MHIC MHIC Maryland Home Improvement Law and Contracts 2

Question 1

Which of the following advertising practices violates MHIC regulations for licensed home improvement contractors in Maryland?

Accepted Answer

Claiming to be 'licensed and bonded' without actually holding a current MHIC license

Answer

Claiming to be 'licensed and bonded' when a contractor does not hold a current, valid MHIC license is fraudulent and violates Maryland law. All advertising by home improvement contractors must be truthful, and representing licensure status falsely is a serious violation.

Question 2

What minimum insurance coverage must an MHIC licensee maintain under Maryland regulations?

Accepted Answer

General liability insurance of at least $50,000 per occurrence and a surety bond

Answer

Maryland MHIC licensees are required to carry both general liability insurance (minimum $50,000 per occurrence) and a surety bond. These financial responsibility requirements protect consumers in case of property damage or contractor default.

Question 3

A licensed MHIC contractor subcontracts the electrical work on a remodeling project to another company. Who bears responsibility if the subcontractor performs defective work that violates the contract?

Accepted Answer

The licensed MHIC contractor, who remains responsible for all work under the contract

Answer

The licensed MHIC contractor is responsible to the homeowner for all work performed under the contract, including work performed by subcontractors. The prime contractor cannot shift this responsibility to a subcontractor to escape liability to the homeowner.

Question 4

Under the Maryland Home Improvement Act, a written contract is required when the total price of a home improvement project is:

Accepted Answer

$500 or more

Answer

Maryland law requires a written contract for any home improvement project where the total price — labor plus materials — is $500 or more. Below this threshold, an oral agreement may suffice, but a written contract is always recommended for consumer protection.

Question 5

Which of the following actions by an MHIC contractor could result in revocation of the contractor's license?

Accepted Answer

Collecting more than one-third of the contract price as an initial deposit

Answer

Collecting a deposit exceeding one-third (1/3) of the total contract price is a direct violation of the MHIA and can result in disciplinary action, including license revocation. Requesting change orders and including license numbers in ads are proper practices; minor delays due to material shortages are generally not grounds for revocation.

(MHIC) Maryland Home Improvement Contractor Practice Test

(MHIC) Maryland Home Improvement Contractor Practice Test

MHIC MHIC Maryland Home Improvement Law and Contracts 2