MHIC Maryland Home Improvement Law and Contracts Flashcards

A licensed MHIC contractor completes $1,400 in additional work after a homeowner verbally agrees to the upgrade mid-project. When the homeowner refuses to pay for the extras, citing no written documentation, which statement best describes the contractor's legal position under Maryland Home Improvement Law?

Answer: The contractor cannot enforce the oral modification; MHIC requires all home improvement agreements, including change orders that increase the contract price, to be in writing.

Maryland's Home Improvement Law (Bus. Reg. Art. § 8-601 et seq.) requires that all home improvement contracts — including modifications that alter the scope or price — be in writing and signed by both parties. An oral change order is unenforceable even when the work has already been performed; the contractor's failure to obtain written authorization bars recovery of the additional amount.

A homeowner sustains $38,000 in verified losses after a licensed MHIC contractor abandons a project and becomes insolvent. The homeowner files a claim with the Maryland Home Improvement Commission's Guaranty Fund. What is the maximum amount the homeowner can recover from the Fund for this single claim?

Answer: $20,000 — the per-claimant maximum regardless of actual losses.

The MHIC Guaranty Fund compensates aggrieved homeowners up to a maximum of $20,000 per claim, irrespective of actual losses. Amounts above that ceiling are not covered by the Fund; the homeowner must pursue any remaining balance through civil litigation or other remedies against the contractor directly.

A contractor signs a $15,000 contract to install custom-fabricated cabinetry that must be ordered six weeks in advance. The contractor requests a $7,000 deposit before placing the factory order. Which of the following most accurately states whether this deposit is permissible under MHIC rules?

Answer: The deposit is permissible provided the contract explicitly identifies the special-order materials requiring advance payment and ties the larger deposit to that specific cost.

MHIC's general rule limits deposits to one-third of the contract price. However, Maryland law recognizes an exception when special-order or custom-fabricated materials must be procured in advance. The larger deposit is lawful only if the contract specifically describes those materials and links the elevated deposit to their cost. A blanket claim of 'special materials' without contractual specificity does not satisfy the exception.

Marcus is a full-time W-2 employee of Chesapeake Renovations LLC, a company holding a current MHIC license. Marcus performs tile installation on residential projects every day under the direct supervision of the company's licensed qualifier. Which statement correctly describes Marcus's licensing obligation under Maryland Home Improvement Law?

Answer: Marcus is exempt from individual MHIC licensing because employees performing work within the scope of their employer's license are covered by that license.

Maryland Home Improvement Law requires that the business entity (or the individual operating as a sole proprietor) hold an MHIC license, but employees who perform work on behalf of a licensed employer are covered by that employer's license. Marcus does not need a separate individual license as long as he is acting within the scope of Chesapeake Renovations LLC's licensed operations and is not independently contracting with homeowners.

A salesperson for a licensed MHIC contractor visits a homeowner's residence on a Friday evening and closes a $6,000 deck-replacement contract. The homeowner signs and immediately tells the salesperson, 'I'm certain — please start demolition Monday morning.' The contractor begins work Monday as requested. If the homeowner later invokes the right of rescission on Tuesday, what is the legal outcome under Maryland law?

Answer: The rescission is valid; the homeowner retains the full three-business-day right to cancel a contract solicited at their home, and the contractor's early start creates no offset against the homeowner's refund rights.

When a home improvement contract is solicited at the consumer's residence, Maryland law (mirroring the FTC Cooling-Off Rule) grants a three-business-day right of rescission. This right cannot be waived by a simple oral instruction to begin early. A valid waiver requires the consumer to sign a separate, dated waiver document describing the specific emergency and expressly requesting immediate performance — a casual 'start Monday' does not satisfy that standard. Because no proper written waiver was executed, the homeowner's Tuesday rescission is effective, and the contractor generally cannot retain compensation for work performed during the uncancelled rescission window.

A home improvement contract is fully performed to the homeowner's satisfaction, but upon review the homeowner's attorney discovers the written contract omits the contractor's MHIC license number — a mandatory disclosure under Maryland law. The homeowner refuses final payment citing this defect. Which legal outcome is most consistent with Maryland Home Improvement Law?

Answer: The omission is a technical regulatory violation subject to MHIC disciplinary action, but it does not automatically void an otherwise valid, fully performed contract; the contractor may still pursue payment.

Maryland courts and the MHIC Commission treat the omission of a license number as a regulatory violation that can trigger administrative penalties, license suspension, or disciplinary proceedings. However, a missing license number — standing alone in a contract that was otherwise properly formed and fully performed — does not automatically void the contract or strip the contractor of the right to be paid for completed work. The homeowner's remedy lies in reporting the violation to MHIC; it does not create a windfall right to retain the benefit of completed improvements without payment.