MHIC NASCLA CONTRACTORS EXAM WITH CORRECT ANSWERS GRADED A+

Yes - correct answer Does home improvement include work done on an individual condominium unit? Yes - correct answer Does home improvement include work done on a swimming pool? Yes - correct answer Does a home improvement contract HAVE to be in writing in order to preserve your lien rights? Subcontractors - correct answer Contractors who can only contract with a contractor or a subcontractor are: Cannot - correct answer A county or municipality in Maryland _____________ require a contractor to get authorization from an official in that city to be able to contract in that municipality. Can - correct answer A county or municipality in Maryland _______________ regulate the character, performance and quality of home improvement. 7 - correct answer How many members are there in the Maryland Home Improvement Commission? 3 - correct answer Of the 7 members on the Commission, how many are experienced in home improvement? 4 Years - correct answer What is the term of a member on the Commission? Associated Answers 5 years - correct answer How long must a person be a citizen and member of Maryland before they can be appointed to the Commission? True - correct answer It is illegal for a member of the Commission to receive any compensation from a person regulated by the Commission. 12 times a year - correct answer How often does the Commission hold meetings at a minimum? Executive Director - correct answer The _______________ is a full time employee of the State. the Director of the Commission - correct answer People hired to investigate complaints about home improvement projects work under: 1. injunctive relief against the conduct 2. an order for satisfactory completion 3. restitution - correct answer If the Commission decides to sue a contractor because they believe that the contractor has or will cause harm to another person, they can sue for: yes - correct answer Can the Commission request financial records at any time? yes - correct answer Must a contractor, sub-contractor, or salesperson who places their license on inactive status pay a fee to renew an inactive license? yes - correct answer Can the Commission take disciplinary action against an inactive license? 10 days - correct answer How many days does a licensee have to notify the Commission of change in control in ownership, management, address or trade name? 2 - correct answer How many contractors may a salesperson represent? both a and b - correct answer The following are exempt from licensure requirements: Associated Answers 1 employees for labor services 2 employees for clerical work 3 Salespersons 4 both a and b $50,000 - correct answer What is the minimum amount of liability insurance needed? true - correct answer An applicant for licensure must have 2 years trade experience or comparable educational training. $250 - correct answer What is the cost of the initial application fee for a home improvement contractors' license? All of the above - correct answer The Commission can ask an applicant for information about the applicant's... 1 character 2 experience 3 financial stability 4 all of the above No - correct answer The financial information provided by an applicant is public information. 10 days - correct answer If an application for a license is denied, the applicant can request a hearing within ______________ after the notice of denial is mailed. True - correct answer A salesperson will not be issued a license until the salesperson becomes employed or contractually involved with a licensed contractor. no more than $50 - correct answer What is the fee to place a license on inactive status? All of the above - correct answer A person whose license is put on inactive status... 1 must return their license to the State. 2 doesn't have to maintain the required liability insurance coverage. 3 must not do any contracting. 4 all of the above. Yes - correct answer Must a contractor, sub-contractor, or salesperson who places their license on inactive status pay a fee to renew an inactive license? 10 days - correct answer How many days does a licensee have to notify the Commission of change in control in ownership, management, address or trade name? 2 - correct answer How many contractors may a salesperson represent? No - correct answer Jim Smith is a Sales Representative for ABC Construction. Can he accept a position as a Sales Representative for Top Notch Construction without first informing ABC Construction of his intentions and also informing Top Notch Construction of his existing situation with ABC Construction? give the commission written notice - correct answer When a sales person is no longer associated with a company they represented, the contractor must: all of the above - correct answer The Commission may suspend or revoke a license if the licensee: 1 lies on their application 2 practices fraud while being licensed 3 is convicted of a felony 4 all of the above True - correct answer A contractor may not pay a subcontractor who is required to be licensed unless the subcontractor holds the required license. False - correct answer Licensed Home Improvement Contractors are also required to hold a construction license issued by the Clerk of the Court under Title 17. actual loss - correct answer Home owners have a right to bring a claim against the Guaranty Fund for situations of _________________________ concerning restoration, repair, replacement or completion that arise from unworkmanlike, inadequate, or incomplete home improvement. $100 - correct answer What is the fee a Home Improvement Contractor must pay into the Guaranty Fund before the Commission will issue a license? $20,000.00 - correct answer What is the maximum amount of money the Commission will award to any one claimant from the Guaranty Fund? $100,000.00 - correct answer What is the maximum amount of money the Commission will pay out of the fund concerning the affairs of any one contractor? No - correct answer Can a person bring a claim against the Guaranty Fund in a contract he has with the employer of his son? 3 years from discovery of the loss or damage - correct answer How long does a claimant have to bring a claim against the Guaranty Fund? 10 days - correct answer How many days does a contractor have to respond in writing to the copy of a claim that was sent by the Commission? Yes - correct answer Can a disciplinary hearing and a hearing concerning a claim against the Guaranty Fund be held at the same time if the facts in this situation are the same? 30 days - correct answer If within ____________ after the Commission gives notice, a contractor on whose account a claim was paid does not reimburse the fund in full, the Commission may sue the contractor for reimbursement. 10 percent - correct answer In addition to full reimbursement of the fund, a contractor is responsible to pay at least ___________ interest on the amount to reimburse. True - correct answer The state can record a lien against any real property owned by the contractor for a debt owed to the fund. True - correct answer If the Commission pays a claim from the Fund based on the actions or omissions of a contractor, the Commission may suspend the contractor's license until full reimbursement of the Fund plus at least 10% interest. Names and license numbers of subcontractors - correct answer A home improvement contract in compliance with the home improvement laws would include all of the following except: True - correct answer A salesperson may not represent 2 contractors at the same time for the same project. No - correct answer Can a salesperson legally accept money for themselves from the customer? True - correct answer It is against the law for building and permits departments to issue a permit to a contractor without the contractor's license number. True - correct answer If a contractor fails to correct a violation of the building code within a reasonable time period, the county or municipality inspecting the project shall notify the Commission. $1,000 and/or 6 months in jail or both - correct answer What is the maximum fine for contracting without a license - first offense? $5,000 and/or 2 years in jail or both - correct answer What is the maximum fine for contracting without a license - second offense? Yes - correct answer Contractor, Jack Smith, is not getting along with Hector Jones, his customer. If he decides not to complete the contract, has Jack broken any law? No - correct answer Can a contractor decide to use a material other than specified in the contract documents without getting permission from the owner? All of the above - correct answer Contractors may not: 1 misrepresent their service or product 2 make false promises 3 lie on their license application 4 all of the above All of the above - correct answer Contractor, Jack Brown, makes a deal with customer, Ameal Cougar, to provide an estimate of $40,000 on a project where the actual costs are $30,000, allowing Ameal to pocket $10,000 after securing a mortgage at $40,000 and paying off Jack. This is: 1 fraud 2 an illegal act 3 a misdemeanor 4 all of the above True - correct answer A licensed salesperson can only sell the services of licensed contractor or subcontractors. True - correct answer If a contractor's salesperson stops selling or working with the contractor for any reason, the contractor has a responsibility to the State to inform the Commission. True - correct answer All advertising has to provide the identifier "Maryland Home Improvement Commission License No ______________" or "MHIC#__________". $5,000 - correct answer What is the maximum penalty the Commission may impose upon a contractor, licensed or unlicensed, per violation of these laws: True - correct answer Advertising must be done in a way as to avoid misrepresenting the product, service or terms of sale so as not to deceive the customer. True - correct answer An applicant must provide to the Commission, a credit report with their application. 10 days - correct answer How many days does a contractor have to respond to a receipt of a claim from the commission? perform repairs for a homeowner. - correct answer A Home Improvement Contractor is a person who offers to... $500 - correct answer What is the MAXIMUM deposit permitted for a project with a total contract price of $1,500? The contractor is NOT permitted to compensate the homeowner for referrals. - correct answer What is the MAXIMUM amount that a home improvement contactor may pay to a homeowner for referring a client to the contractor? 6 months. - correct answer An applicant was denied a license after a hearing. When may the applicant reapply? No license is required. - correct answer What license is required for a telephone salesperson that works as an independent contractor for a home improvement contractor? 60 days. - correct answer The Home Improvement Commission holds a hearing to determine the status of an individual's application for licensure. The Commission MUST notify the applicant of its decision with (how many days after the hearing)? nothing. No service fee may be collected. - correct answer A homeowner cancels a $1,000 door-to-door contract 2 days after signing the contract. The MAXIMUM service fee that me be collected by the contractor is 1 month - correct answer A renewal notice MUST be mailed by the Commission within how many months of the license expiration date? expire. - correct answer A license that is NOT renewed will... regulate, quality - correct answer A local county or municipality may ________ the _______ of home improvements. Baltimore. - correct answer The office of the Home Improvement Commission is located in... Executive Director - correct answer The official recordkeeper of the Home Improvement Commission, is the _________ ________ of the Commission Investigative staff of the Home Improvement Commission. - correct answer Who investigates complaints against Home Improvement licensees? 1 year. - correct answer A person who is convicted of acting without a required Home Improvement license MUST wait a MINIMUM of what time period before being issued a license? 10 days. - correct answer The Commission MUST give a MINIMUM of how many days notice to a license about a hearing on disciplinary action against the licensee? the name and address of the seller. - correct answer All door-to-door sales contracts MUST include (what two things)? $1,175 - correct answer The cost of a project includes $1,000 for goods and services, $50 for delivery, and $125 for interest. What is the purchase price for this contract? noon on Thursday, September 27. - correct answer A contract is signed at noon on Thursday, September 20. The buyer can cancel this contract anytime up until... In order for a contractor to present a proposal to a customer, they first have to create a cost estimate of the entire project. Review the project documents (drawings, specifications, contracts and bonds). Attend all pre-bid meetings. Determine costs of labor, materials, equipment and subcontractors. Consider the degree of difficulty the job poses, the overhead involved, and the profit expected. Conduct a site visit! - correct answer Estimate Planning counting the number of items associated with a particular construction project, determining the associated materials and labor costs, and formulating a bid (or estimate) as part of the bidding process. Quantity take-off is also applied to the pricing process. First determine labor costs (by considering historical information) and burden (employment taxes and insurance). Figure out materials, allowances and contingencies, and how they will impact the outcome of the project. Include the direct costs of rented or leased equipment. Also consider: * Subcontractors if needed * Project overhead * Company overhead * Add markup for profit being careful to keep your bid competitive - correct answer The Quantity Take-off Method involves The cost of labor will vary from job to job. Historical information will help you arrive at an accurate estimate. - correct answer Labor Costs Labor burden refers to the "indirect" administrative costs of employing laborers. The cost of employment taxes and insurance (Medicare, Social Security, unemployment insurance, workers' compensation, liability insurance etc.) must be considered. Indirect labor costs can range from 25 to 70 percent of the base wage rate, and once that percentage is determined, it should be added to the direct labor costs to come up with a single hourly or "shop" rate. - correct answer Labor Burden. The costs of materials can fluctuate, and it is important to be current in your estimate of material costs. Be sure to get several bids from each supplier. Add contingency costs for waste. - correct answer Materials Large equipment required to complete a project, for example a loader needed for moving stockpiled dirt for removal, is considered a direct cost. These costs will differ depending on whether or not you own or rent the equipment. If you own, calculate the unit cost of the equipment by determining the actual value (depreciation from original price), operation and maintenance costs, taxes and fees, labor and insurance. If the equipment is rented, factor in the rental rate, delivery fees, labor, fuel etc. Finally, the option of subcontracting the work is available, and this cost would appear under subcontractor fees. - correct answer Equipment Cost. Contingencies are added to allow for unanticipated problems. Adding contingency costs to the estimate from the start allows more flexibility to absorb these additional expenses without going over budget. - correct answer Contingencies These are costs (soft costs) that are associated with the project, but are not labor and materials. Examples of project overhead are: utilities, temporary storage and office costs, security, dumpsters and sanitation. Determine project overhead by adding all your project costs from the previous year, and then divide that number by your revenues to arrive at your overhead percentage. - correct answer Project Overhead This is the cost of running the business itself. Permanent office costs, taxes, telephones, legal/accounting fees, and administration costs are all considered company overhead. Company overhead is calculated by a percentage of annual gross revenue. Annual company overhead, divided by annual gross revenues, provides the percentage amount to add to each bid to cover company overhead. So, for example, if your company overhead is 2%, you know to add that amount to every bid. - correct answer Annual Company Overhead No - correct answer When interviewing a person for employment, is it legal to ask them about their mental health history? True - correct answer Employers are required to report a new employee or rehired employee to the State Directory of New Hires. I-9 - correct answer What Federal form are employers required to complete within 3 days of their hire for the U.S. Customs and Immigrations Service? Fair Labor Standard Act - correct answer What Federal law provides employers with their minimum wage and overtime requirements? No - correct answer Do employers have to pay overtime pay to employee who works on a holiday? True - correct answer The Wage Garnishment Law prohibits an employer from firing an employee whose pay is garnished for payment of a single debt. to detect benefits fraud and to enforce child support orders both b and c - correct answer What is the purpose of New Hire Reporting? 1 to collect taxes 2 to detect benefits fraud 3 to enforce child support orders 4 both b and c True - correct answer Employers in Maryland are required to report their payroll and pay unemployment insurance taxes on their Quarterly Contribution Report 1 - correct answer How many employees must an employer have before they are required to purchase Workers Compensation Insurance? all of the above are benefits provided to an injured employee if needed - correct answer What benefit is provided to an injured employee if needed? 1 Wage replacement and payment for loss or permanent damage to body parts 2 Rehabilitation costs 3 Current and future medical costs 4 All of the above 10 days - correct answer If, due to an injury that occurred at work, an employee is unable to return to work after three work days, how long does the employer have to report this accident to the Workers Compensation Commission? Up to $5000 fine, imprisoned for one year, or both - correct answer What is the penalty for not providing Workers Compensation Insurance to your employee(s)? Department of Labor, Licensing and Regulation - correct answer What governmental department in Maryland administers the Laws for Unemployment? 20 days - correct answer After how many days of conducting business with an employee is an employer in violation of the law if they have not yet registered for Unemployment Insurance? New Account Rate - correct answer Which of the following rates is for unemployment insurance that is the average rate paid by all employers over the last five years? True - correct answer Employers are required to pay a percentage of the first $8,500 of wages for each employee to cover the cost of unemployment insurance. This is 100% an employer expense. No minimum of twice a month - correct answer Can an employer legally pay an hourly wage earner only once a month? No - correct answer Can an employer, as a form of disciplinary action, legally doc an employee's earned wage? $7.25 /hr - correct answer What is the federal minimum wage? True - correct answer After working more than 40 hours in a seven day week, employees in the building trades would be paid 1 1/2 times their usually hourly pay for those hours over 40. $4.25 - correct answer If a new employee is under 20 years of age, what is the required minimum wage during their first 90 consecutive calendar days of employment? True - correct answer In the absence of an express contract, employees may be hired or fired for almost any reason - whether fair or not - or for no reason at all. True - correct answer Can an employer legally require an employee to be tested for the illegal use of drugs and alcohol for a "legitimate business purpose".? True - correct answer Minors between 14 and 17, in order to be gainfully employed, must have a work permit. A workweek is considered 168 hours during seven 24 hour periods. It may begin on any day of the week and at any hour of the day - correct answer Workweek Defined under FLSA 1. Employee's full name and social security number. 2. Address, including zip code. 3. Birth date, if younger than 19. 4. Sex and occupation. 5. Time and day of week when employee's workweek begins. 6. Hours worked each day. 7. Total hours worked each workweek. 8. Basis on which employee's wages are paid (e.g., "$9 per hour", "$440 a week", "piecework") 9. Regular hourly pay rate. 10. Total daily or weekly straight-time earnings. 11. Total overtime earnings for the workweek. 12. All additions to or deductions from the employee's wages. 13. Total wages paid each pay period. 14. Date of payment and the pay period covered by the payment - correct answer Required Recordkeeping. The following records must be kept and preserved for at least three years. A violator may be fined up to $10,000, and if found guilty a second time may be imprisoned. - correct answer Willful violations of the FLSA can result in significant fines. applies to employers of more than 20 employees, and prohibits discrimination against applicants over the age of 40. Interestingly, the act does not protect younger workers from "reverse age discrimination". - correct answer Age Discrimination in Employment Act of 1967 The Family and Medical Leave Act permits a "spouse, son, daughter, parent, or next of kin" to take up to 26 work weeks of leave to care for a "member of the Armed Forces, including a member of the National Guard or Reserves, who is undergoing medical treatment, recuperation, or therapy, is otherwise in outpatient status, or is otherwise on the temporary disability retired list, for a serious injury or illness." - correct answer Family and Medical Leave Act This law limits the amount of income that may be legally withheld from an employees income - correct answer Wage Garnishment Law. 1.Medical Expenses 2. Disability Pay 3. Vocational Rehabilitation 4. Benefits to dependents - correct answer There are 4 components to Workers' Compensation: no later than 20 days after the first day of business. - correct answer Employers should submit a Combined Registration Form -Wage and Hour Fact Sheet -Equal Pay for Equal Work -Employment of Minors -Unemployment Insurance and Benefits -Unemployment Insurance Coverage -Workers' Compensation Commission Notice C-24 -Employment Discrimination is Illegal -Occupational Safety and Health Law (MOSH) - correct answer Required Postings. -Safety and Health Protection on the Job -Equal Opportunity is the Law -Employee Rights for Workers with Disabilities -Your Rights under the Family Leave and Medical Leave Act -FLSA Minimum Wage Poster - correct answer Federal postings that may apply to you: 3 years from discovery of the loss or damage - correct answer How long does a claimant have to bring a claim against the guaranty fund? 10 days - correct answer How many days does a contractor have to respond in writing to the copy of claim that was sent by the commission? 60 days - correct answer If within ________ after the commission gives notice , a contractor on whose amount a claim was paid does not reimburse the fund in full, the commission may sue the contractor for reimbursement. 10 % - correct answer In addtion to full reimbursement of the fund, a contractor is responsible to pay at least _________interest on the amount to reimburse. True - correct answer The state can record a lien against any real property owners by the contractor for a debt owed to the fund. True - correct answer If the commission pays a claim from the fund base on the actions or omissions of a contractor, the commission may suspend the contractors license until full reimbursement of the fund plus at least 10%interest Names and license numbers of subcontractors - correct answer A home improvement contract in compliance with the home improvement laws would include all of the following except True - correct answer A salesperson may not represent 2 contractors at the same time for the same project. No - correct answer Can a sales person legally accept money for themselves from the customer True - correct answer It is against the law for building and permits departments to issue a permit to contractor without the contractors license number. True - correct answer If a contractor fails to correct violation of the building code within reasonable time period, the county or municipality inspecting the project shall notify the commission $5,000 and/or 2 years in jail or both - correct answer What is the maximum fine for contracting without a license-second offense Yes - correct answer Contractor, jack smith, is not getting along with hector jones , his customer. If he decides not to complete the contract, has jack broken any laws? No - correct answer Can a contractor decide to use material other than specified in the contract documents without getting permission from the owner? Lie on their license application Make false promises Misrepresent their service or product - correct answer Contractors may not : Fraud An illegal act A misdemeanor All of the about - correct answer Contractor, jack brown, makes a deal with customer, ameal cougar , to provide an estimate of $40,000 on project where the actual cost are $30,000,allowing ameal to pocket $10,000 after securing a mortgage at $40,000 and paying off jack this is : True - correct answer If a contractor sells personstoos selling or working with the contractor for any reason, the contractor has a responsibility to the state to inform the commission? True - correct answer All advertising has to provide the identifier "Maryland home improvement commission license no___________"or "MHIC $5,000 - correct answer What is the maximum penalty the commission may impose upon a contractor, licensed or unlicensed , per violation of these laws True - correct answer Advertising must be done in a way as to avoid misrepresentating the product, service or Terms of sale so as not to deceive the customer. True - correct answer An applicant must provide to the commission, a credit report with their application. 10 days - correct answer How many days does a contractor have to respond to a receipt of a claim from commission? 9 members - correct answer How many members are there in the Maryland home improvement commission? 4 member - correct answer Of the 9 members on the commission , how many are experienced in home improvement ? Yes - correct answer If a contract was agreed to and signed by both parties for the purchase of replacement windows at a trade show, would this sale be subject to the laws of the Door-to-Door Sales Act? Yes - correct answer If a consumer, by phone, contacted a roofing company and asked for a bid for their home, and the contract is signed at the home of the consumer without ever going to the office of the roofing company, is this sale subject to the laws of the Door-to-Door Sales Act? Yes - correct answer Can a buyer waive his right to cancel a contract that would fall into the category of situations that this law covers in emergency situations? No - correct answer When a buyer initiates the contact and requests a contractor to visit the home to make a repair or perform maintenance, is this sale to repair or maintain this home subject to the Door-to-Door Sales Act? No - correct answer If a customer made a purchase entirely over the phone or by mail, would this sales be subject to the Door-to-Door Sales Act? True - correct answer Contractors cannot fail to provide a copy of the contract entered into between the contractor and this customer at the time this contract is executed. 10 points - correct answer The contract or sales receipt must inform the buyer in BOLDFACE TYPE a minimum size of __________ points in the area where their signature is required on the document that "You, the buyer, may cancel this transaction at any time prior to midnight of the third business day after the date of this transaction." Notice of Cancellation - correct answer Where applicable, contractors must provide to their customers the form titled, ________________________ at the time of the sale. 10 business days - correct answer If a customer cancels their transaction with you, how long do you have to return property traded in and money exchanged? the seller - correct answer If a customer cancels their transaction with you and agrees to ship the purchased item back to the seller, who pays for the shipping? 20 days (NOT 20 business days!) - correct answer If a customer makes the goods available to the seller at their residence and the seller does not pick them up, at what point does the customer get to keep the goods? All of the above - correct answer The "Notice of Cancellation" that must be provided to the buyer at the time of the sale must be complete and in duplicate providing: 1 Name of Seller 2 Address of place of business 3 Date of transaction and the date not earlier than the third business day following the transaction that the customer can cancel. 4 All of the above True - correct answer A seller, by law, has to, at the time of sale, orally explain to the customer of their right to cancel. all of the above - correct answer What are the possible repercussions of violating the Door-to-Door Sales Act laws? 1 Repayment of any damages plus paying the customer's attorney's fees 2 Guilty of a misdemeanor 3 Can be fixed $1,000 fine or 1 year in jail or both 4 All of the above $25.00 - correct answer Door-to-Door Sales Act applies to sales, lease or rental of consumer goods or services under single or multiple contracts with a purchase price of ____________ or more. - correct answer Can an employer legally require an employee to be tested for the illegal use of drugs and alcohol?