MHIC Contracts and Estimating 4 — Questions and Answers
Question 1: Under Maryland Home Improvement Law, what is the maximum number of days a homeowner has to cancel a home improvement contract after signing?
- 3 business days (Correct answer)
- 5 business days
- 7 calendar days
- 10 calendar days
Correct answer: 3 business days
Maryland law grants homeowners a 3-business-day right of rescission for home improvement contracts signed at their residence.
Question 2: A contractor's written estimate for a roofing job comes in at $9,800, but the final bill is $12,500. What is the most likely legal issue?
- The contractor violated the Maryland Consumer Protection Act by exceeding the estimate without written authorization (Correct answer)
- Estimates are non-binding, so no issue exists
- The homeowner must pay because labor costs are never fixed
- The contractor can bill any amount if the job took longer than expected
Correct answer: The contractor violated the Maryland Consumer Protection Act by exceeding the estimate without written authorization
Significant cost overruns beyond a written estimate without prior written change orders can constitute a deceptive trade practice under Maryland law.
Question 3: Which contract clause protects a contractor if unforeseen site conditions (e.g., hidden mold or rot) substantially increase the project cost?
- Unforeseen conditions clause (Correct answer)
- Liquidated damages clause
- Indemnification clause
- Arbitration clause
Correct answer: Unforeseen conditions clause
An unforeseen conditions clause allows the contractor to seek additional compensation when hidden defects materially change the scope of work.
Question 4: When preparing a materials estimate, a contractor should add a waste factor to account for cuts and defects. What typical waste factor is used for ceramic tile installations?
- 10–15% (Correct answer)
- 1–2%
- 25–30%
- 50%
Correct answer: 10–15%
A 10–15% waste factor is standard for ceramic tile to account for cuts, breakage, and pattern matching.
Question 5: A Maryland MHIC contract must include the contractor's license number. Where must it appear?
- On the face of the contract (Correct answer)
- Only on the contractor's business card
- On the permit application only
- On the certificate of insurance
Correct answer: On the face of the contract
Maryland law requires the MHIC license number to appear prominently on the face of every home improvement contract.
Question 6: A homeowner requests several add-ons mid-project. The best way for a contractor to document and price these changes is to use a:
- Written change order signed by both parties before the work begins (Correct answer)
- Verbal agreement confirmed by text message
- Supplemental invoice issued after project completion
- Revised bid submitted to the permit office
Correct answer: Written change order signed by both parties before the work begins
A signed change order executed before the additional work begins protects both parties and is required by Maryland home improvement regulations.
Question 7: If a subcontractor is not paid by the general contractor, what Maryland legal remedy can the subcontractor use against the homeowner's property?
- File a mechanic's lien (Correct answer)
- Sue the homeowner directly for breach of contract
- Report the homeowner to the MHIC board
- Place a UCC financing statement on the property
Correct answer: File a mechanic's lien
Under Maryland law, unpaid subcontractors and suppliers may file a mechanic's lien against the improved property within prescribed deadlines.
MHIC Contracts and Estimating 4
Under Maryland Home Improvement Law, what is the maximum number of days a homeowner has to cancel a home improvement contract after signing?