MHIC Maryland Home Improvement Law and Contracts Flashcards

A licensed MHIC contractor enters into a home improvement contract for $13,500. The homeowner later claims the contractor performed unauthorized additional work costing $2,800 and files a complaint with the Commission. Under Maryland law, what is the maximum combined amount the homeowner may recover from the Guaranty Fund for both the original contract and the unauthorized work?

Answer: $15,000 per contractor, per claim period

The Maryland Home Improvement Guaranty Fund caps recovery at $15,000 per claim against any single licensed contractor within a claim period. The cap applies to all related claims against that contractor — original contract damages and unauthorized work are not evaluated as separate claims that could independently reach the cap.

A Maryland homeowner signs a home improvement contract on a Tuesday at the contractor's office. The contractor begins demolition the following Friday before the homeowner attempts to cancel. Under the Maryland Home Improvement Law, which statement is most accurate regarding the homeowner's right of rescission?

Answer: No right of rescission exists because the contract was signed at the contractor's office, not the homeowner's residence

Maryland's home improvement rescission right — mirroring the FTC Cooling-Off Rule — applies only to contracts solicited at the consumer's home (door-to-door or in-home sales). When the homeowner travels to and signs at the contractor's place of business, no statutory right of rescission is triggered under either Maryland Home Improvement Law or the FTC rule.

Which of the following persons is EXEMPT from the MHIC licensing requirement when performing work on a residential property in Maryland?

Answer: A property management company employee making repairs exclusively to units within the apartment complex their employer owns

Maryland law exempts persons who perform home improvement work exclusively on property owned by their employer. A property manager making repairs within the employer-owned complex falls within this exemption. The other choices describe scenarios that would require an MHIC license: sole proprietors crossing the threshold, general contractors directing home improvement work, and out-of-state contractors do not qualify for a blanket emergency exemption beyond the narrow post-disaster provisions.

A licensed MHIC contractor's written contract specifies a start date of September 1 but work does not begin until October 15 due to material delays. The homeowner demands contract rescission claiming the contractor violated the mandatory contract terms. Under Maryland Home Improvement Law, what is the contractor's strongest defense?

Answer: The law requires a start date or approximate start date and a completion date; a documented material-supply delay constitutes good cause that survives a rescission claim

Maryland law requires every home improvement contract to contain a start date (or approximate start date) and a completion date. A delay alone does not automatically void the contract or give rise to rescission; the contractor's strongest defense is demonstrating documented good cause — such as verified material-supply chain delays — which courts and the Commission recognize as a legitimate excuse for the deviation from the stated start date.

A homeowner pays a $6,000 deposit to an MHIC-licensed contractor before work begins. The contractor completes 40% of the project and then abandons it. The homeowner's actual unrecovered loss — after accounting for the value of work performed — is $4,200. The contractor's MHIC license lapses two months later. How does the license lapse affect the homeowner's Guaranty Fund claim?

Answer: The homeowner may still file a valid claim because the contractor was licensed at the time the contract was executed and the harm occurred

Maryland's Guaranty Fund protects consumers harmed by MHIC licensees. The controlling factor is whether the contractor was licensed when the contract was formed and when the violation occurred — not whether the license remains active at the time the consumer files the claim. A subsequent lapse does not retroactively extinguish a valid consumer claim that arose during the licensed period.

Under Maryland Home Improvement Law, a contractor includes a binding arbitration clause in a home improvement contract. The homeowner later discovers the clause and argues it is unenforceable. Which scenario would MOST likely render the arbitration clause void under Maryland law?

Answer: The clause requires arbitration in another state and waives the homeowner's right to seek relief from the MHIC Commission, in violation of the statute's non-waiver provision

Maryland's Home Improvement Law contains a strong non-waiver provision: any contractual term that purports to waive or limit rights granted to consumers under the statute — including the right to file complaints with and seek relief from the MHIC Commission — is void as against public policy. An arbitration clause requiring out-of-state proceedings and stripping MHIC Commission access crosses this line. The other options, while potentially problematic, do not reflect a per se statutory basis for voiding the clause under MHIC law.