MHIC - Maryland Home Improvement Contractor Contracts and Estimating Questions and Answers 1 — Questions and Answers
Question 1: According to Maryland Home Improvement Law, what is the maximum deposit a contractor can accept from a homeowner before work begins?
- 50% of the contract price.
- An amount agreed upon by both parties, not to exceed $5,000.
- 1/3 of the contract price. (Correct answer)
- The total cost of materials needed for the project.
Correct answer: 1/3 of the contract price.
The Maryland Home Improvement Law explicitly states that a contractor cannot accept more than one-third (1/3) of the total contract price as a deposit before work commences. No payment can be accepted until the contract is signed by all parties.
Question 2: A contractor provides a homeowner with a contract for a new deck. The contract is signed in the homeowner's kitchen. Under the Maryland Door-to-Door Sales Act, what is the standard cancellation period for the homeowner?
- 24 hours from signing.
- 3 business days.
- 5 business days. (Correct answer)
- 10 business days.
Correct answer: 5 business days.
Most home improvement contracts signed at the consumer's home are covered by the Maryland Door-to-Door Sales Act. This Act provides a 'cooling-off' period, giving the homeowner the right to cancel the contract without penalty until midnight of the fifth business day after the transaction. The period is extended to the seventh business day if the homeowner is 65 or older.
Question 3: Which of the following is NOT a required element in a Maryland Home Improvement contract?
- The contractor's MHIC license number.
- The homeowner's driver's license number. (Correct answer)
- Approximate start and substantial completion dates.
- A description of the work to be performed and materials to be used.
Correct answer: The homeowner's driver's license number.
Maryland Home Improvement Commission (MHIC) regulations require specific information in every contract, including the contractor's name, address, and MHIC license number; the salesperson's name and license number (if applicable); approximate dates; a description of the work and materials; and the MHIC's contact information. The homeowner's personal identification numbers, like a driver's license number, are not required.
Question 4: A salesperson for a licensed home improvement contractor finalizes a deal with a homeowner. According to MHIC regulations, which of the following must be included on the contract?
- The salesperson's home address.
- The contractor's federal tax ID number.
- The salesperson's name and MHIC license number. (Correct answer)
- The name of the company that supplies the materials.
Correct answer: The salesperson's name and MHIC license number.
If a salesperson solicited or sold the home improvement project, the contract must contain the name and MHIC license number of that salesperson, in addition to the contractor's information.
Question 5: A contractor is preparing an estimate for a large kitchen remodel. To ensure the estimate is comprehensive and professional, which practice should the contractor follow?
- Provide a single, lump-sum price with no breakdown to keep it simple.
- Include a clause that all material prices are subject to change without notice.
- Base the estimate on a verbal description of the project to save time.
- Itemize the costs for labor, materials, permits, and other major expenses. (Correct answer)
Correct answer: Itemize the costs for labor, materials, permits, and other major expenses.
A high-quality, professional estimate should be as specific as possible. Itemizing costs for labor, materials, permits, and other expenses provides clarity for the homeowner, helps prevent disputes, and forms the basis for a detailed contract. While getting multiple estimates is advice for homeowners, providing a detailed one is a best practice for contractors.
Question 6: If a mandatory arbitration clause is included in a Maryland home improvement contract, what specific action must be taken by the parties regarding this clause?
- The clause must be printed in red ink.
- The homeowner must have it reviewed by their attorney.
- Both parties must initial and date the contract next to the clause. (Correct answer)
- The contractor must pay all potential arbitration fees upfront.
Correct answer: Both parties must initial and date the contract next to the clause.
MHIC regulations require that if a contract contains a mandatory arbitration clause, the clause must be separately initialed and dated by both the contractor and the homeowner to ensure it was explicitly acknowledged and agreed upon by both parties.
MHIC - Maryland Home Improvement Contractor Contracts and Estimating Questions and Answers 1
According to Maryland Home Improvement Law, what is the maximum deposit a contractor can accept from a homeowner before work begins?