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Should Your Contractor Be MHIC Licensed?


If you’re like most people, your house is your prized possession.  It’s not just your largest investment, but it’s also where you relax from the stresses of daily life and raise a family.  So, when it comes to choosing a contractor to oversee renovations on the property, it doesn’t hurt to be cautious.  Apart from researching rates, previous customer satisfaction, and capabilities, there’s something else you should look for:  an MHIC license.

What is the MHIC?

This stands for the Maryland Home Improvement Commission.  What it actually does, though, is regulate and/or license various contractors and salespeople who operate in the home improvement field, only in the state of Maryland.  Typically, this concerns companies who conduct business relating to renovations, repairs, remodeling, and other home alterations.  For the most part, its jurisdiction lies in single-family dwellings, rather than large condominiums or apartment complexes.  Those types of neighborhoods usually have enough weight that they can band together, if needed, and seek restitution; unlike an individual homeowner who may not know how to go about dealing with a dishonest or careless contractor.

How do they operate?

Basically, they have a couple of different functions that protect both the contractor(s) and the homeowner(s).  They serve as a regulatory committee to whom you can report complaints about shoddy workmanship and/or contract violations.  Since they have an obligation to both parties, they objectively investigate the claim first to see if there is any evidence of a violation.  Then, if they find some, they prosecute the violator and eventually collect monetary damages that are then awarded back to the homeowner.

Some of these damages are funded by the commission’s own Guaranty Fund.  Licensed MHIC contractors pay into this fund each time they obtain or renew their license.  In return, the guaranty pays damages on behalf of that contractor in the event of a breach.  Now, there is a limit to this compensation of $20,000 per contract, but it’s a payment you know you’re actually going to get.  Moreover, this guaranty only applies to contractors who currently hold an MHIC license.

Why should I pick someone who is MHIC licensed?

Unfortunately, seeking this license isn’t mandatory for everyone who will work on your home.  Rather, many tradesmen have to take the initiative to obtain it, which involves several steps.  Not only are licensed contractors required to take and pass an exam relevant to their field, but also the MHIC vets participants based on past criminal history, as well as financial solvency.  Thus, if a contractor is too heavily indebted, or has been involved with too many legal violations in the past, then a license won’t be issued.  This applies to renewals as well, since several companies have had their licenses revoked in recent years.

Working with an MHIC licensed contractor ensures that you have the protection of the Guaranty Fund too.  Therefore, even if the contractor isn’t in a position to refund your payment, the fund can step in and take care of it on his/her behalf.  It also should provide some piece of mind as an additional qualification that distinguishes reputable contractors. 


Before they even begin the renovation, you can rest assured that they’ve already passed an industry-specific exam, a background consideration, and that they’ve bought into an organization that exists as much for your protection as it does theirs.  So, the next time you’re shopping around for the right home improvement provider, pay extra attention to the initials associated with their name.  It could save you a lot of money and hassle in the long run!

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