Practice Test Geeks(MHIC) Maryland Home Improvement Contractor Practice Test
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Financial Management and Consumer Protection Flashcards

7 cards from real MHIC practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Financial Management and Consumer Protection flashcards as text

  1. Under Maryland Home Improvement Law, what is the maximum deposit a contractor may collect from a homeowner at the time of contract signing?

    Answer: One-third of the total contract price

    Maryland law limits the initial deposit to no more than one-third of the total contract price to protect consumers from financial overexposure before work begins.

  2. The Maryland Home Improvement Guaranty Fund is primarily designed to:

    Answer: Compensate homeowners harmed by licensed contractors who fail to complete or properly perform work

    The Guaranty Fund exists to reimburse homeowners who suffer financial losses due to defective, incomplete, or abandoned work by MHIC-licensed contractors.

  3. Maryland law requires a home improvement contract to be in writing when the contract price exceeds:

    Answer: $500

    Any home improvement contract exceeding $500 must be in writing under the Maryland Home Improvement Law to ensure consumer protection and enforceability.

  4. A homeowner who signs a home improvement contract at their residence during a door-to-door solicitation has the right to cancel within:

    Answer: 3 business days

    Federal FTC rules and Maryland consumer protection law give homeowners 3 business days to cancel contracts entered into at their home through a solicited sale.

  5. What minimum general liability insurance must a Maryland MHIC-licensed contractor maintain per occurrence?

    Answer: $50,000

    MHIC regulations require licensed contractors to carry a minimum of $50,000 per occurrence in general liability insurance to protect homeowners from property damage and injury claims.

  6. Under Maryland's mechanics lien law, within how many days after the last work performed must a contractor file a petition for a mechanics lien?

    Answer: 90 days

    Maryland law requires contractors to file a petition establishing a mechanics lien within 90 days of the last date work was performed on the property.

  7. Which of the following payment practices is prohibited under Maryland Home Improvement Law?

    Answer: Collecting the full contract amount from the homeowner before any work begins

    Collecting the entire contract price before beginning work leaves consumers with no financial protection and is prohibited under Maryland home improvement regulations.