MD Home Improvement Law Flashcards

A licensed MHIC contractor completes a $22,000 kitchen remodel. The homeowner later discovers that the contractor's license had lapsed by 11 days during the project. Under Maryland Home Improvement Law, which of the following best describes the legal consequence?

Answer: The contract is voidable at the homeowner's option, and the homeowner may recover all amounts paid

Under Maryland Business Regulation Article §8-623, a home improvement contract entered into while a contractor's license is lapsed is voidable at the homeowner's election. The homeowner can rescind the contract and recover payments made. Maryland courts have denied quantum meruit recovery to unlicensed contractors performing home improvement work as a matter of public policy — an expired license during performance is treated the same as no license.

A Maryland home improvement contract for $7,500 includes a 'no cancellation after material delivery' clause. The homeowner attempts to cancel 2 days after signing. Which statement is most accurate under MHIC regulations?

Answer: The homeowner retains the statutory 3-business-day right of rescission, and the clause is void as against public policy

Maryland Home Improvement Law mandates a 3-business-day right of rescission for home improvement contracts, mirroring the FTC Cooling-Off Rule. Any contractual clause that purports to waive or limit this right is void and unenforceable under §8-625. The right applies regardless of where the contract was signed or whether materials have been ordered, and no restocking fee can be imposed during this period.

An MHIC-licensed general contractor subcontracts all electrical work on a home addition to an unlicensed electrician (the electrician holds an electrical license but not an MHIC license). A dispute arises. Which party bears MHIC disciplinary exposure?

Answer: The licensed MHIC contractor, because licensees are responsible for ensuring subcontractors comply with applicable licensing requirements

Under MHIC regulations, the primary licensed contractor retains responsibility for all work performed under a home improvement contract, including work done by subcontractors. Using a subcontractor who lacks required licensing (here, MHIC registration is required for home improvement work regardless of a trade license) exposes the primary licensee to disciplinary action. The MHIC license holder cannot escape liability by delegation — this is a non-delegable duty under the licensing scheme.

A contractor submits a draw request for 40% of a $50,000 contract ($20,000) after completing only the foundation work. The contract contains no draw schedule. The homeowner refuses to pay. Under Maryland Home Improvement Law, what governs the dispute?

Answer: Without a written draw schedule, draw amounts must be proportionate to the work actually completed, and the contractor may not demand payment exceeding the value of completed work

Maryland Home Improvement Law (§8-624) requires contracts over $1,000 to specify payment terms, but the absence of a draw schedule does not void the contract. Instead, under Maryland law and common law construction principles, payments must be commensurate with work actually performed. A contractor cannot demand payment disproportionate to completion. There is no statutory 33/33/34 default schedule — that is a fabricated option. The contract's lack of a schedule limits the contractor to recovering the fair value of completed work.

A homeowner files a claim against the Maryland Home Improvement Commission Guaranty Fund after a licensed contractor abandons a $45,000 project. The homeowner suffered $38,000 in actual damages. What is the maximum the homeowner can recover from the Guaranty Fund?

Answer: $20,000 — the statutory per-claim maximum under the Guaranty Fund

The Maryland Home Improvement Commission Guaranty Fund caps recovery at $20,000 per claim, regardless of actual damages sustained. Even though the homeowner suffered $38,000 in losses, the Fund will pay a maximum of $20,000. The homeowner would need to pursue the contractor directly (or through litigation) for the remaining $18,000. This cap is set by statute and is a frequently tested distinction — the Fund is a last-resort consumer protection, not a full indemnification mechanism.

Under Maryland Home Improvement Law, which of the following acts by a licensed contractor constitutes a basis for mandatory license revocation (as opposed to discretionary discipline)?

Answer: Conviction of a crime involving moral turpitude directly related to the contractor's fitness to hold a license

Maryland Business Regulation Article §8-621 distinguishes between grounds for mandatory versus discretionary revocation. Conviction of a crime involving moral turpitude that is directly related to the contractor's fitness — such as fraud, theft, or financial crimes related to construction — triggers mandatory revocation proceedings. The other options (permit violations, timeline failures, and advertising a related entity's license) are grounds for discretionary discipline, including fines, suspension, or conditions, but do not mandate revocation. This distinction between mandatory and discretionary grounds is a nuanced, frequently tested VIP-level topic.