MHIC NASCLA Contractors Practice Exam

What is the maximum amount that a home improvement contractor may pay to a homeowner for referring a client to the contractor?

1. 3 months

2. 6 months

3. 12 months

4. No maximum

The correct answer is: 6 months

The maximum amount that a home improvement contractor may pay to a homeowner for referring a client to the contractor is 6 months. This provision is established to maintain fair business practices within the home improvement industry, ensuring that referral incentives do not lead to unethical behavior or inflated costs for consumers. By capping the referral compensation at 6 months, the regulation encourages contractors to provide quality work and build genuine relationships with clients, rather than relying solely on referral incentives for business growth. This limit is intended to protect both the contractor's integrity and the homeowner's financial interests, fostering a responsible and sustainable referral culture in the home improvement sector.