MHIC Licensing — Questions and Answers

Question 1: Under Maryland law, who is required to hold an MHIC license before performing home improvement work?

Any contractor performing home improvement work valued at $500 or more in labor and materials (Correct answer)
Only contractors performing structural work on residential properties
Contractors whose annual home improvement revenue exceeds $10,000
Any subcontractor working on a licensed contractor's project

Correct answer: Any contractor performing home improvement work valued at $500 or more in labor and materials

Maryland law requires any person or company contracting for home improvement work where the total cost of labor and materials is $500 or more to hold a valid MHIC license. The $500 threshold applies per project and covers anyone who solicits, bids, or performs such work directly with a homeowner.

Under the Maryland Home Improvement Law (Business Regulation Article, Title 8), anyone who contracts directly with a homeowner for home improvement work with a combined cost of labor and materials of $500 or more must hold a valid MHIC license. This includes general contractors, specialty contractors, and anyone who solicits, bids, or performs such work. The $500 threshold is calculated per project, not annually. Subcontractors who work only for MHIC-licensed contractors and never directly with homeowners are generally exempt from the individual MHIC licensing requirement.

Question 2: What is the minimum surety bond amount required for an MHIC license applicant?

$20,000 (Correct answer)
$10,000
$50,000
$5,000

Correct answer: $20,000

MHIC applicants must furnish a surety bond of at least $20,000 as part of the licensing requirements. The bond protects consumers from financial loss due to contractor default or violations of Maryland home improvement law.

The Maryland Home Improvement Commission requires all MHIC license applicants to furnish a surety bond in the amount of $20,000. This bond serves as a financial guarantee that the contractor will fulfill contractual obligations and comply with Maryland home improvement law. If a contractor defaults on a contract, commits fraud, or otherwise violates the law, consumers may file a claim against the bond. The bond must be maintained throughout the entire license period and the Commission must be named as an obligee. The surety bond requirement is separate from the MHIC Guaranty Fund, which provides an additional layer of consumer protection.

Question 3: How long is an MHIC license valid before it must be renewed?

2 years (Correct answer)
1 year
3 years
5 years

Correct answer: 2 years

MHIC licenses are issued for a two-year period. Before expiration, contractors must submit a renewal application, pay the renewal fee, maintain a valid surety bond, and complete any required continuing education to keep their license active.

Maryland MHIC licenses are valid for two years from the date of issuance. Before the license expires, contractors must submit a renewal application along with the required fee, proof of a current and valid surety bond, and evidence of completing mandatory continuing education hours. Failure to renew on time results in license expiration, prohibiting the contractor from legally performing or soliciting home improvement work. Contractors who allow their license to lapse may face reinstatement fees and, if the lapse is extended, may be required to reapply as a new applicant and retake any applicable examinations.

Question 4: Which Maryland state agency issues and enforces MHIC licenses?

Maryland Home Improvement Commission (MHIC) (Correct answer)
Maryland Department of Labor
Maryland State Board of Contractors
Maryland Department of Housing and Community Development

Correct answer: Maryland Home Improvement Commission (MHIC)

The Maryland Home Improvement Commission (MHIC) is the state agency responsible for licensing home improvement contractors, investigating consumer complaints, and enforcing the Maryland Home Improvement Law.

The Maryland Home Improvement Commission (MHIC) operates under the Maryland Department of Labor and is the sole state authority that licenses home improvement contractors in Maryland. The Commission investigates consumer complaints, conducts hearings on alleged violations, imposes civil penalties, and administers the MHIC Guaranty Fund. The Commission consists of members appointed by the Governor, including licensed contractors, public members, and representatives of related trades. Its primary mission is to protect Maryland consumers by ensuring that home improvement contractors meet minimum standards of competency and financial responsibility before working in the state.

Question 5: What is the consequence if an MHIC licensee's required surety bond lapses or is cancelled during the license period?

The license is automatically suspended until a replacement bond is filed (Correct answer)
The contractor has 30 days to replace the bond before any action is taken
The contractor must cease work, but the license remains technically active
The license is immediately and permanently revoked

Correct answer: The license is automatically suspended until a replacement bond is filed

If the required surety bond lapses or is cancelled, the contractor's MHIC license is automatically suspended. The contractor cannot legally perform home improvement work until a new bond is filed with the Commission and the suspension is lifted.

Maryland regulations require MHIC licensees to maintain a valid surety bond at all times during the license period. If the bonding company cancels the bond or it expires without renewal, the Commission is notified and the contractor's license is automatically placed in suspended status. During suspension, the contractor is prohibited from contracting for, soliciting, or performing home improvement work in Maryland. To reinstate the license, the contractor must obtain a new surety bond and submit proof to the Commission. This automatic suspension mechanism protects consumers, because the bond is one of the key financial safeguards built into the MHIC licensing system.

Question 6: Which of the following individuals is EXEMPT from obtaining an MHIC license in Maryland?

A homeowner personally performing improvements on their own primary residence (Correct answer)
A roofing contractor replacing a residential roof for $2,000
A painting company contracted to repaint the interior of a private home
A landscaping firm hired to install a retaining wall at a residence

Correct answer: A homeowner personally performing improvements on their own primary residence

Maryland's Home Improvement Law exempts homeowners who personally perform improvements on a residence they own and occupy as their primary home. Licensed tradespeople (electricians, plumbers, HVAC) working within the scope of their own license are also exempt, as are new construction contractors.

The Maryland Home Improvement Law provides several exemptions from the MHIC licensing requirement. Owner-occupants who personally perform improvements on their own primary residence are exempt because they are not contractors soliciting business from the public. Licensed tradespeople such as electricians, plumbers, gas fitters, and HVAC technicians are exempt when performing work within the scope of their own occupational license. New construction contractors are generally exempt because the law specifically covers improvements to existing residential structures. Understanding these exemptions is critical for MHIC exam candidates, as misapplying them can result in unlicensed contracting violations and significant penalties.

MHIC Licensing

Under Maryland law, who is required to hold an MHIC license before performing home improvement work?