- What is the Guaranty Fund?
- Who is eligible to file a claim against the Guaranty Fund?
- Who is not eligible to file a claim against the Guaranty Fund?
- Is there a time limit for filing a claim?
- How do I get a claim form?
- What is the difference between a complaint form and a claim form?
- I filed a complaint so why do I also have to file a claim?
- How much money can I recover from the Guaranty Fund?
- What costs does the Guaranty Fund cover?
- What claims are dismissed without a hearing?
- What do I need to submit with my claim form?
- Why do I need to give copies of my contract, change orders and cancelled checks?
- What happens after I file a claim?
- After I file a claim, how long does the process take?
- Why does the process take so long?
- If I repair the work before the Guaranty Fund hearing, will it hurt my claim?
- How do I check on the status of my claim?
- What if the home improvement contract contains an arbitration clause?
- What happens to my claim if I file a lawsuit in court or file for arbitration
against the contractor?
- What happens to my claim if the contractor sues me in court or files for arbitration?
- What happens if I win the lawsuit or arbitration against the contractor?
- What is the assignment of judgment form?
- What happens if the contractor wins the lawsuit or arbitration against me?
- Why do some claims go to mediation?
- What happens if I choose not to go to mediation?
- Does every claim involve a Guaranty Fund hearing?
- What happens at the Guaranty Fund hearing?
- Does the Commission represent me at the Guaranty Fund hearing?
- How do I find more information about the Guaranty Fund process?
- How do I find more information about the hearing process?
- Do I need a lawyer at the hearing?
- How long does a Guaranty Fund hearing take?
- What happens after the Guaranty Fund hearing?
- What is an exceptions hearing?
- What happens if neither party files an appeal?
- What happens if a party files an appeal?
- When do I get paid?
- What happens after I get paid?
- What happens to the contractor if the Guaranty Fund pays an award?
- Other helpful information
1. What is the Guaranty Fund?
The Maryland Home Improvement Commission administers a Guaranty Fund, which exists to reimburse homeowners
for the actual loss caused by a licensed contractor who performed a home improvement job in an
unworkmanlike, incorrect, or incomplete manner, or who abandoned a home improvement job. The Fund
is supported by licensed contractors, who pay a Guaranty Fund assessment when they obtain their
home improvement license and each time they renew the license.
2. Who is eligible to file a claim against the Guaranty Fund?
Any homeowner who suffered an actual loss caused by a licensed contractor may file a claim against
the Guaranty Fund. An owner may make a claim against the Fund only if the owner resides in the home
as to which the claim is made; or does not own more than 3 residences.
3. Who is not eligible to file a claim against the Guaranty Fund?
The following individuals are not eligible to make a claim against the Fund: a spouse or immediate
relative of a contractor, an employee, officer or partner of the contractor, or an immediate relative
of an employee, officer, or partner of the contractor.
4. Is there a time limit for filing a claim?
A claim shall be brought against the Fund within 3 years after the claimant discovered, or by use of
ordinary diligence, should have discovered the loss or damage.
5. How do I get a Guaranty Fund claim form?
After you file a complaint with the Home Improvement Commission, MHIC will investigate the complaint.
Following the investigation, if the complaint is not resolved, you may be eligible to file a Guaranty
Fund claim. If so, you will receive a claim form, which you may then complete, sign, and return to
MHIC. Claim forms are not available online.
6. What is the difference between a complaint form and a claim form?
A complaint form is the first step for a homeowner who believes a contractor has violated the Home
Improvement Law. By filing a complaint, a homeowner triggers an investigation by MHIC. If the contractor
is licensed (or was licensed at the time the home improvement contract was signed), then the homeowner
may file a separate form, called a Guaranty Fund claim form, , to seek monetary compensation from the
7. I filed a complaint so why do I also have to file a claim?
A complaint and claim are separate forms that are required to be filed by a homeowner. Once a complaint
is filed, MHIC will conduct a regulatory investigation to determine if the contractor violated the
Home Improvement Law. By filing a claim form, a homeowner initiates a process to determine whether
the homeowner is eligible to recover money from the Guaranty Fund.
8. How much money can I recover from the Guaranty Fund?
The maximum recovery for a claim against the Guaranty Fund is $20,000 per claimant, or the amount
the homeowner paid to the contractor against whom the Guaranty Fund claim is made, whichever amount
is less. The maximum amount that the Fund will pay on behalf of the same contractor is $100,000 to
all claimants. If the total of all approved claims against a contractor amounts to more than
$100,000, then the Commission will pro-rate the claims and will pay the approved claims proportionately
so that each claimant receives the same percentage payment of the claim. For example if the total
amount of approved claims against a contractor is $200,000, then each claimant would receive 50% of
the awarded amount of their claim. If the contractor reimburses the Fund, following the pro-rated
payout, then the claimants would again receive a pro-rated amount of their claim, based on the
amount of money that the contractor reimbursed into the Fund.
9. What costs does the Guaranty Fund cover?
The Guaranty Fund covers the "actual loss," which means the cost of restoration, repair, replacement,
or completion that arise from an unworkmanlike, inadequate, incomplete, or abandoned home improvement.
The Fund does not cover consequential damage or other costs that may be incurred, such as attorney's
fees or court costs. The Fund also will not reimburse a claimant for money paid to an unlicensed
home improvement contractor to correct or complete work performed that is the subject of the claim.
10. What claims are dismissed without a hearing?
The Commission may dismiss any clam that is frivolous, legally insufficient or made in bad faith.
These include claims based upon a false or altered document; a document, bill, receipt or estimate
that includes an enhancement, improvement, upgraded services or materials or work or repairs that are
outside the scope of the original contract; and work completed by an unlicensed contractor. The
Commission may also deny any claim if the claimant unreasonably rejected good faith efforts by the
contractor to resolve the claim.
11. What do I need to submit with my claim form?
Each claim form shall be submitted under oath, and contain an accurate amount of the claim based upon
the actual loss; the facts giving rise to the claim; copies of the original contract and all other
documents that support the claim, including photographs, copies of 2 or 3 estimates from licensed
contractors detailing the cost to correct or repair the original home improvement job. If the work
has already been corrected, the claimant should also include proof of payment to the second contractor
as well as a copy of the contract to complete or repair the work.
12. Why do I need to give copies of my contract, change orders and cancelled
The documentation you provide to the Commission allows the investigator assigned to your claim to
validate your claim. Claims that cannot be validated are dismissed without a hearing.
13. What happens after I file a claim?
After MHIC receives a completed claim form, properly signed, the Commission sends a copy of the claim
form and supporting documents to the contractor alleged to be responsible for the actual loss. The
contractor is required to submit a written response to the claim within 10 days. Once the response
is received, an investigator at MHIC reviews both the claim and the response to determine if the
claim is valid. This determination is based on whether the claim has factual and legal merit. The
investigator may request more information from either side; may try to mediate a settlement between
the parties; or may suggest that the parties participate in formal mediation in an effort to resolve
the dispute. If the Commission determines that the claim is legally sufficient and supported by the
evidence, the Commission may schedule the claim for a hearing, or issue a proposed order approving
the claim, if the claim is for $5,000 or less. If the claim exceeds $5,000, a hearing may be scheduled.
14. After I file a claim, how long does the process take?
The process can be very lengthy depending on many factors that can influence the amount of time
required to resolve and adjudicate a claim. The Commission may prioritize certain claims involving
the habitability of the homeowner's primary residence, especially in cases where the homeowner is,
elderly, homebound or has a limited income.
15. Why does the process take so long?
The process takes a long time because of the large number of claims that are currently pending in
addition to a limited number of available hearing dates. Because a majority of claims require a
hearing, even when the contractor is no longer in business, there is currently a large backlog of
claims awaiting hearings. However, this guarantees that each claimant has an opportunity to present
their claim at a hearing.
16. If I repair the work before the Guaranty Fund hearing, will it hurt my claim?
If work is repaired prior to the hearing, it is important to fully document the condition of the
property prior to the repairs with an inspection report, photographs, etc., in order to support
the claim. The Commission recommends that homeowners obtain at least 3 bids from properly licensed
contractors and provide copies of cancelled checks as proof of payment to the new contractor. In
any case, the Commission cannot guarantee payment, nor that you will receive full reimbursement for
amounts you spend on repairs.
17. How do I check on the status of my claim?
MHIC will send each party a notice every 3 - 4 months to update the status of the claim. Homeowners
may also call or email the claim investigator to determine the status of their claim.
18. What if the home improvement contract contains an arbitration clause?
The Home Improvement Law states that a claimant shall comply with a written agreement to submit a
claim for arbitration before seeking recovery from the Guaranty Fund. If your home improvement
contract contains a binding arbitration clause, you must make a good faith effort to submit your
dispute to arbitration before seeking recovery from the Guaranty Fund. Therefore, MHIC may not
process a claim against the Guaranty Fund until the parties have participated in arbitration or
the contractor has expressly waived the right to go to arbitration. For more information about
arbitration, please see the Commission's flyer,
19. What happens to my claim if I file a lawsuit in court or file for
arbitration against the contractor?
If a claimant initiates civil litigation or arbitration against the contractor based upon the contract
that is the subject of the Guaranty Fund claim, then MHIC will close its file pending the outcome of
the court or arbitration proceedings.
20. What happens to my claim if the contractor sues me in court or files for
If a contractor files a civil action in a court or files for arbitration against the homeowner based
upon the contract that is the subject of the Guaranty Fund claim, then MHIC will close its claim
file in deference to the court or arbitration proceedings. Once the proceedings have concluded,
the Commission may take action, depending on the Court's or the arbitrator's findings.
21. What happens if I win the lawsuit or arbitration against the contractor?
If a homeowner prevails following a civil trial or arbitration proceeding in which the judge or
arbitrator specifically found that the homeowner incurred an "actual loss" as a result of an
unworkmanlike, inadequate, incomplete, or abandoned home improvement by a licensed home improvement
contractor, then the Commission will award to the homeowner the amount of the actual loss (subject to
the limitations of the Home Improvement law). The homeowner needs to submit a certified copy of the
Final Order and also complete and sign an Assignment of Judgment form. The Commission will not pay an
award from the Guaranty Fund based upon an affidavit or default judgment. Likewise, the Commission
will not pay an award based upon a judgment that has already been satisfied (or paid by the contractor).
22. What is the assignment of judgment form?
Following litigation in which the homeowner prevails, the homeowner shall sign an Assignment of Judgment
form. With the assignment, the homeowner gives the right to the Commission to use the judgment to
collect reimbursement from the contractor for the money paid from the Guaranty Fund.
23. What happens if the contractor wins a lawsuit or arbitration
proceeding against me?
If the contractor prevails in a civil litigation or arbitration proceeding against the homeowner,
then MHIC is required to dismiss the Guaranty Fund claim.
24. Why do some claims go to mediation?
MHIC offers free mediation to all parties who are interested in working with a trained professional
in an effort to resolve their dispute. The mediators are not affiliated with MHIC, so any information
shared during the mediation session is confidential and will not be shared with MHIC. Mediation is
the right choice for homeowners and contractors who wish to work together for the benefit of both
parties. The advantage for the homeowner is that mediation can be scheduled far sooner than a claim
is processed, including scheduling a hearing. The advantage for the contractor is that the claim will
not be part of the public record. For both parties, mediation offers an opportunity to save time and
money required to go to a hearing.
25. What happens if I choose not to go to mediation?
If either party decides not to participate in mediation - or if the mediation effort is unsuccessful
then the claim is scheduled for a Guaranty Fund hearing. Hearings are held at the Office of
Administrative Hearings (OAH), which is located in Hunt Valley, Maryland. Some hearings are scheduled
in other jurisdictions for the convenience of the parties and witnesses.
26. Does every claim involve a hearing?
No, the Commission can decide claims that are less than $5,000 without holding a hearing. However,
if either party disagrees with the Commission's decision, the claim will be set for a hearing. In
addition, the Commission may deny any claim that lacks legal or factual merit, or is made in bad
faith, without first holding a hearing.
27. What happens at the hearing?
At the hearing, the homeowner, who is the claimant, has the burden of proof, which means that the
homeowner must establish by the evidence that the claim is valid and that she or he is entitled to
receive an award from the Guaranty Fund. The contractor, who is the respondent, has the right to
defend against the claim. In addition, an Assistant Attorney General is present at the hearing to
represent the Guaranty Fund; the Assistant Attorney General does not represent either the claimant
or the contractor.
28. Does the Commission represent me at the Guaranty Fund hearing?
The Home Improvement Commission does not represent either party at the hearing. Instead, the purpose
of the Commission is to administer the Guaranty Fund and to give each party a fair and equal opportunity
to present evidence in support of their position.
29. How do I find more information about the Guaranty Fund process?
The Commission hosts a workshop on the 3rd Thursday of every other month (odd numbered months only) to explain the process. The workshop is free and is open to both
homeowners and contractors. Participants at the workshop learn about the hearing process and what to expect after the hearing. Specific claims are not discussed at the
workshop and legal advice is not given. The workshops are held at 2 p.m. on the 3rd Thursday of January, March, May, July, September and November. The workshops are at
500 North Calvert Street, 2nd Floor Conference Room. Baltimore, MD 21202. Please enter the building on the Centre Street side.
30. How do I find more information about the hearing process?
For more information regarding the hearing, please visit the website
of the Office of Administrative
Hearings. The site has a list of FAQ's and links to videos that explain how to represent yourself at a hearing.
31. Do I need a lawyer at the hearing?
Whether to hire an attorney is a personal decision that each party needs to make. Most claimants and respondents
do not hire an attorney for the hearing. However, an attorney can be useful, especially in cases involving
technical or complex legal issues. Formal rules of evidence are relaxed at Guaranty Fund hearings. The OAH
webpage also has videos online that explain how to how to represent yourself at a hearing.
32. How long does a Guaranty Fund hearing take?
A hearing can last several hours or it may take a day or more. It depends on the number of witnesses who
testify and the amount of evidence that is presented by each party. While most Administrative Law Judges are
patient, parties should be prepared to present their evidence in an organized and efficient manner, without
33. What happens after the Guaranty Fund hearing?
The Administrative Law Judge has 90 days following the hearing to issue a written Recommended Decision, which
is sent to MHIC. The Commission reviews the Recommended Decision and issues a Proposed Order, which is sent to
both parties. Either party who disagrees with the Proposed Order can file exceptions to the Order, and MHIC
will schedule an exceptions hearing before a Hearing Board of the Commission.
34. What is an exceptions hearing?
An exceptions hearing is held before a Hearing Board of the Commission at the Home Improvement Commission. It
is not a hearing to retry the case. The purpose of the exceptions hearing is for the party who disagrees with
the Proposed Order to tell the Hearing Board why the Proposed Order is incorrect. The Hearing Board ordinarily
does not consider new evidence at the exceptions hearing. Instead the individual who disagrees with the
Proposed Order explains why the Order is incorrect, based upon the evidence that was presented to the Administrative
Law Judge. The Commission may then amend the Order; affirm the Order; or remand the case to OAH.
35. What happens if neither party files an appeal?
If neither party requests an exceptions hearing, the Proposed Order converts into a Final Order. The
Final Order documents either the amount the Commission authorizes to be paid from the Guaranty Fund to
the claimant or the reasons for the denial of the claim. Either party has 30 days from the date of the
Final Order to file an appeal of the Final Order to the Circuit Court.
36. What happens if a party files an appeal?
A party who disagrees with the findings contained in the Final Order has the right to file an appeal to
the Circuit Court. If either party files an appeal, the procedures for the appeal are governed by the
Circuit Court in which the appeal is filed.
37. When do I get paid?
Once the award is final, and all appeals are exhausted, the Commission authorizes a payment from the
Guaranty Fund to the claimant. Claimants then receive a check from the State Treasury in approximately
38. What happens after I get paid?
After the Commission pays a claim from the Guaranty Fund, the Commission is subrogated to all rights of
the claimant in the claim up to the amount paid and the claimant shall assign to the Commission all
rights of the claimant in the claim up to the amount paid.
39. What happens to the contractor if the Guaranty Fund pays an award?
After the Commission pays a claim from the Guaranty Fund, the contractor is responsible for reimbursing
the Guaranty Fund for the amount paid plus 10% interest per year. The contractor's MHIC license will be
suspended until the money is reimbursed.
40. Other helpful Information
The Guaranty Fund is designed for homeowners to recover an actual loss caused by the unworkmanlike,
inadequate, incomplete, or abandoned home improvement work of a licensed home improvement contractor.
Claimants have the right to seek remedies through other avenues, such as the courts or the contractor's
insurance company. The Commission shall deduct the amount recovered from other sources from the amount
payable upon the claim and deduct the difference to be paid from the account. The Guaranty Fund is not
available to homeowners who hire unlicensed contractors.