The Maryland Home Improvement Law (“MHIL”) protects homeowners from unlicensed home improvement contractors, but it affords no such protections between contractors, such as an when an unlicensed subcontractor works for a licensed general contractor.
The MHIL requires any contractor “who performs or offers or agrees to perform a home improvement for an owner” to first obtain a license through the Maryland Department of Labor, Licensing and Regulation, the purpose being to protect the public – homeowners, specifically –from unqualified and unscrupulous contractors.
Specifically, the law renders unenforceable any contract between a homeowner and any unlicensed home improvement general contractor, thereby barring any recovery by the unlicensed contractor for work performed and materials furnished. The law, however, does not apply to a contract between a general contractor and its unlicensed subcontractor, thereby enabling an unlicensed subcontractor to bring forth a claim against the general contractor for work performed on a residential project.
Where a general contractor contracts with an unlicensed subcontractor to perform work on a residential project, however, the MHIL protection is unnecessary, as the general contractor and the subcontractor are companies engaged in the same business or profession, dealing at arm’s length with one another. Maryland courts have held that “the technical requirements of the licensing statute play no part in the determination of just claims between persons in the same business field who have contracted with knowledge of each other’s respective professional qualifications”, as specifically held by the Maryland Court of Appeals in a 2011 case.
Consequently, an unlicensed subcontractor may only bring forth a claim in residential construction cases against the construction company it has contracted with and may be precluded from bringing forth a mechanic’s lien or any of the claims against the owner.
In the 2011 case, the court held that an unlicensed subcontractor’s claim may be asserted against the general contractor rather than against the homeowner. As such, an unlicensed subcontractor would not be able to bring a mechanic’s lien or other claim against the owner and the unlicensed subcontractor’s recovery would only be limited to the general contractor.
So what becomes of a claim by licensed contractors against homeowners for the work performed by the licensed contractor’s unlicensed subcontractors? Unfortunately, this specific legal issue remains unclear in Maryland construction and mechanic’s lien law; however, there appears to be a compelling argument that as long as the higher-tiered contractor is licensed, that contractor can bring forth a claim for all work performed, including for its unlicensed contractor against the residential owner.
For more information please contact Michael W. Siri at 410-583-2400 or firstname.lastname@example.org.