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The Maryland Home Improvement Commission (MHIC) has specific requirements for the form and content of
every home improvement contract. The contract must be in writing and be legible. Also, the contract must
describe each document that it incorporates, and it must be signed by each party to the agreement. The
contract also must contain a description of the home improvement to be performed and the materials to be
used. Remember, a contract is a legally binding document so it is important to understand what you are
signing. The homeowner must receive a signed copy of the contract prior to the work starting.
Contractor’s Name, Address, and MHIC License Number
A home improvement contract must contain the name, address, and MHIC license number of the contractor.
If a salesperson solicited or sold the home improvement, then the contract must also contain the name and
license number of each salesperson. The contract must also contain a notice that states, "Every home
improvement contract must contain a notice that gives the telephone number of MHIC and states that each
contractor and subcontractor must hold a current MHIC license and anyone can ask MHIC about a contractor or
subcontractor."
Dates
A home improvement contract must contain the approximate dates when the performance of the home
improvement will begin and when it will be substantially completed.
Deposit and Payments
A contractor cannot accept more than 1/3 of the contract price as a deposit and may not accept any
payment until the contract is signed. The agreed upon price of the home improvement contract should be
clearly stated. Beyond the initial deposit, the Home Improvement Law does not control the payment schedule;
instead payment terms can be negotiated between the homeowner and contractor.
Mortgage or Liens
If you are borrowing money to finance the home improvement project, this information is very important.
Whenever payment for work performed under a home improvement contract will be secured by an interest in
residential real estate, the contract is required to contain additional information. On the first page of
the contract, there must be a written notice that states: "This contract creates a mortgage or lien against
your property to secure payment and may cause a loss of your property if you fail to pay the amount agreed
upon. You have the right to consult an attorney. You have the right to rescind this contract within 3
business days after the date you sign it by notifying the contractor in writing that you are rescinding the
contract."
Mandatory Arbitration
Does the contract contain an arbitration clause? Before you sign a contract, it is important to know
what arbitration is and whether the contract has an arbitration clause. A mandatory arbitration clause in a
home improvement contract is required to include the name of the person or organization that will conduct
the arbitration; whether any mandatory fees will be charged to the parties for the arbitration and list the
fee schedule; whether the arbitrator's findings are binding; and a disclosure that a claim against the
Guaranty Fund will be stayed until completion of the mandatory arbitration proceeding. Also, the parties
must initial and date the contract next to the arbitration clause.
Door-to-Door Sales Act
The contract may also be covered by the Maryland Door-to-Door Sales
Act. If the contract is covered by the Door-to-Door Sales Act, the contractor must include additional
information in the contract, including a notice that states that "you may cancel the transaction at any
time prior to midnight of the 3rd business day after the date of the transaction." A separate "Notice of
Cancellation" form must be attached to the contract and filled in with the information about how to cancel
the contract. According to the Door-to-Door Sales Act, the contract must be written in the same language as
that principally used in the oral sales presentation.
Legal Advice
Information contained in this flyer is not legal advice. You may wish to consult an attorney prior to
signing any legal document. MHIC staff cannot provide legal advice.
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