MHIC Knowledge 4 — Questions and Answers
Question 1: Under Maryland law, what is the maximum civil penalty the Maryland Home Improvement Commission can impose per violation?
- $1,000
- $2,500
- $5,000 (Correct answer)
- $10,000
Correct answer: $5,000
The MHIC may impose a civil penalty of up to $5,000 per violation under Maryland law.
Question 2: A homeowner pays a contractor $15,000 upfront and the contractor abandons the job. What is the MAXIMUM the homeowner can recover from the Maryland Home Improvement Guaranty Fund per contractor?
- $10,000
- $15,000 (Correct answer)
- $20,000
- $25,000
Correct answer: $15,000
The Guaranty Fund pays up to $15,000 per contractor for losses caused by a licensed contractor's violation.
Question 3: Which document must a Maryland home improvement contractor provide to a homeowner BEFORE beginning any work?
- Lien waiver
- Written contract signed by both parties (Correct answer)
- Certificate of occupancy
- Building permit application
Correct answer: Written contract signed by both parties
Maryland law requires a written contract signed by both the contractor and the homeowner before work commences.
Question 4: A subcontractor places a mechanic's lien on a homeowner's property. Within how many days after the work was completed must the subcontractor file the lien in Maryland?
- 90 days
- 120 days
- 180 days (Correct answer)
- 365 days
Correct answer: 180 days
In Maryland, a mechanic's lien must be established within 180 days after the work was finished.
Question 5: What type of insurance is a licensed Maryland home improvement contractor required to carry?
- Workers' compensation only
- Surety bond only
- Liability insurance and a surety bond (Correct answer)
- Health insurance for all employees
Correct answer: Liability insurance and a surety bond
MHIC licensees must maintain both liability insurance and a surety bond as conditions of licensure.
Question 6: When may a Maryland home improvement contractor legally collect a deposit exceeding one-third of the contract price?
- Never; deposits are capped at one-third
- When the homeowner agrees in writing
- When special-order materials exceed that amount (Correct answer)
- When the project spans more than 90 days
Correct answer: When special-order materials exceed that amount
A deposit greater than one-third is permitted only when special-order materials require the extra payment upfront.
Question 7: If a Maryland home improvement contractor's license expires, how many days does the contractor have to renew before the license is considered lapsed?
- 30 days (Correct answer)
- 60 days
- 90 days
- 180 days
Correct answer: 30 days
A contractor may renew an expired MHIC license within 30 days of expiration without being treated as newly applying.
MHIC Knowledge 4
Under Maryland law, what is the maximum civil penalty the Maryland Home Improvement Commission can impose per violation?