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Maryland Home Improvement Bond

Do You Need A Maryland Home Improvement Bond?

The Maryland Home Improvement commission requires that home improvement contractors get a $20,000 surety bond prior to being licensed or they must demonstrate financial solvency as part of the application process.

When you are a home improvement contractor you are required to comply with the Annotated Code of Maryland, Business Regulation, Article, Title 8.  https://law.justia.com/codes/maryland/2010/business-regulation/title-8/

The guaranty fund will compensate the homeowner up to $20,000 or the total amount of payments made for a contract if less, in the event the contractor performs an unworkmanlike, inadequate, or incomplete home improvement.

Here are some tips for home improvement contracts:

  • Each home improvement contract must be in writing and legible.
  • Contractors can not accept a deposit or payment from the homeowners until the contract is signed by each party.
  • The agreed-upon price of the home improvement contract should be clearly listed.
  • If there are additional documents, like architects’ drawings or building permits they should be attached to the contract and the homeowners should be given a copy.

How long is the MHIC bond good for?

A Maryland home improvement bond is good for 2 years.  If the surety company wishes to cancel the bond they must give 30 days’ notice to the home improvement commission.

What do you need to do become a home improvement contractor?

  • To become a Maryland home improvement contractors, all applicants must pass and exam prior to licensing.

Once the exam is passes, the applicant can begin the licensing application. https://www.dllr.state.md.us/license/mhic/mhicapply.shtml

  • Do you have a trade name?
  • Prior to registering a trade name/partnership/corporation, call the commission to check for name availability

Register the business name with the Maryland Dept of Assessment and Taxation and submit proof of acceptance with the application

  • You will need to submit proof of at least 2 years of experience in the home improvement work, construction and/or education
  • Current, original credit report in the last 90 days
  • Copies of any conviction records for misdemeanors or felonies related to home improvement transactions
  • Proof of financial solvency based on the scope and size of the business in relation to total assets, liabilities, credit rating, and net worth (Assets-Liabilities=Net Worth)
  • Proof of General liability coverage, they only require $50,000 limit but this is an outdated limit that is really not offered, and we strongly encourage you to seek higher limits of coverage

The proof of insurance needs to include the individual’s name as well as the company name and show that the Maryland Home Improvement Commission is the certificate holder

  • Real Estate and bank statements

You can use a copy of the current real property assessment notice or a written appraisal to prove the value of the property provided the appraisal is less than 2 years old

For properties that are not in MD, you will need a copy of the deed

  • Notarized signatures of all co-owners of real estate, bank accounts or other assets
  • Personal bank statements for the last 3 months
  • Copy of all vehicle titles or registrations.  Kelly Blue Book to state the value of the vehicle
  • For other assets you must provide proof of ownership and documented proof of value

After you have all necessary documentation mail it with the application and a check to the Maryland Home Improvement commission. The current fee is $370.00

Remember that before you can even apply for your license you need to have the general liability insurance coverage and you need a certificate of insurance. The application process once everything is submitted usually takes a few weeks, longer if there are documents missing.

Contact Huff Insurance

Huff Insurance can help you with all of your insurance needs to get your MHIC home improvement bond.  We can also help you with your general liability insurance coverage. Fill out the form below or give us a call at 410-647-1111.