Licensing Flashcards

A Maryland home improvement contractor's qualifying party resigns on a Tuesday. Under MHIC regulations, how long does the company have to designate a new qualifying party before its license is automatically suspended?

Answer: 30 days

Under MHIC regulations, when a qualifying party (the individual responsible for the license) leaves the company, the business has 30 days to designate a new qualifying party. Failure to do so within 30 days results in automatic suspension of the company's license — not 60 or 90 days, which are common distractors.

Which of the following subcontractors performing work on a licensed MHIC contractor's home improvement project is EXEMPT from holding their own MHIC license?

Answer: An electrical subcontractor licensed by the Maryland State Board of Master Electricians

Maryland law exempts subcontractors who are licensed by another state regulatory body — such as master electricians, master plumbers, and HVAC contractors — from the separate MHIC license requirement when working as a sub under a licensed MHIC. Subcontractors without a separate state license performing home improvement trades must hold their own MHIC license.

A homeowner files a claim against the MHIC Guaranty Fund after a contractor abandons a $35,000 kitchen remodel project. The contractor has had two prior Guaranty Fund claims from other homeowners totaling $15,000. What is the MAXIMUM amount this homeowner can recover from the Fund for this transaction?

Answer: $5,000

The MHIC Guaranty Fund caps claims at $10,000 per single transaction AND $20,000 lifetime aggregate against any one contractor. Because this contractor already has $15,000 in prior Fund payouts, only $5,000 of the $20,000 lifetime cap remains — so the homeowner's recovery is limited to $5,000, not the per-transaction max of $10,000.

A licensed MHIC contractor wants to run a radio advertisement promoting their services. Under MHIC advertising rules, which element is REQUIRED to appear in the ad?

Answer: The contractor's MHIC license number

Maryland law requires that all home improvement contractor advertising — including broadcast media like radio — display or state the contractor's MHIC license number. The bond amount, qualifying party's name, and physical address are not advertising mandates under MHIC rules, though they may be required in contracts.

An individual performs home improvement work on a single-family dwelling they own and occupy. Three months later, they sell the house. Under MHIC law, which statement BEST describes their licensing obligation for that work?

Answer: They were exempt at the time of the work, but if a pattern of such sales is established, the exemption may be lost

The owner-occupant exemption under MHIC applies to work done by owners on their own primary residence, but the exemption is not unconditional. If the Maryland Home Improvement Commission finds that an individual is repeatedly performing work and flipping properties — establishing a pattern that resembles the business of a contractor — the exemption can be forfeited. The sale alone doesn't retroactively require a license, but a pattern of behavior can negate the exemption.

A licensed MHIC contractor operates under the trade name 'Chesapeake Renovations LLC.' They want to begin bidding jobs under a second DBA name, 'Bay Area Builders.' What must they do BEFORE using the new name in home improvement contracting?

Answer: Notify the MHIC Commission of the additional trade name and have it added to their license record

MHIC requires that all trade names under which a licensee conducts home improvement business be disclosed to and registered with the Commission — not deferred to the next renewal cycle, and not handled solely through a county DBA filing. A separate license is not needed, but the additional name must appear in the Commission's records before it is used in contracting.