Designed to protect homeowners from unlicensed contractors, the Maryland Home Improvement Law renders a contract between an owner and unlicensed contractor unenforceable. Essentially, if you are a contractor that performs home improvement work for a home owner, but you do not have a license, there will be no obligation by the home owner to make payment for your work. Maryland’s highest appellate court, however, refused to apply the same standard between a general contractor and unlicensed subcontractor, who performed home improvement work. The Court reasoned that the Home Improvement Law was enacted to protect the public and not companies or individuals engaged in the same business.
Specifically, in Stalker Brothers, Inc. v. Alcoa Concrete Masonry, Inc., the Maryland Court of Appeals found that Stalker Brothers, the general contractor, could be liable for unpaid monies due and owing to its unlicensed subcontractor, Alcoa Concrete Masonry, Inc., despite the fact that Alcoa did not have a MHIC license. Alcoa performed work on the residential property as Stalker Brothers’ subcontractor and did not need a MHIC license to enforce its contract with Stalker. Had Alcoa been performing work directly for the homeowner, it would have been precluded from seeking payment under the Maryland Home Improvement Law.
From a practical perspective, if a construction company or contractor in Maryland intends on performing work and supplying materials on residential properties, it is always best to obtain a MHIC license; however, this may not be a total bar on recovery. The Maryland contractor must consider who they are specifically performing work for and whether they require a MHIC license. For additional information, contact Michael W. Siri at 410-582-2400 or at firstname.lastname@example.org.