Wednesday, July 29, 2009

Baltimore Street Builders v. Stewart (Ct. of Special Appeals)

Filed: July 7, 2009
Opinion by Judge James P. Salmon

Held: Home improvement contractor that failed to comply or "substantially comply" with the regulatory requirement to hold a home improvement license was not entitled to enforce its contract.

Facts: Affirming the Circuit Court's dismissal of a petition to establish a mechanic's lien based on construction contract where builder did not have home improvement license.

A builder entered into a contract and performed construction on a residence in Maryland. The defendant owner failed to pay in full. The builder sued to establish and enforce a mechanic's lien. The builder was not licensed as a home improvement contractor. The builder protested that a principal owner of the builder did hold a license.

The Court noted that contracts made by unlicensed persons subject to regulatory statutes designed to protect the public are illegal and unenforceable. The Court discussed the principle that strict application of the rule is not always appropriate. There may be circumstances where such contracts may be enforced. Such circumstances would include where the contractor "substantially complied" with the regulatory requirement. Factors relevant to this issue would be (1) whether the contractor had a license at the time of contracting; (2) whether the contractor readily secured a license; (3) the responsibility and competence of the contractor.

Finding that neither the contractor nor its contracting agent ever held a license, the Court rejected the notion that the contractor substantially complied.

The full opinion is available in PDF.

*The opinion contains a detailed explication of the principle of "substantial compliance."

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