HOME IMPROVEMENT CONTRACTORS LICENSING REQUIREMENTS

The client was a hard working carpenter. He had contracted to build an extensive deck on a home in Potomac and had substantially completed the job. Unfortunately, the homeowners were unhappy about a small portion of the job and refused to pay him the $5,500.00 balance that was due him. He was meeting with me to plan his course of action for litigation.

We carefully reviewed his contract with the homeowners and examined his invoices and bills for materials. I then asked when he was licensed by the Maryland Home Improvement Commission. "Well, I have a business license in the County, my corporation is properly registered with the State Department of Assessments and Taxation and I always pay my taxes including workmen's compensation and unemployment," he responded. "Very good" I said, "but what about your Home Improvement Commission License?" You can guess the response -- I've been meaning to take care of that but never got around to it.

At that point, the case is lost if the homeowner retains a clever attorney. The Maryland Home Improvement Law is detailed in the Maryland Code, Business Regulation Volume. At Section 8-601 of the Code, the Act specifies the licensing requirements --

(a) Except as otherwise provided in this title, a person may not act or offer to act as a contractor in the State unless the person has a contractor license.
(b) Except as otherwise provided in this title, a person may not act or offer to act as a subcontractor in the State unless the person has a contractor license or subcontractor license.
(c) Except as otherwise provided in this title, a person may not sell or offer to sell a home improvement in the State unless the person has a contractor license or salesperson license.
(d) A person who violates this section is guilty of a misdemeanor and, on first conviction, is subject to a fine not exceeding $1,000 or imprisonment not exceeding 30 days or both and, on a second or subsequent conviction, is subject to a fine not exceeding $5,000 or imprisonment not exceeding 2 years or both.

"But we had a written contract that they signed!" Unfortunately, the Maryland courts have held that where a statute is regulatory in nature, contracts made by unlicenced persons are illegal as against public policy and will not be enforced. See Harry Berenter, Inc. v. Berman, 265 A.2d 759 (1970). The Maryland Home Improvement Law requires that all persons who engage in those activities be licensed and if they are not, their contracts are unenforceable. Donmar Md. Corp. v. Hawkesworth, 420 A.2d 295 (1980). The contract was not enforceable in the courts and the best the client could hope to do was negotiate some resolution directly with the parties. Beyond that, the client risked criminal penalties for engaging in home improvement activities without a license.

Too often small contractors are failing to obtain their licenses from the Maryland Home Improvement Commission. All it takes is one case where you don't get paid and the next day you will fill out the application and become licensed.

It may not seem fair that a homeowner can get something for nothing, but the law is clear. If a home improvement contractor wants to help ensure the ultimate collection of his payment he or she must be licensed and must abide by the terms of the home improvement law.

If you are properly licensed and haven't been paid, give us a call and we will assist you in collection. If you are not licensed and haven't been paid -- lots of luck.

If you have any questions regarding collection of accounts please contact Jonathan Bromberg, Esq. at Bromberg Rosenthal LLP (301-251-6200).