Contracts and Estimating Flashcards

A homeowner enthusiastically offers to pay $9,000 upfront on an $18,000 window-replacement contract (all standard stock items) so the contractor can order materials immediately. The contractor accepts the full $9,000. Which statement is MOST accurate under Maryland Home Improvement Law?

Answer: The contractor has violated Maryland law; the maximum allowable deposit is one-third of the contract price ($6,000), regardless of whether the consumer initiated the larger payment.

Maryland Home Improvement Law caps deposits at one-third of the total contract price to protect consumers. This ceiling is not waived merely because the consumer volunteers a higher amount—the law's purpose is consumer protection and applies regardless of who proposes the larger payment. Accepting $9,000 on an $18,000 contract (legal max: $6,000) is a statutory violation subject to MHIC disciplinary action.

During a $30,000 addition project, a homeowner verbally directs the contractor to upgrade all interior doors to solid-core units—an extra $2,800. The original contract contains a clause stating 'all changes must be documented in a signed written change order.' The contractor completes the upgrade but receives no written authorization. The homeowner refuses to pay the overage. What is the contractor's MOST LIKELY outcome under Maryland Home Improvement Law?

Answer: No recovery, because Maryland requires written, signed change orders for modifications to home improvement contracts; performing work without one shifts the financial risk to the contractor.

Maryland Home Improvement Law mandates that any modification to a home improvement contract be in writing and signed by both parties. A contractor who proceeds on verbal authorization alone assumes the entire risk of non-payment for that additional work. Courts and MHIC hearing panels routinely deny recovery when this statutory requirement is not met, regardless of whether the homeowner genuinely requested the work.

A homeowner discovers that the MHIC contract signed three weeks ago omits the contractor's license number—a required element under Maryland Home Improvement Law. Work has already begun. What is the MOST significant legal consequence the contractor faces?

Answer: The contract may be unenforceable against the homeowner, potentially barring the contractor from suing to collect any outstanding balance.

Maryland courts have held that a home improvement contract that materially violates the Home Improvement Law—including the omission of the contractor's license number—may be unenforceable by the contractor. This means the contractor could be unable to sue in court to collect unpaid amounts, even for work legitimately performed. The unenforceability doctrine is a severe consequence that incentivizes full statutory compliance from the outset.

An MHIC-licensed general contractor subcontracts all HVAC work to an unlicensed HVAC technician. A faulty installation causes water damage to the homeowner's finished basement. Under Maryland Home Improvement Law, who bears PRIMARY liability to the homeowner?

Answer: The MHIC-licensed prime contractor, who is legally responsible for all work performed under their contract, including that of subcontractors.

Under Maryland Home Improvement Law, the licensed prime contractor is responsible to the homeowner for all work performed under their contract—whether done by the contractor's own employees or by subcontractors. Engaging an unlicensed subcontractor is itself a separate violation. The homeowner's claim runs against the licensed MHIC contractor, who may separately seek contribution from the subcontractor but cannot use delegation as a shield against homeowner claims.

A remodeling contract specifies a substantial completion date of September 15. A critical specialty window order is delayed by the manufacturer, pushing completion to October 5. The contractor says nothing to the homeowner until October 3 and simply finishes late. Even if the delay was beyond the contractor's control, what MHIC compliance problem has the contractor created?

Answer: The contractor has violated the duty to provide timely written notice of delay and a revised completion date, exposing them to a complaint regardless of fault for the underlying delay.

Maryland Home Improvement regulations impose an affirmative obligation on contractors to notify homeowners promptly of schedule changes and to provide a revised completion date in writing. Even when the delay is caused by a third party outside the contractor's control, failing to communicate leaves the homeowner in the dark and can result in a valid MHIC complaint. Proactive notice is both a legal obligation and a practical defense against claims of abandonment or breach.

A Maryland contractor submits a written estimate before the homeowner signs the contract. The estimate lists labor and materials but omits both an approximate start date and an approximate completion date. The homeowner signs the estimate as the contract. Under Maryland Home Improvement Law, which of the following BEST describes the contract's status?

Answer: The contract is non-compliant because Maryland law specifically requires both an approximate start date and an approximate substantial completion date as mandatory written contract elements.

Maryland Home Improvement Law explicitly lists both an approximate start date and an approximate completion (or substantial completion) date as required elements of a written home improvement contract. Their omission makes the contract non-compliant regardless of whether harm results. This is one of the most frequently violated provisions in MHIC disciplinary cases—contractors often treat dates as informal and optional when Maryland law treats them as mandatory written disclosures. An estimate used as a contract is subject to exactly the same requirements as a formal contract.