MHIC Basic 5 — Questions and Answers
Question 1: How long must a Maryland home improvement contractor retain copies of all contracts and related documents after project completion?
- 3 years (Correct answer)
- 1 year
- 5 years
- 7 years
Correct answer: 3 years
MHIC regulations require contractors to keep project records for at least three years following completion.
Question 2: A homeowner signs an MHIC contract at their residence during a home visit. Under Maryland's Home Improvement Law, how many days does the homeowner have to cancel the contract?
- 3 business days (Correct answer)
- 5 business days
- 7 calendar days
- No right of rescission applies
Correct answer: 3 business days
Maryland follows the FTC three-business-day cooling-off rule for contracts solicited at the consumer's home.
Question 3: Which of the following must be included in every MHIC-required home improvement contract?
- The contractor's MHIC license number (Correct answer)
- The contractor's personal Social Security number
- The homeowner's credit score
- The subcontractors' license numbers
Correct answer: The contractor's MHIC license number
Maryland law mandates that the contractor's MHIC license number appear on every home improvement contract.
Question 4: What is the primary purpose of the Maryland Home Improvement Guaranty Fund?
- To compensate homeowners harmed by licensed contractors who cannot pay judgments (Correct answer)
- To fund contractor training programs
- To reimburse contractors for unpaid work
- To cover permit fees for low-income homeowners
Correct answer: To compensate homeowners harmed by licensed contractors who cannot pay judgments
The Guaranty Fund provides a financial safety net for homeowners who obtain a judgment against a contractor that is unable to pay.
Question 5: An MHIC licensee subcontracts electrical work to an unlicensed electrician. Under Maryland law, the primary contractor is:
- Responsible and may face license discipline (Correct answer)
- Not responsible because the subcontractor is a separate business
- Required only to notify the homeowner
- Exempt if the subcontractor carries insurance
Correct answer: Responsible and may face license discipline
The primary MHIC licensee remains responsible for ensuring all subcontractors meet required licensing standards.
Question 6: If a home improvement contractor changes their business address, within how many days must they update the Maryland Home Improvement Commission?
- 30 days (Correct answer)
- 10 days
- 60 days
- 90 days
Correct answer: 30 days
Licensees must notify the Commission of address changes within 30 days to ensure regulatory correspondence reaches them.
Question 7: Which action would most likely result in automatic revocation of an MHIC license in Maryland?
- Conviction of a crime involving fraud or dishonesty (Correct answer)
- Failing to finish a project on the agreed date
- Raising contract prices after supply costs increase
- Hiring employees without running background checks
Correct answer: Conviction of a crime involving fraud or dishonesty
A fraud or dishonesty conviction strikes at the core fitness requirements for licensure and can trigger automatic revocation.
MHIC Basic 5
How long must a Maryland home improvement contractor retain copies of all contracts and related documents after project completion?