MH 701 Exam Bundle | Test Questions with Correct Answers

MH 701 Exam Bundle | Test Questions with Correct Answers What is Workers Comp insurance - ansRequired to be carried by any company that has one or more employees. It is 100% paid by employer and cannot be charged to employee. Social Security - ansSocial Sec Admin is responsible for paying retirement, disability and survivors benefits to workers and their families. The SSA issues SSN which are required for employees to legally work in US What is a bond? - ansA surety bond is a risk transfer mechanism between surety company, the contractor and the property owner. The agreement binds the contractor to comply with the terms and conditions of the contract. if the contractor cannot perform, the surety assumes responsibility. Bond language or requirements - ans1) Total amount required for the bond (varies and can be up to 100% value of contract) 2) Length of the bond 3) Requirement for notice of defect or lack of maintenance (a period of completion of corrections is generally outlined after notice of defect, and it also establishes a time period of response) 4) Bond enforcement (if a contractor fails to successfully complete work or violates any requirement of the bond, enforcement measures are outlined here) Types of Bonds - ans- Bid bond (guarantees that the contractor, if awarded the job, will perform at submitted price) - Performance bond (guarantees that the contractor will complete the contract) - Payment bond (guarantees subcontractors and suppliers will be paid for work and material) - maintenance bond (guarantees that for a stated period, typically 1 year, no defective workmanship or material will appear in the completed project) - completion bond (provides assurance to the financial backers of a construction project that it will be completed on time) - fidelity bond (covers business owners for losses due to dishonest acts by their employees) - lien bond (guarantees that liens cannot be places against the owners property by contractors payment of services) MD Department of the Enviroment responibilities - ansEnforcement of federal and state environmental laws and regulations and for the issuing of permits, licenses and certifications for activities that may affect the environment. The MDE published the MDE guide to environmental permits and approvals that provide guidance on permit applications and approval requirements What is the clean water act - ansestablishes the basic structure for regulating discharges of pollutants into the waters of the US What are several Evironmental Laws that may affect your construction activities? - ansThe Clean water act Clean Air Act Endangered species act (ESA) National Environmental Policy Act (NEPA) National Historic Preservation Act (NHPA) What is the required notification under Lead PRE - ansUnder Lead PRE, federal law requires that contractors provide lead info to residents before renovating pre- 1978 housing. The EPA publishes a pamphlet titled Protect your family from lea din your home, which must be distributed to the owner and occupants before starting work. Confirmation of receipt of the lead pamphlet or a certificate of mailing must be kept for 3 years Sole proprietors and taxes - ansYour net income from the business is reported as ordinary income. Sole proprietors do not pay corporate income taxes What are disadvantages of Sole proprietorship - ansUnlimited personal liability less available capital Possible difficulty getting long term financing dissolution of business in the even of owners death MHIC does not transfer What is the requirement for Commissioners? - ansMust be a resident of MD for at least 5 years How long if the Commissioner's term? - ans4 years Where is the Commission's office? - ansBaltimore, MD Who appoints the Executive Director? - ansThe Secretary of Department of Labor, Licensing and Regulation What is the Executive Director responsible for? - ansthe daily operations of the Commission and signs under the seal letters affirming the licensing status of individuals for court proceedings. The Executive director is also responsible for compiling and maintaining a copy of the Commission's current regulations What do investigators do? - ansThe Commission also employs investigators that review the complaints and Guaranty Fund claims that are received by the Commission. The investigators review complaints against licensed and unlicensed contractors and salespersons. If an investigator determines that a violation may have occurred, what actions can the Commission take? - ansThe Commission may take disciplinary action which may include reprimand, monetary fine or suspension or revocation of the license. True or False: An individual who holds a home improvement license as a contractor is NOT required to obtain a construction license from the Circuit Courts - ansTrue How long are exams valid for? - ans2 years If a candidate fails the exam, how long must he/she wait before retaking it? - ans30 days the first time. After each subsequent failure a candidate must wait 60 days. What is the insurance requirement for contractor? - ansGeneral Liability at least $50,000 What is the Home Improvement Guaranty Fund? - ansOne of the Commissions most important function is to administer the Home Improvement Guaranty Fund. The fund compensates homeowners for the actual loss caused by the acts or omissions of a licensed contractor. True or False: Is a homeowner hires an unlicensed contractor he/she is eligible to collect money from the fund? - ansFALSE - if a homeowner hires an unlicensed contractor, the homeowner will NOT be eligible to collect money from the Fund. What is Actual Loss? - ansActual Loss means the cost to correct or complete a home improvement that is inadequate, unworkmanlike or incomplete. How much can homeowners recover? - ansHomeowners may recover up to $20,000 per contract, though they are not eligible to recover more than the amount paid to the contractor against whom the claim is based. Certain costs like: legal fees, interest, consequential damages are not covered by the Fund. What is the max amount that can be awarded from the Guaranty Fund for the acts or omissions of a contractor? - ans$100,000 How is the Fund maintained? - ans$100 by each contractor at the time of applying for a license. The Commission may also assess each contractor a fee of $50 if the Fund falls below $250,000 How many days does the contractor have to respond to claims from a homeowner once it has been received by the commission? - ansOnce the Commission receives a claim, it send a copy to the contractor who has 10 days to respond back to the Commission. Who is not eligible to collect from the Fund? - ansSpouse, relative, or employee of the contractor, or an officer of the corporation. Similarly, an owner may only receive compensation if she/he resides in the house where the work was performed or does not own more than 3 residences. What happens to the license of the contractor after a claim has been paid? - ansThe licensed is suspended, unless the commission determines that contractor did not know the wrongful conduct or it could had not been avoided What is required in a home Improvement contract? - ansDate Contractors name, address, and MHIC number Consumer Notice Dates Description of work Deposit and Payment information What is Consumer Notice? - ansIt provides phone of the Commission and states that "each contractor and subcontractor must hold a current MHIC license and anyone can ask MHIC about a contractor" The contract also needs to inform homeowners of the following: 1) Formal mediation disputes between homeowners and contractors are available through the Commission 2) The Commission administers the Fund which can compensate owners for certain actual losses caused by acts or omissions of licensed contractors 3) The homeowner may request that the contractor purchase a performance bond for additional protections against losses not covered by the Fund What is the maximum a contractor may ask for downpayment? - ans1/3 of the contract How long does a homeowner have to rescind a contract? - ans3 days after signing, and notification must be in writing. Who can make changes to a home improvement contract? - ansOnly the contractor is authorized to make changes for a homeowner. The commission recommends changes to be in writing. True or False: Before the performance of a home improvement coontract, the owner shall be given a copy of the home improvement contract signed by the contractor - ansTRUE