MD Home Improvement Law Flashcards

A licensed MHIC contractor completes a basement waterproofing job. The homeowner discovers serious defects 28 months later and files a Maryland Home Improvement Guaranty Fund claim. The contractor's license has since lapsed. Which statement is most accurate regarding the claim?

Answer: The claim is valid if filed within 3 years of the date of loss, regardless of the contractor's current license status.

Under Maryland law, a Guaranty Fund claim must be filed within 3 years of the date of loss (not completion), and the contractor's current license status at the time of filing does not bar an otherwise valid claim. The license must have been valid at the time the work was performed. Since 28 months is within the 3-year window, the claim is timely.

A homeowner signs a $45,000 home improvement contract at a home show at the Baltimore Convention Center. The contractor correctly provides the required 3-day right of rescission notice. The homeowner attempts to cancel on day 4 via certified mail. Which legal principle most accurately governs this situation?

Answer: The cancellation may still be valid if the notice was postmarked by midnight of the third business day, regardless of when the contractor receives it.

Under Maryland's Home Improvement Law and the federal FTC Cooling-Off Rule (which applies to sales not made at the seller's permanent place of business), the rescission notice is considered timely if postmarked by midnight of the third business day — the consumer does not need to ensure receipt by the contractor within that period. A day-4 receipt is valid if the certified mail was postmarked on day 3.

An MHIC licensee enters a $60,000 remodeling contract and receives a $20,000 deposit (exactly one-third). During construction, the homeowner requests a significant scope change adding $15,000 in work. The contractor requests an additional $5,000 deposit for the change order. Is this additional deposit permissible?

Answer: Yes, provided the change order is in writing and signed by both parties before work begins, and the new deposit does not exceed one-third of the change order amount.

Change orders under MHIC must be in writing and signed by both parties before any additional work is performed. The one-third deposit limitation applies to each contract and change order independently — the contractor may collect up to one-third of the change order value ($5,000 of $15,000 = exactly one-third) as an additional deposit. This is permissible provided all procedural requirements are met.

A master electrician holds an active Maryland master electrician license. She also wants to offer general home improvement services (framing, drywall, painting) beyond her electrical trade. Which licensing scenario is correct?

Answer: She must obtain an MHIC license for any home improvement work outside the scope of her electrical license, even if bundled with electrical work on the same project.

Maryland's MHIC exemption for licensed tradespeople (electricians, plumbers, HVAC technicians, etc.) is narrow: it covers only work within the specific licensed trade. When a tradesperson performs home improvement work outside their trade — such as framing or painting — that work is subject to MHIC licensing requirements. The exemption does not extend to general contracting work simply because the individual holds another license.

The Maryland Home Improvement Guaranty Fund pays a homeowner the maximum allowable amount on a valid claim against Contractor X. Six months later, the same contractor's former customer files a second valid claim. The Fund has already paid out $45,000 in total claims against this contractor. What is the correct outcome for the second claimant?

Answer: The second claimant receives $5,000 — the remaining amount under the $50,000 aggregate cap per contractor — distributed pro-rata if other claims are pending.

Maryland's Guaranty Fund imposes a $20,000 per-consumer maximum and a $50,000 aggregate per-contractor cap. With $45,000 already paid against Contractor X, only $5,000 remains available under the aggregate cap. The second claimant can recover a maximum of $5,000 (not the full $20,000), and if multiple valid claims are competing for that remainder, they are distributed pro-rata among eligible claimants.

A contractor is convicted of a second offense of conducting home improvement work without an MHIC license in Maryland. Which penalty range most accurately reflects the statutory consequence?

Answer: A misdemeanor with a fine up to $1,000 for the first offense; subsequent offenses carry fines up to $5,000 and/or up to 2 years imprisonment.

Under Maryland Business Regulation Article §8-625, unlicensed home improvement contracting is a misdemeanor. A first offense carries a fine of up to $1,000. Subsequent offenses escalate to fines up to $5,000 and/or imprisonment up to 2 years. The offense remains a misdemeanor (not a felony) regardless of the number of violations, and criminal penalties exist alongside any civil or administrative remedies.