MHIC Complaints: What Homeowners Need to Know

When you hire someone for a home improvement project, you want some assurance that the work will be of good quality and conducted in a timely manner. Your contract should state the scope of the project, along with specific details about costs, payment, and timelines; but, occasionally, homeowners find that the promises included in a contract don’t come to fruition.

If you suffer actual monetary losses due to a contractor’s sub-standard or incomplete work, you may file a claim with the Maryland Home Improvement Commission (“MHIC”). The MHIC oversees a Guaranty Fund, which is funded by contractors’ licensing fees. Should the MHIC find your claim to be valid, you may be reimbursed up to $20,000.

Finding Reputable Contractors

When considering contractors to handle your home improvement project, you can contact the MHIC by email or phone to check for any previous complaints for a Contractor in their records. Any complaints within the past three years will be on the record (unless the complaint was found to be unjustified or was resolved through mediation).

Ask friends and family for recommendations, and make sure you get quotes from at least three contractors. You should also ask to see their credentials – don’t hire unlicensed contractors, because clients of unlicensed contractors are ineligible for compensation from the MHIC Guaranty Fund.

The Importance of Reviewing Contracts

Your contractor will prepare a contract for you to review. Read the fine print carefully to make sure that it contains the following information:

  • Basic contractor information – The name, address, and MHIC license number
  • Dates – The approximate start and end dates of the project
  • Deposit/payment information – Contractors cannot ask for more than a third of the total project cost as a deposit, nor can they require you to pay the deposit before signing the contract.
  • Mortgage/lien language – If you have secured financing for your home improvement project, the following exact language must be included in the contract: “This contract creates a mortgage or lien against your property to secure payment, and may cause a loss of your property if you fail to pay the amount agreed upon. You have the right to consult an attorney. You have the right to rescind this contract within three business days after the date you sign it by notifying the contractor in writing that you are rescinding the contract.”

If you found a contractor because a salesperson came to your home soliciting business, the contract must also include language required by Maryland’s Door-to-Door Sales Act. Contractors may also include an optional arbitration clause in the contract.

Subcontractors aren’t required to be licensed in Maryland. They may work for contractors, but only MHIC licensed contractors may enter into a contract with a homeowner.

When Things Go Wrong

If a contractor fails to complete a project or performs sub-standard work, you must be able to prove that you suffered an actual financial loss in order to prevail on a formal complaint. If work is shoddy or incomplete, take photos before making any attempt to correct the problem; and if you buy parts to repair the deficiencies, keep the receipts.

Usually, reputable contractors will be willing to work with you to find a solution. And if not, the MHIC Guaranty Fund may help you recoup your losses.

The best way to protect your interests before work begins is to have an attorney review your contract. Lusk Law, LLC, has provided legal counsel and contract review to homeowners, helping them avoid litigation and actively representing them in court, should litigation become necessary. Please call us at 443-535-9715 or fill out our contact form if you have any questions about this topic.

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