How Much Deposit Can a Contractor Ask For in Maryland?
Maryland does not set a percentage cap on a home improvement deposit, but the contract must be in writing, the contractor must be licensed, and a state Guaranty Fund can repay an actual loss.
Maryland regulates home improvement through the Maryland Home Improvement Commission rather than by fixing a single deposit percentage. The protections that matter to a homeowner handing over a deposit are structural: the contract has to be in writing and legible,1 the person doing the work has to be licensed, and if a licensed contractor causes you an actual loss, a state Guaranty Fund can repay it.2 This page walks through those three, because in Maryland they are what stand behind your deposit.
The contract must be in writing, and the contractor licensed
Maryland requires that each home improvement contract be in writing and legible.1 A written contract is not a formality here: it is what fixes the price, the scope, and the payment terms, and without it the other protections are hard to enforce.
Licensing is the other precondition. In Maryland, except as otherwise provided in this title, a person may not act or offer to act as a contractor in the State unless the person has a contractor license.3 Checking that a contractor is licensed before you pay a deposit is the single most useful step, because the Guaranty Fund below only reaches licensed contractors.
The Guaranty Fund if a licensed contractor causes a loss
Maryland maintains a Home Improvement Guaranty Fund. A homeowner may seek compensation from the Fund for an actual loss that results from an act or omission by a licensed contractor.2 That is the mechanism a deposit dispute usually runs through when a licensed contractor takes the money and fails to deliver.
The Fund reaches licensed contractors only, which is why the licensing check matters so much before any money changes hands. If the contractor was never licensed, the Fund is not available, and the unlicensed-work offense above and the ordinary courts are the routes that remain.
Sources
In Maryland, each home improvement contract must be in writing and legible.
A homeowner may seek compensation from the Maryland Home Improvement Guaranty Fund for an actual loss that results from an act or omission by a licensed contractor.
Except as otherwise provided in this title, a person may not act or offer to act as a contractor in the State unless the person has a contractor license.
Frequently asked questions
- Does Maryland cap how much deposit a contractor can ask for?
- Maryland does not set a single percentage cap in statute. Its protections are that the contract must be in writing, the contractor must be licensed, and a state Guaranty Fund can repay an actual loss caused by a licensed contractor.
- Does a home improvement contract have to be in writing in Maryland?
- Yes. Maryland requires each home improvement contract to be in writing and legible.
- Can I recover my deposit if a Maryland contractor disappears?
- If the contractor was licensed, you may seek compensation from the Home Improvement Guaranty Fund for an actual loss. If the contractor was unlicensed, the Fund is unavailable, but performing home improvement without a license is itself a misdemeanor.
Last reviewed July 29, 2026
This page is general information about state law, not legal advice. Laws change, and how they apply depends on the facts of your situation.