the general contractor's payment date.

Under MHIC regulations, a written home improvement contract must include several mandatory elements. Which of the following is NOT required to appear in the contract at the time it is executed?

Answer: The names and MHIC license numbers of all subcontractors who will perform work on the project

MHIC-required contract elements include the contractor's license number, a description of work and materials, start and completion dates, the contract price, and a payment schedule — but the statute does not require listing subcontractor names and license numbers in the original contract. Subcontractors may be engaged after contract execution and their identities need not be known at signing. All other choices listed are expressly required by MHIC regulations.

During a $52,000 whole-home renovation, the homeowner verbally instructs the contractor to upgrade all doorknobs to brushed nickel hardware throughout the home. The contractor completes the upgrade at an additional cost of $2,200. When the final invoice arrives, the homeowner refuses to pay the upgrade charge, citing the lack of a written change order. What is the most likely legal outcome under MHIC contract requirements?

Answer: The contractor will not recover the $2,200 because MHIC regulations require all modifications to a home improvement contract to be in writing and signed by both parties

MHIC regulations explicitly require that all changes to a home improvement contract be documented in a written, signed change order. Without written authorization, the contractor cannot legally enforce payment for additional work, even if the homeowner requested it verbally and accepted the completed upgrade. Maryland courts have consistently upheld this requirement — the unjust enrichment argument does not override the MHIC's written-change-order mandate in residential home improvement disputes.

A contractor provides a detailed written document labeled 'ESTIMATE' for a $29,500 bathroom renovation. The document includes the contractor's MHIC license number, a full description of work and materials, a payment schedule, start and completion dates, and a cancellation notice. The homeowner signs it and pays the first installment. Two weeks later, the contractor claims it was merely a preliminary estimate and presents a new formal contract at $33,000. Under Maryland law, what governs whether the original document is binding?

Answer: Whether the document contained all MHIC-required contract elements — if it did, it constitutes a binding home improvement contract regardless of what it is labeled

Under Maryland law, a document's title does not determine its legal effect — its substance does. If a document labeled 'estimate' contains all elements mandated by MHIC regulations (license number, work description, payment schedule, start/completion dates, cancellation notice), it constitutes a legally binding home improvement contract. The contractor cannot escape its terms simply by calling it an estimate. The homeowner would be entitled to enforce the $29,500 price in the original signed document.