Contractor Licensing in Maryland: The MHIC License

Maryland licenses home improvement work statewide, through the Maryland Home Improvement Commission (MHIC) under Title 8 of the Business Regulation Article. The law is strict where it counts: no license, no contract with a homeowner; no signed contract, no deposit. Here is who needs the license, how to get it and what it costs, where the separate trade boards take over, how the Guaranty Fund works from the contractor’s side, and what every contract must say.

What counts as home improvement

Section 8-101 defines it broadly: the addition to or alteration, conversion, improvement, modernization, remodeling, repair or replacement of a building used or designed as a residence, or a structure next to it, and improvements to the land next to it. It names a driveway, fence, garage, landscaping, deck, porch and swimming pool; awnings, fire alarms and storm windows; and work on individual condominium units. It leaves out construction of a new home, apartment buildings of four or more units, the common areas of condominiums, and selling materials without arranging the installation.

The Commission’s own “Do you need a license to do that?” answers settle many trade questions:

• Licensed: house painting, interior and exterior; tile, wood and other flooring; gravel driveway work; paver patios and retaining walls; a central vacuum system; a chimney cap or chimney rebuild; a shed the contractor installs permanently; solar panels (and a licensed master electrician makes the connection).
• Not licensed by MHIC: carpet installation and carpet cleaning; chimney sweeping; demolition and clean-up only; interior curtains and blinds; mounting a TV; a shed set on the ground or on blocks.
• Someone else’s license: new homes are built by builders registered with the Attorney General’s Home Builder Registration Unit; tree experts are licensed by the Department of Natural Resources (see Tree Work Licenses); marine work belongs to the Department of the Environment’s Marine Contractors Licensing Board.

Who needs which license

Section 8-301 requires a contractor license to act as a contractor, and a salesperson license (or a contractor license) to sell a home improvement, which includes negotiating or seeking a contract with an owner. It does not apply to someone who works for a contractor for wages and is not a salesperson, or to a licensed electrician, plumber or HVACR contractor working within the scope of that license or installing central heating or air conditioning.

Subcontractors no longer have a license of their own. The Commission says Maryland eliminated the subcontractor category on July 1, 2016, so a sub may work without a license on home improvements for an MHIC-licensed contractor; only licensed contractors may contract with homeowners. A salesperson license needs written notice to the Commission, signed by the contractor and the salesperson, of their relationship (§8-306). And §8-612 bars performing or selling a home improvement through anyone who must be licensed and is not.

Getting the contractor license

1. Pass the exam first. Section 8-302 requires it before you apply. The Commission’s exam page describes 55 questions on the laws and regulations of running a home improvement business, two hours on computer at PSI test centers, a passing score of 70%, and a standard fee of $63. Apply for the license within two years of passing or the score expires; after a failed attempt you wait 30 days to try again.
2. Insure for $500,000. Since June 1, 2024, §8-302.1 requires every applicant and licensed contractor to keep general liability insurance of at least $500,000, with proof filed with the application (§8-303) and at each renewal.
3. Show you can pay your bills. The application includes a credit report or its fee (§8-303), and the Commission posts a personal financial statement form. It may deny a contractor who fails to show financial solvency, judged by the size of the intended business against assets, liabilities, credit rating and net worth (§8-311). An applicant who falls short of its guidelines may use an indemnitor or buy a surety bond; the Commission posts $30,000 and $100,000 bond forms.
4. Pay the fees. COMAR 09.08.07.02 sets the contractor license at $281.25 for each place of business, plus a $22.50 processing fee; a salesperson license is $112.50. The Guaranty Fund fee is $100 for an original contractor license (§8-404), and the Commission’s page puts the two-year Fund assessment at renewal at $175.
5. Renew every two years. Licenses run for two-year terms (§8-308).

Say a painter with one office applies in 2026. The figures above add up to $466.75 before the license issues: $63 for the exam, $281.25 for the license, $22.50 for processing and $100 for the Fund, plus the credit report and the insurance premium. Each renewal after that is $281.25 plus the $175 Fund assessment, $456.25, plus a new credit report or its fee (§8-308). A company based in another state pays that state’s fee for a similar nonresident business if it is higher (§8-303(f)); the rest of crossing a state line is in Working Across a State Line.

The separate trade boards

The MHIC license does not cover the licensed trades, which the Maryland Department of Labor regulates through their own boards:

• Electrical. The State Board of Electricians: all electrical work in Maryland must be done by a licensed master, journeyperson or apprentice electrician, with apprentices supervised at all times. An electrician’s license requires general liability insurance of at least $300,000 and property damage insurance of at least $100,000.
• Plumbing and gas. The State Board of Plumbing licenses plumbing and gas services statewide except in Baltimore County and the area served by WSSC (Prince George’s and Montgomery counties), which issue their own licenses and have their own plumbing code.
• HVACR. The Board of Heating, Ventilation, Air Conditioning and Refrigeration Contractors licenses residential and commercial HVACR services under Title 9A.

So a remodeler running a kitchen job holds the MHIC license and brings in a licensed electrician and plumber for their parts. Local permits tie back to the license too: a county or city may not issue a home improvement permit, other than an owner’s own, unless it carries a licensed contractor’s number (§8-504).

The Guaranty Fund, from your side of it

Contractors pay into the Fund, and it pays homeowners for actual losses caused by a licensed contractor’s act or omission, including those of the contractor’s subcontractors, salespeople and employees (§8-405). The limits: $30,000 to one claimant for one contractor, $250,000 to all claimants for one contractor, never more than the claimant paid the contractor, and nothing for attorney fees, consequential or punitive damages, interest or personal injury. A homeowner has three years from discovering the loss to claim, must first arbitrate if the contract requires it, and can be denied for unreasonably rejecting the contractor’s good faith efforts to resolve the claim.

That last rule is the contractor’s best defense: answer complaints, offer the fix in writing, and keep the record. Because once the Fund pays, the bill comes back. The Commission is entitled to reimbursement of the amount paid plus interest of at least 10% a year (§8-410), may suspend your license until it is paid in full (§8-411), can sue for it, and an unpaid amount can become a lien on your real property.

What every contract must say

Section 8-501 requires every home improvement contract to be written, legible and signed by each party, to describe each document it incorporates, and to contain:

• your name, address, telephone number and MHIC license number, and the name and license number of each salesperson involved;
• the approximate start date and substantial completion date;
• a description of the work and the materials;
• the agreed price, the number and amount of any monthly payments including finance charges, and any collateral;
• the Commission’s notice that each contractor must be licensed and anyone may ask the Commission about a contractor, with its telephone number and website, and the notice about the Guaranty Fund and the owner’s right to buy a performance bond.

The owner gets a copy signed by you before work begins. If payment is secured by a lien on the home, the first page carries a notice in at least 10-point bold type, initialed by the homeowner, including the right to rescind within 3 business days. You may not take any payment before the contract is signed, or a deposit of more than one-third of the price (§8-617; the details are in How Big a Deposit Can You Legally Ask For?). A sale made at the customer’s home may also fall under Maryland’s Door-to-Door Sales Act; the Commission’s contracts page describes its cancellation right, to midnight of the fifth business day or the seventh day for a buyer 65 or older, with a Notice of Cancellation form attached. The federal version is in The 3-Day Right to Cancel.

One advertising rule: if you advertise that you are licensed, the ad must state the number as “Maryland Home Improvement Commission License No. ___” or “MHIC No. ___” (§8-615). Other states’ rules are in Your License Number in Ads.

What working without one costs

Acting as a contractor or selling a home improvement without the license is a misdemeanor: on a first conviction, a fine of up to $1,000, up to 6 months in jail or both; on a later one, up to $5,000, up to 2 years or both (§8-601). The Commission may also impose a civil penalty of up to $5,000 per violation, licensed or not (§8-620), and someone convicted under §8-601 cannot be licensed until all outstanding obligations are settled and a year has passed (§8-306). For the method of checking any other state, see Do I Need a Contractor License?

General information, not legal or tax advice. Rules change and vary by state; check with the agency named above or a professional for your situation.