P R A C T I C E Q U E S T I O N S A N D S T U DY
GUIDE • 2026|2027 EDITION
Maryland Home
Improvement
Commission
(MHIC) Exam Prep
Forty scenario-based questions with embedded
answer keys and step-by-step regulatory
rationales, covering licensing law, contracts and
mechanic’s liens, business management and
insurance, and codes and job-site safety —
aligned to current Maryland statutes and
2026|2027 blueprint domains.
40 Questions • 4 Sections • 100 Points
September 2026 • Updated for the 2026 Guaranty Fund,
contract, insurance, and code landscape
IN D E P E N D E N T S T UDY R E S O UR C E — N O T AF F ILIAT E D
WIT H M HIC O R P S I
,MHIC Exam Prep | Practice Questions and Study Guide 2026|2027 Edition
2026|2027 EDITION • 40 QUESTIONS • 2.5 POINTS EACH • 100 POINTS TOTAL
This study guide simulates the knowledge domains tested by the Maryland Home Improvement Commission
(MHIC) licensing examination administered at PSI test centers. Work through the four sections closed-book
at roughly ninety seconds per question, mark your choices, and then compare them against the embedded
answer key and rationale that follow each question. The blueprint is weighted for 30 percent recall, 50
percent application, and 20 percent analysis, with 75 percent of items presented as job-site or office
scenarios and 25 percent as direct statutory-recall items; every rationale explains the governing legal or safety
mechanism and why each distractor represents a non-compliant or unsafe practice.
Section 1: Maryland Home Improvement Law, MHIC Regulations,
and Consumer Protection
Questions 1-10 | Scope: the statutory definition of home improvement, licensing and trade-license boundaries, Guaranty
Fund coverage and claims, Consumer Protection Act enforcement, deposits, and the consequences of unlicensed practice.
Q1. Under the Maryland Home Improvement Law, which of the following activities requires a valid MHIC
contractor license?
A. Refacing kitchen cabinets and installing new countertops in an existing owner-occupied residence
[CORRECT]
B. Constructing a brand-new single-family home from the ground up
C. Building out the office space of a commercial law firm
D. Selling lumber and paint to a homeowner who will perform the installation herself
Correct Answer: A
Rationale. The statute defines home improvement as any addition, alteration, conversion, improvement,
modernization, remodeling, or repair to a building or part of a building used as a residence, and it expressly
includes work on individual condominium units. Option A is a core residential alteration, so it demands an MHIC
license. Option B is excluded because new home construction falls outside the definition; Option C is commercial
work on a non-residential building; and Option D is the sale of materials without installation, which is not home
improvement. Performing Option A without a license is criminal unlicensed practice and leaves the homeowner
without Guaranty Fund protection.
Q2. A licensed MHIC contractor wins a kitchen remodel that includes relocating a 240-volt range circuit.
How may the electrical portion be performed lawfully?
A. By the contractor's general laborers, because an MHIC license authorizes every trade
B. By a state-licensed master electrician performing the work under his or her own license and permit
[CORRECT]
C. By the contractor personally after reviewing an instructional video
D. By the homeowner's unlicensed handyman, who charges by the hour
Correct Answer: B
Independent study resource 1
, MHIC Exam Prep | Practice Questions and Study Guide 2026|2027 Edition
Rationale. The MHIC license covers general home improvement trades, but electrical, plumbing, and HVACR
work require separate state licenses issued by Maryland's master electrician, master plumber, and HVACR boards.
The compliant path is to have the electrical work performed by a properly licensed master electrician who pulls the
permit and answers to the electrical board. Options A and C create unlicensed electrical work even though the
contractor holds an MHIC license, and Option D compounds the problem by adding a completely unlicensed
worker. Delegating to licensed specialists is also the only way to keep insurance and Guaranty Fund exposure clean.
Q3. What is the maximum amount an eligible homeowner may recover from the Maryland Home
Improvement Guaranty Fund on a single claim?
A. $7,500
B. $20,000
C. $30,000 [CORRECT]
D. $50,000
Correct Answer: C
Rationale. The current cap is $30,000 per claim, measured against the amount the homeowner actually paid the
contractor; the figure was raised from earlier lower caps and is the number tested today. Option A is a historical
figure, Option B was the cap before the increase, and Option D exceeds the statutory ceiling. Contractors should
also know the pro-ration rule: when the total of all claims against one contractor exceeds $250,000, the
Commission pays claims proportionately under Business Regulation §8-409(b). Quoting an outdated cap to a client
is a misrepresentation risk under the Consumer Protection Act.
Q4. In month 18 after completion, a homeowner discovers that a licensed contractor's defective basement
waterproofing caused hidden mold damage, and the contractor refuses to pay. What is the correct Guaranty
Fund course of action?
A. File a Fund claim immediately upon noticing the defect, bypassing the complaint process
B. File any time within 10 years, because Fund claims never expire
C. Wait to recover until the contractor's license is revoked
D. File an MHIC complaint first, then submit a Guaranty Fund claim within three years after
discovering, or with ordinary diligence reasonably should have discovered, the loss [CORRECT]
Correct Answer: D
Rationale. The Fund procedure is sequenced: the homeowner files a complaint with MHIC, the Commission
investigates, and only after the complaint is unresolved does the claimant receive and file the actual Fund claim
form. The filing deadline is three years after the claimant discovered, or by ordinary diligence should have
discovered, the loss or damage. Option A skips the mandatory complaint stage, Option B invents a longer window,
and Option C adds a revocation condition that does not exist. For contractors, the same three-year horizon explains
why complete job records, payments, and change orders must be retained and retrievable.
Independent study resource 2
GUIDE • 2026|2027 EDITION
Maryland Home
Improvement
Commission
(MHIC) Exam Prep
Forty scenario-based questions with embedded
answer keys and step-by-step regulatory
rationales, covering licensing law, contracts and
mechanic’s liens, business management and
insurance, and codes and job-site safety —
aligned to current Maryland statutes and
2026|2027 blueprint domains.
40 Questions • 4 Sections • 100 Points
September 2026 • Updated for the 2026 Guaranty Fund,
contract, insurance, and code landscape
IN D E P E N D E N T S T UDY R E S O UR C E — N O T AF F ILIAT E D
WIT H M HIC O R P S I
,MHIC Exam Prep | Practice Questions and Study Guide 2026|2027 Edition
2026|2027 EDITION • 40 QUESTIONS • 2.5 POINTS EACH • 100 POINTS TOTAL
This study guide simulates the knowledge domains tested by the Maryland Home Improvement Commission
(MHIC) licensing examination administered at PSI test centers. Work through the four sections closed-book
at roughly ninety seconds per question, mark your choices, and then compare them against the embedded
answer key and rationale that follow each question. The blueprint is weighted for 30 percent recall, 50
percent application, and 20 percent analysis, with 75 percent of items presented as job-site or office
scenarios and 25 percent as direct statutory-recall items; every rationale explains the governing legal or safety
mechanism and why each distractor represents a non-compliant or unsafe practice.
Section 1: Maryland Home Improvement Law, MHIC Regulations,
and Consumer Protection
Questions 1-10 | Scope: the statutory definition of home improvement, licensing and trade-license boundaries, Guaranty
Fund coverage and claims, Consumer Protection Act enforcement, deposits, and the consequences of unlicensed practice.
Q1. Under the Maryland Home Improvement Law, which of the following activities requires a valid MHIC
contractor license?
A. Refacing kitchen cabinets and installing new countertops in an existing owner-occupied residence
[CORRECT]
B. Constructing a brand-new single-family home from the ground up
C. Building out the office space of a commercial law firm
D. Selling lumber and paint to a homeowner who will perform the installation herself
Correct Answer: A
Rationale. The statute defines home improvement as any addition, alteration, conversion, improvement,
modernization, remodeling, or repair to a building or part of a building used as a residence, and it expressly
includes work on individual condominium units. Option A is a core residential alteration, so it demands an MHIC
license. Option B is excluded because new home construction falls outside the definition; Option C is commercial
work on a non-residential building; and Option D is the sale of materials without installation, which is not home
improvement. Performing Option A without a license is criminal unlicensed practice and leaves the homeowner
without Guaranty Fund protection.
Q2. A licensed MHIC contractor wins a kitchen remodel that includes relocating a 240-volt range circuit.
How may the electrical portion be performed lawfully?
A. By the contractor's general laborers, because an MHIC license authorizes every trade
B. By a state-licensed master electrician performing the work under his or her own license and permit
[CORRECT]
C. By the contractor personally after reviewing an instructional video
D. By the homeowner's unlicensed handyman, who charges by the hour
Correct Answer: B
Independent study resource 1
, MHIC Exam Prep | Practice Questions and Study Guide 2026|2027 Edition
Rationale. The MHIC license covers general home improvement trades, but electrical, plumbing, and HVACR
work require separate state licenses issued by Maryland's master electrician, master plumber, and HVACR boards.
The compliant path is to have the electrical work performed by a properly licensed master electrician who pulls the
permit and answers to the electrical board. Options A and C create unlicensed electrical work even though the
contractor holds an MHIC license, and Option D compounds the problem by adding a completely unlicensed
worker. Delegating to licensed specialists is also the only way to keep insurance and Guaranty Fund exposure clean.
Q3. What is the maximum amount an eligible homeowner may recover from the Maryland Home
Improvement Guaranty Fund on a single claim?
A. $7,500
B. $20,000
C. $30,000 [CORRECT]
D. $50,000
Correct Answer: C
Rationale. The current cap is $30,000 per claim, measured against the amount the homeowner actually paid the
contractor; the figure was raised from earlier lower caps and is the number tested today. Option A is a historical
figure, Option B was the cap before the increase, and Option D exceeds the statutory ceiling. Contractors should
also know the pro-ration rule: when the total of all claims against one contractor exceeds $250,000, the
Commission pays claims proportionately under Business Regulation §8-409(b). Quoting an outdated cap to a client
is a misrepresentation risk under the Consumer Protection Act.
Q4. In month 18 after completion, a homeowner discovers that a licensed contractor's defective basement
waterproofing caused hidden mold damage, and the contractor refuses to pay. What is the correct Guaranty
Fund course of action?
A. File a Fund claim immediately upon noticing the defect, bypassing the complaint process
B. File any time within 10 years, because Fund claims never expire
C. Wait to recover until the contractor's license is revoked
D. File an MHIC complaint first, then submit a Guaranty Fund claim within three years after
discovering, or with ordinary diligence reasonably should have discovered, the loss [CORRECT]
Correct Answer: D
Rationale. The Fund procedure is sequenced: the homeowner files a complaint with MHIC, the Commission
investigates, and only after the complaint is unresolved does the claimant receive and file the actual Fund claim
form. The filing deadline is three years after the claimant discovered, or by ordinary diligence should have
discovered, the loss or damage. Option A skips the mandatory complaint stage, Option B invents a longer window,
and Option C adds a revocation condition that does not exist. For contractors, the same three-year horizon explains
why complete job records, payments, and change orders must be retained and retrievable.
Independent study resource 2
