What Has to Be in a Maryland Home Improvement Contract

Maryland requires a home improvement contract in writing, signed by each party, carrying the contractor's MHIC license number, a description of the work and materials, the price, approximate start and completion dates, and the Commission's consumer notices. No contractor may take more than a third as a deposit. Ask Remodel Now for all of it in writing.

A handshake counts, and that is where people get hurt

Maryland defines this paperwork broadly enough that most homeowners have signed one without realizing it. Under the Business Regulation Article, a home improvement contract is an oral or written agreement between a contractor and an owner for the contractor to perform a home improvement. A home improvement is any adding to, altering, converting, improving, modernizing, remodeling, repairing or replacing of a residence or a structure next to it. Kitchens, baths, basements, additions, roofing, siding, windows and decks all land inside that definition. Building a new house does not. Neither does work on an apartment building with four or more units, or on the commonly owned areas of a condominium, although an individual condo unit is covered.

The word oral is the one to notice. A verbal agreement to redo your basement is a home improvement contract under Maryland law, which means the contractor is bound by the statute whether or not anybody printed anything. It does not mean you are protected. Almost every protection in Title 8 attaches to a document: a term that has to appear, a notice that has to be printed, a signature that has to be collected before money changes hands. With nothing on paper there is nothing to compare against the law.

So the practical question is not whether you have a contract. You do. The question is whether the one you have contains what the state says it must, and a surprising number of proposals circulating in Baltimore County and down through the Washington suburbs do not. The statute is short, and it is worth reading once before you ever have to use it.

What Maryland requires on the page

Section 8-501 of the Business Regulation Article is the list. The contract has to be in writing and legible, has to clearly describe any other document it incorporates, and has to be signed by each party. Then it has to contain a specific set of terms.

  • The contractor's name, business address, telephone number and license number.
  • The name and license number of each salesperson who solicited or sold the job.
  • The approximate dates when the work will start and when it will be substantially completed.
  • A description of the home improvement to be performed and the materials to be used.
  • The agreed price.
  • If you are paying in monthly installments, the number of payments, the amount of each, and any finance charge.
  • A description of any collateral securing your obligation.
  • A notice giving the Commission's telephone number and website, stating that every contractor must hold a current license and that anyone may ask the Commission about a contractor.
  • The consumer protection notice the Commission sets by regulation, including your right to buy a performance bond.

Two of those deserve a second look. The first is the description of the work and the materials. A line reading "remodel hall bath per discussion" satisfies nobody. The description is the only thing that later defines what finished means, so it should name the fixtures, the tile, the grade of cabinet, the specific products where they are known, and an allowance with a defined basis where they are not. If a product is still undecided, say so in writing and say how the choice gets priced.

The second is the pair of dates. Maryland asks only for approximate dates, and that word is doing real work. It is not a guarantee. It does become the reference point if a job stalls, because abandoning a job without a reasonable justification is one of the things the Commission investigates. A contract with blank dates is missing a required term, and it quietly removes the only timeline you could ever point at.

You must also receive a copy of the contract signed by the contractor before work begins. Not at the first invoice, not when the permit comes through. Before anyone starts.

The license number, the salesperson, and the name that has to match

The MHIC number belongs on the contract because Maryland wants you able to check the company before the first hammer swings, and because the number ties the job to a licensed entity that answers for it. Acting as a contractor without that license is a misdemeanor in Maryland, carrying a fine, possible imprisonment, or both, with a stiffer penalty on a repeat conviction.

Read the name next to the number carefully. An MHIC license is issued to a contractor, who may also register trade names under it, so the name on the truck, the name on the proposal and the name on the license do not always match word for word. Some of that is ordinary. A licensed individual operating under a registered trade name is normal practice. What is not normal is a contract naming an entity that appears nowhere on the license record, with a number borrowed from someone who will never set foot on your property. That arrangement puts you outside the protections of Title 8 on a job you believed was covered.

If a salesperson sat at your table and quoted the job, that person's name and license number go on the contract too. Maryland licenses salespeople separately, and the statute says plainly that a salesperson or other agent may not change the contract on the owner's behalf. Anything the salesperson promised that is not written into the document is not part of the deal, and that one sentence of law explains a large share of the disputes that reach the Commission.

There is a related clause worth catching. If the contract says it is subject to the contractor's approval before it becomes binding, a Commission regulation requires it to state that approval or disapproval will be given within ten working days of the contract date, with written notice to you either way. If the contractor disapproves, your deposit or other collateral has to come back within three working days of that decision and no later than thirteen working days from the contract date. A subject-to-approval clause with no deadline attached is not compliant.

The notices, and what each one is actually doing

Three notices get folded into most Maryland home improvement contracts, and homeowners skim all of them because they read like boilerplate. Each one is pointing at something specific.

The licensing notice carries the Commission's phone number and website and tells you that anyone may ask about a contractor. That is an invitation to make a phone call the website cannot replace, because the public license lookup shows status, not complaint history.

The second notice comes from COMAR 09.08.01.26 and has to be in the contract itself rather than an attachment. It tells you three things: that formal mediation of disputes is available through the Commission, that the Commission administers a Guaranty Fund that may compensate homeowners for certain actual losses caused by licensed contractors, and that you may ask your contractor to buy a performance bond for protection beyond what the Fund reaches. Most people never exercise the third option. It exists, it is yours to ask for, and asking is a reasonable thing to do on a large job.

The third notice only appears when your payment is secured by your house. If the contract creates a mortgage or lien against your residential real estate, Section 8-501 requires a notice on the first page, in at least ten point bold type, telling you so, telling you that you may want a lawyer, and telling you that you may rescind within three business days of signing by written notice to the contractor. You have to initial that notice separately from your signature on the contract. Leaving it out is not a technicality. Section 8-607 of the Business Regulation Article puts omitting that written notice in the same short catalog of prohibited acts as making a substantial misrepresentation to obtain a home improvement contract and making a false promise to induce one.

The deposit limit is the only hard money rule

Maryland regulates the money in a home improvement contract at exactly two points, and both live in Section 8-617. No payment may be demanded or received before the contract is signed. And no deposit may exceed one third of the contract price, whether it is collected before signing or at the moment the contract is executed.

That is the entire statutory limit, and everything after the deposit is negotiable between you and the contractor. Draws, progress payments and final retainage are terms, not law, and a smaller deposit is always permitted if that is what the two of you agree to.

Use that freedom deliberately, because a payment schedule is the only leverage a homeowner reliably has. Tie each payment to something you can walk up to and look at rather than to a date on a calendar. Materials delivered and stored on site. Demolition complete and the rough inspections passed. Tile set and grouted. Punch list cleared. A schedule built on dates rewards a crew for showing up; a schedule built on milestones rewards it for finishing. Hold a meaningful amount until the punch list is done, because the last small percentage of a remodel is the part everyone wants to walk away from and the part you will look at every morning.

One more detail belongs in the payment section. If any part of the price is financed in monthly installments, the number of payments, the amount of each and the finance charge all have to be stated in the contract. Financing arranged through the contractor is still part of the contract, and it still has to be written down.

When you can still cancel after you sign

Maryland gives homeowners more than one cancellation right, and which one you have depends entirely on where and how the deal was made. This is the part that surprises people, because the longest window attaches to the situation that feels most casual.

If the contractor or a representative personally solicited the sale and you agreed somewhere other than their place of business, the Door-to-Door Sales Act applies. Your own kitchen table counts. It still counts if you were the one who called and invited them out. The Act requires a bold statement of your cancellation right near the signature line and a separate, detachable Notice of Cancellation furnished in duplicate, with the contractor's name, address, the transaction date and the cancellation deadline already filled in. If the contract is missing that notice, the Commission's guidance says you may cancel by telling the seller in any manner and by any means, and a canceled deposit has to come back within ten business days.

  • Door-to-Door Sales Act. When it applies: The sale was personally solicited and you agreed somewhere other than the contractor's place of business, including your own home. How long you have: Until midnight of the fifth business day after the transaction, or the seventh business day if you are at least 65. What the contract has to carry: A bold statement of the right near your signature line, plus a separate detachable Notice of Cancellation in duplicate, in the language used in the sales presentation.
  • Payment secured by your home. When it applies: The contract creates a mortgage or lien against your residential real estate. How long you have: Three business days after signing, by written notice to the contractor. What the contract has to carry: A ten point bold notice on the first page that you initial separately from the contract itself.
  • Sale that grew out of a visit to a fixed retail location. When it applies: You went to the showroom or office and the agreement grew out of prior negotiations there. How long you have: No statutory cooling off period. What the contract has to carry: Every term in Section 8-501, but no cancellation notice.

Two exclusions are worth knowing because contractors use them legitimately and sometimes carelessly. A buyer-initiated emergency repair falls outside the Act if you give a separate, dated, handwritten statement waiving the cancellation right and the contractor substantially begins work. A written change order is also excluded, but only if you provide a separate, dated, handwritten statement acknowledging and waiving the right to cancel that change order. Handwritten means handwritten. A preprinted waiver on a form does not qualify.

Change orders are the second contract

Every honest estimate stops at the drywall. Nobody prices what they have not seen, and in a region full of postwar brick ranchers and 1920s rowhouses the wall usually has an opinion. Galvanized supply narrowed from the inside out, a cast iron stack never meant to be reconfigured, knob and tube that somebody abandoned halfway, a subfloor of diagonal planks that is strong and nowhere near flat. In a house built after 2000 the surprises invert: the plumbing is fine and the framing is engineered, so an I-joist cannot be notched the way a sawn joist can, and a relocated drain becomes a design question instead of a Saturday.

What separates a professional operation from a problem is not whether those things turn up. It is whether a written process for handling them existed before the first one did. A change order is a modification of a contract that Maryland requires to be in writing and signed by each party, so treat it with the same seriousness as the original document. It should carry its own description of the added or deleted work, its own price, its own effect on the completion date, and both signatures.

Settle the process before you sign the main contract. Who writes the change order. Whether work in that area stops until you sign it. Whether verbal approval counts, and the answer you want is no, for your protection more than the contractor's. What happens to the deposit percentage when the contract price goes up, since the one third cap runs on the contract price and a change order changes it.

Remodel Now remodels kitchens, bathrooms and basements for homeowners in Baltimore and across the Baltimore-Washington Metro Area, working out of Woodlawn in Baltimore County since 2001. Whatever company you are talking to, ask to see a blank change order form before you sign the remodeling contract itself. The questions you can call in to (301) 798-4696 are the same ones worth asking every bidder.

Permits are the contractor's duty, by regulation

Here is a clause homeowners sign without reading and regret later: one that puts the permit in your name. COMAR 09.08.01.08 makes obtaining every permit, license or special exception required to properly complete the work a non-delegable duty of the prime contractor. Non-delegable is the operative word. The contractor may do it personally or see that someone else does, but the obligation stays with the contractor.

A homeowner-pulled permit moves the liability for code compliance onto the homeowner and takes the licensed company's name off the permit record, so the work is no longer documented as that contractor's. If a contractor asks you to pull your own permit, the reason is almost never convenience.

Which office issues it depends on your address, not on the state. Baltimore County runs permits through its Department of Permits, Approvals and Inspections, and Baltimore City is an entirely separate jurisdiction with its own code and its own permit office. Howard, Anne Arundel, Montgomery, Prince George's and Frederick counties each run their own. Incorporated municipalities complicate it further: the City of Rockville issues its own building and trade permits through its Inspection Services Division rather than through Montgomery County, while nearby Silver Spring is unincorporated and files with the county. The contract should name the scope that requires permits and say who applies. It should not say the owner will obtain them.

Arbitration clauses and the trapdoor under the Guaranty Fund

Mandatory arbitration clauses appear in plenty of remodeling contracts, and Maryland does not ban them. It does require them to be visible. COMAR 09.08.01.25 says a mandatory arbitration clause must disclose who administers the arbitration, whether the parties owe mandatory fees and what the fee schedule is, and whether the arbitrator's findings are binding. It must also carry a notice that any claim you file against the Guaranty Fund is stayed until the arbitration concludes. You and the contractor have to initial and date the clause when you sign.

That stay is the part to think hardest about. The Guaranty Fund exists to compensate an owner for an actual loss resulting from an act or omission of a licensed contractor, and it is the single most valuable protection in Title 8 for a homeowner who ends up with unworkmanlike or abandoned work. Agreeing to mandatory arbitration does not destroy that claim, but it puts a proceeding in front of it, with its own fees and its own calendar.

Know the Fund's shape before you decide. It covers owners who live in the home or own no more than three residences. It excludes a contractor's spouse, immediate relatives, employees, officers and partners. It will not award attorney fees, consequential damages, court costs, interest, personal injury damages or punitive damages, and it will never pay more than what you actually paid the contractor. A claim has to be brought within three years after you discovered the loss or should have discovered it with ordinary diligence. And per the Commission's own answers, it pays nothing at all for work performed by an unlicensed contractor. That exclusion is why the license number on the contract matters more than any other line on the page.

Liens, subcontractors, and the paperwork that closes them out

You can pay a contractor in full and still get a lien notice from a tile setter who was never paid. Maryland law addresses this from two directions, and neither is automatic.

The regulatory side is clean. COMAR 09.08.01.12 makes paying subcontractors, workmen and materialmen a non-delegable duty of the prime contractor, stated in the regulation as existing to keep the owner's property free of mechanics' and materialmen's liens. A prime contractor who collects your draw and stiffs the plumbing sub has violated a Commission regulation, which is something the Commission can act on.

The lien side is procedural. Under Section 9-104 of the Real Property Article, a subcontractor seeking a lien has to give the owner written notice within 120 days after doing the work or furnishing the materials, by registered or certified mail with return receipt requested or by personal delivery. Once you receive that notice you may withhold from the contractor the amount you determine is owed to the subcontractor. Section 9-104 also caps the lien at the amount the owner still owes under the contract when the notice arrives, but it writes that cap for a single family dwelling being erected on the owner's land as the owner's own residence, so do not assume it reaches a remodel of a house you already live in. Either way, the money you have not paid out yet is the part you still control, which is the strongest argument there is for never getting ahead of the work on payments.

Build the answer into the contract. Ask for a lien release or waiver from each subcontractor and major supplier tied to the draw that paid them, and ask for final releases before the last payment. If you cannot get the subcontractor list, you cannot verify the releases, so ask for the list up front.

What to refuse to sign

Some clauses and some behaviors are reliable enough to act on by themselves.

Refuse a deposit demand above one third of the contract price. Refuse any payment at all before the contract is signed by both parties. Refuse a request to make the check out to an individual rather than the licensed company, or to pay cash, because both destroy the record you would need later. Refuse a document with no license number, no description of materials and no start or completion dates, because that is not a compliant contract in Maryland even after both of you sign it.

Refuse a clause putting the permit in your name. Refuse a mandatory arbitration clause that does not disclose the administrator, the fees and whether the decision binds you, and read the Guaranty Fund stay before you initial it. Refuse a subject-to-approval clause with no deadline. Refuse a preprinted waiver of your cancellation rights on a door-to-door job, because the statute asks for a separate handwritten statement from you, not a checkbox from them.

Be skeptical of a price that expires tonight. Scheduling is real and discounts are real, but a deadline that lands before you can read the contract is a sales technique. Be skeptical of an unsolicited knock after a storm, which is the oldest approach in this trade and the exact situation the five day cancellation window was written for.

What you should insist on is unglamorous. A written scope naming products. Approximate dates filled in. A payment schedule tied to completed work. A written change order process. The license number, verified before you sign rather than after. A remodel goes well or badly for reasons that have nothing to do with paperwork, but when one goes badly, the contract is the only part of it you can still hold.

Sources

Frequently Asked Questions

What has to be in a Maryland home improvement contract?

Section 8-501 of the Business Regulation Article requires the contract to be in writing, legible, clear about any document it incorporates, and signed by each party. It must carry the contractor's name, address, telephone number and MHIC license number, the name and license number of any salesperson who sold the job, approximate start and substantial completion dates, a description of the work and the materials, the agreed price, the number and amount of any monthly payments plus finance charge, a description of any collateral, and notices covering the Commission's contact information, mediation, the Guaranty Fund and your right to request a performance bond. You must receive a copy signed by the contractor before work begins.

How much deposit can a Maryland contractor ask for?

No more than one third of the contract price. Section 8-617 of the Business Regulation Article bars a contractor from receiving an advance deposit above that share, whether it is collected before signing or at the moment the contract is executed, and it separately bars demanding or receiving any payment at all before the contract is signed. Beyond the deposit, Maryland does not regulate the payment schedule, so draws and retainage are negotiated terms. A smaller deposit is always allowed if that is what you agree to.

Can I cancel a Maryland home improvement contract after I sign it?

Sometimes, and the window depends on how the sale happened. If the contractor personally solicited the job and you agreed somewhere other than their place of business, including your own home, the Door-to-Door Sales Act lets you cancel until midnight of the fifth business day after the transaction, or the seventh business day if you are at least 65. If the contract creates a mortgage or lien against your home, a separate three business day right to rescind applies and has to be disclosed in bold on the first page. A contract signed at a showroom after prior negotiations there generally carries no statutory cooling off period.

Does a change order have to be in writing in Maryland?

A change order modifies the contract, and Maryland requires a home improvement contract to be in writing and signed by each party, so a written and signed change order is the only version that clearly fits the statute. It should carry its own description of the work added or removed, its own price, and its own effect on the completion date. The Door-to-Door Sales Act treats a written change order as excluded from its cancellation right only if the homeowner supplies a separate, dated, handwritten statement waiving the right to cancel that change order, so a preprinted waiver does not do the job.

Who is supposed to pull the permit, the homeowner or the contractor?

The contractor. COMAR 09.08.01.08 makes obtaining every permit, license or special exception needed to properly complete the work a non-delegable duty of the prime contractor. The contractor can do it personally or see that someone else does, but the obligation does not transfer to you. A clause putting the permit in the homeowner's name shifts code compliance liability onto the homeowner and takes the licensed company's name off the permit record for the job.

Is an arbitration clause in a Maryland home improvement contract allowed?

Yes, and the Commission regulates how it appears. COMAR 09.08.01.25 requires a mandatory arbitration clause to disclose who will administer the arbitration, whether the parties owe mandatory fees and what the fee schedule is, and whether the arbitrator's findings are binding. It must also tell you that a claim against the Home Improvement Guaranty Fund is stayed until the arbitration is complete. Both parties have to initial and date the clause when the contract is signed.

Can a subcontractor lien my house if I already paid the contractor?

Under Section 9-104 of the Real Property Article, a subcontractor seeking a mechanics lien must give the owner written notice within 120 days after doing the work or furnishing the materials, served by registered or certified mail with return receipt requested or delivered personally. After that notice you may withhold from the contractor what you determine is owed to the subcontractor. Section 9-104 also caps the lien at what the owner still owes under the contract when the notice arrives, though it states that cap for a single family dwelling being erected on the owner's land as the owner's own residence, so do not assume it reaches a remodel of a house you already live in. COMAR 09.08.01.12 also makes paying subcontractors and suppliers a non-delegable duty of the prime contractor, stated as existing to keep the owner's property free of liens.

Is a verbal agreement with a contractor binding in Maryland?

The statute defines a home improvement contract as an oral or written agreement between a contractor and an owner, so a verbal deal is a home improvement contract and the contractor is bound by Title 8 either way. That does not make it safe for the homeowner. Nearly every protection in the law attaches to something that has to be printed on a document: required terms, required notices, a signed copy delivered before work starts. With nothing written there is nothing to measure against the statute.

Contact Us
Call Now
Get A Quote