Maryland home improvement law requires every contractor who performs residential improvement work for pay to hold a license from the Maryland Home Improvement Commission (MHIC), and it requires every home improvement contract to be in writing, no matter how small the job. Break either rule and the consequences are real: unlicensed work is a criminal misdemeanor, and a contract that doesn’t meet the statute can be unenforceable in court. The rules that follow apply to both sides of the deal, and knowing them before signing is the cheapest protection you have.
Who Must Be Licensed
Any contractor who enters into a home improvement agreement with a Maryland homeowner must hold an MHIC license, which is issued by the Maryland Department of Labor.1Maryland Department of Labor. License Categories and Requirements – Maryland Home Improvement Commission (MHIC) That includes general contractors handling full remodels and specialists doing roofing, electrical, painting, or HVAC work.
Maryland eliminated its separate subcontractor license on July 1, 2016. A subcontractor can now work without their own MHIC license as long as they work under a licensed contractor, and only the licensed contractor may sign the contract with the homeowner.2Maryland Department of Labor. Maryland Home Improvement Commission (MHIC)
Salespersons who solicit or sell home improvement services on a contractor’s behalf need their own MHIC license. They must pass a licensing exam and hold a written agreement with a licensed contractor confirming the working relationship.3Maryland Department of Labor. Licensing FAQs for Applicants – Home Improvement Commission
What Home Improvement Covers
Maryland defines home improvement broadly. It reaches remodeling, structural repairs, painting, roofing, driveway paving, decks, patios, siding, fencing, waterproofing, and insulation. Plumbing, electrical, and HVAC repair or replacement fall under the law when done as part of a larger project. Smaller jobs like cabinet installation or window replacement qualify when they alter a home’s structure or function. Standalone landscaping and routine upkeep like gutter cleaning generally fall outside the definition unless they involve structural changes.
Hiring Unlicensed Contractors
If you hire an unlicensed contractor, you lose access to the state’s Guaranty Fund, which is the main financial recourse when a licensed project falls apart. An unlicensed contractor also may be unable to enforce the contract to collect payment through the courts, which weakens their position but leaves you with limited practical remedy if the work is bad.4Maryland Department of Labor. Don’t Be an Unlicensed Contractor’s Next Victim! – Maryland Home Improvement Commission You can verify any contractor’s license on the Department of Labor’s website in about two minutes.
What the Written Contract Must Say
Every home improvement contract in Maryland must be in writing, legible, and signed by both parties. There is no dollar threshold. A contract that fails to comply can be rendered unenforceable, meaning the contractor may lose the ability to recover unpaid fees in court.5Maryland General Assembly. Maryland Business Regulation Code Section 8-501 – Home Improvement Contracts
At a minimum, the contract must include:
- The contractor’s name, address, phone number, and MHIC license number.
- The name and license number of any salesperson who solicited the deal.
- A detailed description of the work and the agreed price.
- Approximate start and completion dates.
- Any warranties offered, with duration and coverage.
- Notice of the homeowner’s right to access the Home Improvement Guaranty Fund.
Any change to the scope of work or price must be documented in a written change order signed by both parties. A contractor cannot demand additional payment or shift the terms without that signed amendment.6Maryland Department of Labor. Maryland Home Improvement Contracts
Deposits and Payments
Maryland caps the upfront deposit at one-third of the total contract price. No payment of any kind can be collected before the contract is signed.6Maryland Department of Labor. Maryland Home Improvement Contracts Beyond the deposit, the law does not dictate the payment schedule, so you can negotiate milestone payments tied to specific completed work. Clear benchmarks are where most disputes get avoided.
Financing Disclosures
If the contractor arranges financing, the contract must clearly state the total amount financed, the interest rate, and repayment terms. Maryland consumer protection law applies to those arrangements, and misrepresenting terms can void the contract and trigger civil penalties.
Your Right to Cancel
When a home improvement contract creates a mortgage or lien against your property to secure payment, Maryland gives you three business days to cancel after signing. The contract must include a boldface notice of that right on the first page, and you must initial it separately.7Maryland General Assembly. Maryland Business Regulation Section 8-501 – Statute Text
A separate federal rule can also apply. The FTC Cooling-Off Rule gives you three business days to cancel any sale of $25 or more that takes place at your home rather than the seller’s usual place of business. If a salesperson comes to your door and you sign on the spot, that federal right applies, and the seller must give you two copies of a cancellation form at signing. The state and federal protections serve different purposes and can overlap when a door-to-door sale also puts a lien on the home.
The Guaranty Fund and Its Limits
Maryland’s Home Improvement Guaranty Fund pays homeowners who suffer losses because a licensed contractor abandoned a project, performed substandard work, or engaged in misconduct. The maximum recovery is $30,000 per claimant, or the amount you actually paid the contractor, whichever is less. The fund pays no more than $250,000 total across all claims against the same contractor. If approved claims exceed that ceiling, the MHIC prorates the payments so every claimant receives the same percentage of their award.8Maryland Home Improvement Commission. Guaranty Fund Frequently Asked Questions (FAQs) – Maryland Home Improvement Commission (MHIC)
The fund is financed entirely through contractor license fees: a $100 assessment on new licenses and $175 on renewals.9Maryland Department of Labor. Forms and Fees – Maryland Home Improvement Commission (MHIC) Only work performed by a licensed contractor qualifies for recovery. Hire someone unlicensed and you have no claim against the fund at all.
Permits and the Lead Paint Rule
Many projects require building permits under Maryland’s Building Performance Standards. Local jurisdictions enforce those standards and sometimes add stricter requirements, so permit rules vary by county but generally apply to structural changes, electrical and plumbing work, and major renovations. Once approved, the permit must be displayed at the job site, and inspectors check compliance at key stages. Unpermitted work can trigger fines, forced removal, complications when you sell, and denied insurance claims.
Federal law adds a lead paint layer for pre-1978 homes. The EPA’s Renovation, Repair, and Painting (RRP) Rule requires any firm paid to disturb painted surfaces in pre-1978 housing to be EPA-certified and to assign a certified renovator to each job.10U.S. Environmental Protection Agency. Renovation, Repair and Painting Program – Firm Certification The rule applies when a project will disturb more than six square feet of interior painted surface or more than 20 square feet on the exterior, and window replacements are always covered. The contractor must follow lead-safe work practices and keep records for at least three years.11U.S. Environmental Protection Agency. EPA Lead-Based Paint Program – Frequent Questions (January 2026)
A contractor can skip the lead-safe protocols only if a certified inspector or risk assessor, or a certified renovator using an EPA-recognized test kit, confirms the surfaces are lead-free. If your home was built before 1978, ask for proof of EPA certification before work begins.
Penalties for Unlicensed Work
Performing or offering to perform home improvement work without an MHIC license is a misdemeanor in Maryland, and the penalties climb sharply after a first offense:12Justia. Maryland Business Regulation Title 8 – 8-601 – Acting as Contractor or Subcontractor or Selling a Home Improvement Without License
- First conviction: a fine of up to $1,000, up to 30 days in jail, or both.
- Second or subsequent conviction: a fine of up to $5,000, up to two years in prison, or both.
Courts may order restitution to affected homeowners. Licensed contractors who engage in fraud or unethical practices also face MHIC discipline, including license suspension and revocation, and the Attorney General’s Office can pursue civil lawsuits seeking damages and injunctions.
Filing a Complaint
Complaints against contractors go to the MHIC, which investigates misconduct and can issue cease-and-desist orders, suspend or revoke licenses, and refer cases for criminal prosecution. For broader fraud or deceptive business practices, the Maryland Attorney General’s Consumer Protection Division accepts complaints and can pursue civil penalties, restitution, and injunctions.
You can also report scams to the Federal Trade Commission at ReportFraud.ftc.gov, which shares reports with more than 2,000 law enforcement partners. The FTC does not resolve individual complaints, but reports build the pattern evidence that drives enforcement actions.13Federal Trade Commission. ReportFraud.ftc.gov