MHIC MHIC Maryland Home Improvement Law and Contracts 5 — Questions and Answers
Question 1: A Maryland home improvement contract is signed on a Monday. By what day must the homeowner receive the Notice of Cancellation rights?
- The same day the contract is signed (Correct answer)
- Within 24 hours
- No later than midnight of the third business day after signing
- Within 10 calendar days
Correct answer: The same day the contract is signed
The required Notice of Cancellation must be provided to the homeowner at the time the contract is signed.
Question 2: Which of the following work is EXEMPT from Maryland home improvement licensing requirements?
- Roof replacement costing $750
- New residential construction not involving alteration of an existing structure (Correct answer)
- Bathroom remodeling costing $1,200
- Deck addition to an existing home
Correct answer: New residential construction not involving alteration of an existing structure
New construction of a residence is exempt; the MHIC license applies to improvement, repair, or alteration of existing structures.
Question 3: What happens to a Maryland contractor's MHIC license if their required surety bond lapses?
- The license remains valid for 90 days while the bond is renewed
- The license is automatically suspended until the bond is reinstated (Correct answer)
- The contractor may continue working but must notify clients
- The MHIC issues a warning before any action is taken
Correct answer: The license is automatically suspended until the bond is reinstated
An active surety bond is a continuous licensing requirement; a lapse results in automatic license suspension.
Question 4: A homeowner exercises their 3-day right to cancel a home improvement contract. What must the contractor do with any payments already received?
- Retain the payment as a cancellation fee
- Return the payment within 10 business days of receiving the cancellation notice (Correct answer)
- Negotiate a partial refund with the homeowner
- Apply the payment toward future work
Correct answer: Return the payment within 10 business days of receiving the cancellation notice
Upon valid cancellation, the contractor must return all payments to the homeowner within 10 business days.
Question 5: Under Maryland law, advertising home improvement services without an MHIC license number in the ad is:
- Permitted if the contractor is applying for a license
- A violation subject to penalties (Correct answer)
- Acceptable for jobs under $5,000
- Only required in print advertising, not online
Correct answer: A violation subject to penalties
Maryland law requires contractors to display their MHIC license number in all advertising; omission is a violation.
Question 6: A contractor's MHIC license is revoked. How long must they wait before reapplying for a new license?
- 6 months
- 1 year (Correct answer)
- 2 years
- 5 years
Correct answer: 1 year
A contractor whose license is revoked must wait at least one year before becoming eligible to reapply.
Question 7: Which statement correctly describes the MHIC Guaranty Fund claim deadline?
- Claims must be filed within 1 year of the date of the contract
- Claims must be filed within 3 years of the act giving rise to the claim (Correct answer)
- There is no deadline; claims may be filed at any time
- Claims must be filed within 90 days of discovering the violation
Correct answer: Claims must be filed within 3 years of the act giving rise to the claim
Maryland law requires homeowners to file a Guaranty Fund claim within 3 years of the act or omission that caused the loss.
MHIC MHIC Maryland Home Improvement Law and Contracts 5
A Maryland home improvement contract is signed on a Monday.
By what day must the homeowner receive the Notice of Cancellation rights?