MHIC MHIC Maryland Home Improvement Law and Contracts 4 — Questions and Answers
Question 1: Under Maryland law, what is the maximum civil penalty the MHIC can impose on an unlicensed contractor per violation?
- $500
- $1,000
- $2,000 (Correct answer)
- $5,000
Correct answer: $2,000
The MHIC may impose a civil penalty of up to $2,000 per violation against unlicensed contractors.
Question 2: A homeowner pays a contractor $3,500 upfront before any work begins. Under MHIC regulations, is this deposit permissible?
- Yes, any deposit amount is legal if the homeowner agrees
- No, deposits cannot exceed one-third of the contract price (Correct answer)
- No, no deposit may be collected before work begins
- Yes, up to $5,000 may be collected before work starts
Correct answer: No, deposits cannot exceed one-third of the contract price
Maryland law limits initial deposits to one-third of the total contract price to protect consumers.
Question 3: Which entity administers the Maryland Home Improvement Commission (MHIC)?
- Maryland Department of Labor (Correct answer)
- Maryland Department of Housing and Community Development
- Maryland Secretary of State
- Maryland Board of Public Works
Correct answer: Maryland Department of Labor
The MHIC operates under the Maryland Department of Labor.
Question 4: A licensed MHIC contractor hires an unlicensed subcontractor to perform electrical work. Who bears liability for violations?
- Only the subcontractor
- Only the homeowner for accepting the arrangement
- The licensed contractor, who is responsible for subcontractors they engage (Correct answer)
- The city building department that issued the permit
Correct answer: The licensed contractor, who is responsible for subcontractors they engage
The licensed contractor remains responsible for ensuring all subcontractors meet licensing requirements.
Question 5: How long must a licensed Maryland home improvement contractor retain records of completed contracts?
- 1 year
- 3 years (Correct answer)
- 5 years
- 7 years
Correct answer: 3 years
Maryland regulations require contractors to keep records of home improvement contracts for at least 3 years.
Question 6: Under the Maryland Home Improvement Law, which of the following is NOT required in a home improvement contract?
- The contractor's MHIC license number
- The contractor's Social Security Number (Correct answer)
- The approximate start and completion dates
- A description of the work to be performed
Correct answer: The contractor's Social Security Number
Contracts must include the license number, dates, and scope of work, but a contractor's Social Security Number is not required.
Question 7: A homeowner files a complaint with the MHIC against a contractor. What is the primary remedy available through the MHIC Guaranty Fund?
- Criminal prosecution of the contractor
- Compensation to the homeowner for actual damages up to the fund limit (Correct answer)
- Automatic license revocation of the contractor
- A court injunction stopping the contractor from working
Correct answer: Compensation to the homeowner for actual damages up to the fund limit
The MHIC Guaranty Fund compensates homeowners for actual financial losses caused by a licensed contractor, up to the statutory limit.
MHIC MHIC Maryland Home Improvement Law and Contracts 4
Under Maryland law, what is the maximum civil penalty the MHIC can impose on an unlicensed contractor per violation?