MD MHIC Contractor cheat sheet

Covered work: repair, replacement, remodeling, alteration, conversion, modernization, improvement, rehabilitation, or addition to a residence or lot, including driveways, swimming pools, porches, garages, roofs, siding, insulation, and landscaping tied to the improvement.

A home improvement contract must be written, signed by the owner and the contractor, and dated; it must identify the contractor's MHIC license number and the owner's name and address of the property.

Required contract content includes a description of the work, materials and equipment to be used, total contract price, deposit and payment schedule, start and completion dates, and notice of the owner's right to cancel.

Maryland's Door-to-Door Sales Act gives a 3-business-day right to cancel for contracts solicited at the buyer's home; the contract must state this right and include a cancellation form.

A contract must include a statement of the buyer's right to file a complaint with MHIC and the phone number, plus a statement about the Guaranty Fund's existence and purpose.

Changes to a signed contract must be in writing and signed by both parties before the changed work is performed; oral modifications are not enforceable against the owner.

A contractor may not demand or receive a deposit exceeding one-third of the contract price before any work is performed, unless the contractor posts a surety bond or the contract is for a specific purpose exempted.

Contractors must provide a written warranty statement if any warranty is offered; if no warranty is offered, the contract must state that the contractor makes no warranty.

Completion date and payment schedule must be tied to identifiable milestones or dates; open-ended "time and materials" terms without a cap or schedule are a common contract deficiency.

MHIC operates under the Maryland Home Improvement Law, Business Regulation Article, Title 8, and adopts regulations in COMAR Title 9, Subtitle 30.

"Home improvement contractor" includes persons who sell, install, or perform home improvement work, and subcontractors; a person who only sells must still be licensed.

Unlicensed contracting is a misdemeanor; MHIC may issue a citation and fine, and the contractor may not sue to collect compensation for unlicensed work.

MHIC may suspend, revoke, or refuse to renew a license for violations including abandonment, substantial misrepresentation, failure to perform, and failure to pay Guaranty Fund awards.

A contractor must respond to an MHIC complaint within the time set by MHIC; failure to respond is itself a ground for disciplinary action.

MHIC may order a contractor to pay restitution to an injured owner; the order is enforceable and unpaid orders can lead to license suspension and Guaranty Fund claims.

Advertising must include the contractor's MHIC license number; unlicensed persons may not advertise or hold themselves out as home improvement contractors.

Contractors must maintain records of contracts, invoices, and payments for at least 3 years after completion, and make them available to MHIC investigators on request.

MHIC inspections and investigations may be conducted without a warrant on the contractor's business premises; contractors must cooperate and produce records.

The Home Improvement Guaranty Fund reimburses owners who obtain a final, unappealed MHIC order or a court judgment against a licensed contractor for actual loss caused by the contractor's violation.

The claimant must exhaust administrative remedies first: file an MHIC complaint, obtain a final order, and show the contractor has not paid; a court judgment must also be final and unsatisfied.

A claim must be filed on MHIC's form within the time set by regulation after the final order or judgment, and must include documentation of the loss and the unpaid amount.

Recoverable losses are actual damages, including unpaid deposits and the cost of correcting defective work, but not punitive damages, attorney's fees, or consequential damages.

The Fund pays a claim only after the contractor fails to pay within the time ordered; MHIC then pays the award and the contractor must reimburse the Fund plus interest.

A contractor whose license is suspended for failing to reimburse the Fund may not be relicensed until the Fund is repaid in full, with interest and costs.

The Fund has a per-claim and per-contractor cap set by statute; awards above the cap are not paid from the Fund, and the claimant may pursue the contractor for the balance.

A Guaranty Fund claim is not a substitute for a civil action; filing a claim does not stay the claimant's right to sue, but the claimant may not recover twice for the same loss.

MHIC may deny a claim if the claimant failed to cooperate, submitted false information, or the loss was not caused by the contractor's licensed home improvement activity.

An applicant must pass the MHIC exam, provide proof of general liability insurance of at least $50,000 per occurrence, and pay the license fee; licenses are renewed every 2 years.

A contractor must be licensed before advertising, contracting, or performing home improvement work; a license is not transferable and applies only to the named person or entity.

A licensed contractor must display the MHIC license number on all contracts, bids, and advertisements, and must carry the license or a copy when performing work.

General liability insurance is required to be maintained in force during the license term; a lapse must be reported to MHIC and can result in suspension.

A contractor must maintain a business address and notify MHIC within 10 days of a change of name, address, or ownership structure.

A contractor may not use a contract that waives the owner's right to file a complaint with MHIC or to recover from the Guaranty Fund; such clauses are void.

A contractor may not perform work outside the scope stated in the contract, and may not use subcontractors who are not licensed; the contractor is responsible for subcontractor compliance.

Commingling or misappropriation of owner funds held for materials or subcontractors is a ground for discipline; funds must be used for the project for which they were received.

A contractor must provide a written estimate or proposal before work begins if the owner requests one, and may not charge for a written estimate unless the charge is disclosed in advance.