Licensing Flashcards

Two individually MHIC-licensed contractors form a general partnership and begin performing home improvement work under the partnership's name. Which statement correctly describes the licensing requirement for the partnership?

Answer: The partnership itself must obtain a separate MHIC license before performing home improvement work under the partnership name.

Under Maryland law, each business entity performing home improvement work must hold its own MHIC license. The fact that the individual partners are each licensed does not extend coverage to the partnership as a separate legal entity. The partnership must apply for and obtain its own license before contracting under the partnership name.

Under MHIC regulations, which individual is specifically EXEMPT from the requirement to hold a salesperson's license?

Answer: A field worker who performs only physical construction labor under the direct supervision of a licensed contractor and does not solicit or negotiate contracts.

A salesperson's license is required for individuals who solicit, sell, or negotiate home improvement contracts on behalf of a licensed contractor. A worker who exclusively performs physical labor and has no role in soliciting or negotiating contracts is not acting as a 'salesperson' under MHIC law and is therefore exempt from the salesperson license requirement.

A homeowner pays a contractor in full upon project completion. Six months later, the homeowner discovers the contractor's MHIC license had been revoked eight months before the contract was ever signed. What is the homeowner's strongest legal remedy under Maryland Home Improvement Law?

Answer: The homeowner may seek to void the contract and sue to recover all money paid, since a contract with an unlicensed contractor is voidable by the homeowner.

Maryland law provides that a home improvement contract entered into by an unlicensed contractor is voidable at the homeowner's election. Because the contractor's license was revoked prior to contracting, the homeowner may seek to void the agreement and recover all payments made — even if the work is already complete and payment was voluntarily rendered. Voluntary payment does not waive this statutory protection.

A homeowner wins a court judgment against a licensed MHIC contractor for defective work but is unable to collect because the contractor is insolvent. The homeowner files a claim with the Maryland Home Improvement Guaranty Fund. What are the Fund's maximum payment limits that apply to this claim?

Answer: $20,000 per individual claim; $40,000 aggregate against any single contractor's license.

The Maryland Home Improvement Guaranty Fund pays a maximum of $20,000 per individual claimant per project, with a lifetime aggregate cap of $40,000 against any single contractor's license. Once a contractor's $40,000 aggregate limit is exhausted, no further claims are paid from the Fund against that contractor's license — making the aggregate cap an important consideration when multiple homeowners have claims against the same contractor.

A licensed electrician completes all electrical wiring for a kitchen remodel on an owner-occupied home. During the work, the electrician also patches and repaints the drywall that was cut open to run the new wiring, and installs the homeowner's new under-cabinet lighting fixtures. Which portion of this work, if any, requires an MHIC license?

Answer: An MHIC license is required only for the drywall patching and repainting, since those tasks fall outside the scope of the licensed electrical trade.

MHIC law exempts licensed tradespeople (electricians, plumbers, HVAC contractors) only when their work is confined to their specific licensed trade. Installing wiring and the under-cabinet lighting fixtures are within the licensed electrical trade and remain exempt. However, patching and repainting drywall is general construction work outside the scope of an electrical license — that portion constitutes home improvement work subject to MHIC licensing requirements.

An MHIC-licensed company's qualifying agent — the individual whose credentials and background support the company's license — resigns and leaves the company. What must the company do to avoid having its license automatically lapse?

Answer: The company must notify MHIC of the change and designate an eligible replacement qualifying agent; failure to do so promptly results in the license becoming inactive or subject to suspension.

An MHIC company license is tied to a qualifying agent — a specific individual who meets the experience, background, and competency requirements. When the qualifying agent departs, the company must notify MHIC and designate a replacement who meets all qualifying criteria. Operating without a valid qualifying agent on file puts the company license at risk of suspension. No other employee can informally 'step in' without going through the proper MHIC designation process.