MHIC Financial Management and Consumer Protection 5

Question 1

A Maryland homeowner signed a home improvement contract on a Tuesday at their residence. By when must they exercise their right to cancel?

Accepted Answer

Within 3 business days of signing

Answer

By midnight of the same day

Answer

Within 7 calendar days of signing

Answer

Within 30 days of signing

Question 2

Which of the following must be included in a Maryland home improvement contract to protect both parties financially?

Accepted Answer

A clear payment schedule tied to project milestones

Answer

The contractor's personal credit score

Answer

The homeowner's income verification

Answer

Pre-authorization for the contractor to hire any subcontractor at any price

Question 3

What happens to a Maryland home improvement contractor's license if they are found guilty of collecting money and abandoning a project?

Accepted Answer

Their license may be suspended or revoked and they may face criminal charges

Answer

They receive a written warning only

Answer

They must refund only 50% of the collected amount

Answer

Their license is automatically transferred to another contractor

Question 4

A contractor finishes a job and the homeowner disputes the final payment amount. Under MHIC, what is the preferred first step for resolution?

Accepted Answer

Attempt mediation or negotiation using the written contract terms

Answer

File a mechanics lien immediately

Answer

Contact local law enforcement

Answer

Abandon any remaining warranty obligations

Question 5

Which scenario correctly describes a contractor's obligation under Maryland's mechanics lien law as it relates to consumer protection?

Accepted Answer

Subcontractors and suppliers can lien a homeowner's property if the general contractor fails to pay them

Answer

Contractors must file a lien before starting any job

Answer

Homeowners are immune from mechanics liens on primary residences

Answer

Only licensed electricians may file a mechanics lien in Maryland

Question 6

A Maryland MHIC licensee wants to advertise a special financing offer to homeowners. What must the advertisement comply with?

Accepted Answer

Federal Truth in Lending Act (Regulation Z) disclosure requirements

Answer

MHIC licensing rules only, since finance is not regulated

Answer

Only local county advertising ordinances

Answer

Verbal disclosure requirements with no written documentation needed

Question 7

Under Maryland law, a homeowner may file a claim against the Home Improvement Guaranty Fund for a maximum of how much per contractor?

Accepted Answer

$20,000

Answer

$5,000

Answer

$10,000

Answer

$200,000