MD MHIC Contractor flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Covered home improvement work

Repair, replacement, remodeling, alteration, conversion, modernization, improvement, rehabilitation, or addition to a residence or its lot, including driveways, pools, roofs, and siding.

Contract signature requirement

A home improvement contract must be written, dated, and signed by both the owner and the contractor before work begins; an unsigned contract is not enforceable.

Required contract disclosures

The contract must show the contractor's MHIC license number, the owner's name and property address, work description, materials, total price, payment schedule, and start and completion dates.

Right to cancel notice

Contracts solicited at the buyer's home must state the buyer's right to cancel within three business days and include a cancellation form.

Deposit limit rule

A contractor may not demand or receive a deposit exceeding one-third of the contract price before work begins, unless a surety bond is posted or an exemption applies.

Written change orders

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

Warranty statement

If the contractor offers a warranty, the contract must state its terms; if none is offered, the contract must state that the contractor makes no warranty.

Contract complaint notice

The contract must include a statement of the owner's right to file a complaint with MHIC and the MHIC phone number for complaints.

Home Improvement Law source

Maryland's Home Improvement Law is in Business Regulation Article, Title 8; implementing regulations are in COMAR Title 9, Subtitle 30.

Who must be licensed

Any person who sells, installs, or performs home improvement work, including subcontractors and sales-only personnel, must hold an MHIC license.

Unlicensed contracting penalties

Unlicensed home improvement work is a misdemeanor; MHIC may issue a citation and fine, and the unlicensed contractor cannot sue to collect compensation.

Grounds for discipline

MHIC may suspend, revoke, or refuse renewal for abandonment, substantial misrepresentation, failure to perform, and failure to pay Guaranty Fund awards.

Complaint response duty

A contractor must respond to an MHIC complaint within the time MHIC sets; failing to respond is itself a separate ground for disciplinary action.

Restitution orders

MHIC may order a contractor to pay restitution to an injured owner; an unpaid order can lead to license suspension and a Guaranty Fund claim.

Advertising license number

All advertising by a home improvement contractor must include the MHIC license number; unlicensed persons may not advertise home improvement services.

Record retention period

Contractors must keep contracts, invoices, and payment records for at least three years after completion and produce them to MHIC investigators on request.

Guaranty Fund purpose

The Home Improvement Guaranty Fund reimburses owners for actual losses caused by a licensed contractor's violation, after the owner obtains a final MHIC order or court judgment.

Exhaustion requirement

A claimant must first file an MHIC complaint and obtain a final, unappealed order, or a final court judgment, before the Fund will consider the claim.

Claim filing deadline

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

Recoverable losses

The Fund pays actual damages such as unpaid deposits and the cost of correcting defective work, but not punitive damages, attorney's fees, or consequential damages.

Contractor reimbursement duty

After the Fund pays a claim, the contractor must reimburse the Fund with interest; failure to repay blocks relicensing until the debt is satisfied.

Fund award caps

Statutory caps limit the amount payable per claim and per contractor; amounts above the cap are not paid and the claimant may pursue the contractor for the balance.

No double recovery

A claimant may not recover the same loss twice; amounts received from the contractor or another source reduce the amount payable from the Fund.

Claim denial grounds

MHIC may deny a claim for lack of cooperation, false information, or a loss not caused by the contractor's licensed home improvement activity.

Licensing prerequisites

An applicant must pass the MHIC exam, show general liability insurance of at least $50,000 per occurrence, and pay the required license fee.

License term and renewal

An MHIC license is valid for two years and must be renewed before expiration; an expired license may not be used to contract or perform work.

License nontransferable

An MHIC license applies only to the named person or business entity and may not be sold, assigned, or used by another person.

Insurance maintenance duty

Required general liability insurance must stay in force during the license term; a lapse must be reported to MHIC and can result in license suspension.

Change of address notice

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

Void waiver clauses

Contract terms waiving the owner's right to complain to MHIC or to seek Guaranty Fund recovery are void and cannot be enforced against the owner.

Subcontractor responsibility

A licensed contractor is responsible for ensuring subcontractors are licensed and for the subcontractors' compliance with the Home Improvement Law.

Owner fund handling

Funds received from an owner for a project must be used for that project; commingling or misappropriation is a ground for MHIC discipline.