The short version: hire an MHIC-licensed contractor (or a state-registered builder for a new home), pay no more than one-third up front, get everything in a signed written contract, ask for proof of at least $500,000 in liability insurance, and collect lien waivers before the final payment.
1. Check the MHIC license
In Maryland, the company that signs your home improvement contract, and any salesperson who sells it to you, must be licensed by the Maryland Home Improvement Commission (MHIC). Subcontractors working under a licensed contractor do not need their own MHIC license.
What to do: Look up the license number on the MHIC online search, or call MHIC at 1-888-218-5925, before you sign. The license number must be on the contract.
MHIC license lookup · MHIC: Before you hire
2. New homes are different
Builders of new homes are registered with the Home Builder Registration Unit of the Maryland Attorney General's Consumer Protection Division rather than licensed by MHIC. The Home Builder Guaranty Fund can cover up to $50,000 per claim.
What to do: For a new custom home, check the builder's state registration before you sign.
Check builder registration · Home Builder Registration Unit
3. Deposit: one-third at most
A Maryland home improvement contractor may not take any payment before the contract is signed, and the deposit may not exceed one-third of the contract price (Business Regulation §8-617).
What to do: Tie later payments to finished work you can see, and MHIC advises never paying in cash.
4. Get a complete written contract
Maryland requires home improvement contracts to be in writing and signed by both sides, with the contractor's name, address, phone and MHIC license number; each salesperson's name and license number; approximate start and completion dates; a description of the work and materials; the price and any finance terms; and notices about MHIC and the Guaranty Fund (Business Regulation §8-501).
What to do: You should get a signed copy before work starts. If the contract would put a mortgage or lien on your home, it must say so in bold on the first page, and you have three business days to cancel.
Md. Bus. Reg. §8-501 · MHIC: Contracts
5. Signed at your door? You can cancel
If you signed after a door-to-door sales pitch at your home, Maryland's door-to-door sales law lets you cancel within a few business days and requires a Notice of Cancellation form. MHIC's guidance gives five business days, or seven if you are 65 or older.
What to do: Read MHIC's door-to-door page for the current deadline and how to cancel in writing.
6. Ask for proof of insurance
Since June 1, 2024, MHIC-licensed contractors must carry at least $500,000 in general liability insurance.
What to do: Ask for a current certificate of liability insurance and a workers' compensation certificate before work starts.
7. Know the Guaranty Fund
The Maryland Home Improvement Guaranty Fund can repay homeowners up to $30,000 per claim for actual losses caused by a licensed contractor (up to $250,000 total per contractor). It covers owners who live in the home or own no more than three residences, and you generally have three years from discovering the loss to claim. Work by unlicensed contractors is not covered.
What to do: Start with a complaint to MHIC. Hiring licensed is what keeps this protection available to you.
8. Trades have their own licenses
Electricians are licensed by the State Board of Electricians, plumbers and gas fitters by the State Board of Plumbing (WSSC and Baltimore County license their own areas), and HVAC contractors by the State Board of HVACR Contractors.
What to do: Your general contractor's subs for electrical, plumbing and HVAC work should hold these trade licenses, and those trades usually pull their own permits.
State Board of Electricians · State Board of Plumbing · State Board of HVACR Contractors
9. Protect yourself from liens
An unpaid subcontractor or supplier can seek a mechanic's lien on your home: they must notify the owner within 120 days and file within 180 days after finishing their work. For an owner-occupied single-family home, the lien is limited to what you still owed your contractor when the notice arrived.
What to do: Before the final payment, ask your contractor for lien waivers from the main subcontractors and suppliers.
Md. Real Property §9-104 · Md. Real Property §9-105
10. Make sure permits are pulled
In Anne Arundel County, permits come from the Department of Inspections and Permits, filed online through the Land Use Navigator. Inside Annapolis city limits, the City of Annapolis issues permits.
What to do: Usually your contractor pulls the permit. Confirm it is issued before work starts, and that final inspections pass before your last payment.
Common questions
How do I check if a contractor is licensed in Maryland?
Search the contractor's name or license number on the Maryland Home Improvement Commission (MHIC) license lookup, or call MHIC at 1-888-218-5925. For a new home, check the builder's registration with the Maryland Attorney General's Home Builder Registration Unit.
How much can a contractor ask for up front in Maryland?
No more than one-third of the contract price, and nothing before the contract is signed (Maryland Business Regulation §8-617).
What is the Maryland Home Improvement Guaranty Fund?
A state fund that can repay homeowners up to $30,000 per claim for actual losses caused by an MHIC-licensed contractor. It does not cover work by unlicensed contractors.
Do subcontractors need an MHIC license?
Not if they work for a licensed general contractor. Electricians, plumbers and HVAC contractors still need their own trade licenses.
How much insurance must a Maryland contractor carry?
Since June 1, 2024, MHIC-licensed contractors must carry at least $500,000 in general liability insurance. Ask for a certificate, plus workers' compensation coverage.
Does TBG check these things?
Yes. TBG only introduces homeowners to contractors who are MHIC-licensed (or, for new homes, registered builders) and insured, and you should still verify the license yourself before you sign.
This guide is general information, not legal advice. Laws and limits change; check the linked official sources or a Maryland attorney for your situation.