How large a deposit can a Maryland contractor take?

Work it through

You're the contractor. Pick what you'd do, then see how each choice plays out.

1. AStick with your standard 10% ($3,000) deposit. Explain the milestone payment schedule and why it protects both parties
   Best practice

   Maryland does cap deposits: under Business Regulation §8-617, you may not take any payment before the contract is signed, or a deposit of more than one-third of the contract price before or at signing. On a $30,000 job that ceiling is $10,000, so $9,000 would be legal, but a modest 10% deposit is the stronger practice. Large deposits are a red flag for the MHIC and a top consumer complaint category. A milestone schedule (deposit → rough-in → finish → final) protects the homeowner from paying for unfinished work and protects you by ensuring payment at each phase.

2. BAsk for 50% ($15,000) upfront to cover materials and get the project rolling
   Illegal

   A 50% deposit violates Business Regulation §8-617, which caps a deposit at one-third of the contract price — $10,000 on this $30,000 job. Beyond the violation, you'd be holding $15,000 of the homeowner's money against incomplete work, one of the most common patterns in MHIC Guaranty Fund claims: large deposit + slow/incomplete work = complaint. Your cash flow problems shouldn't become the client's risk.

3. CTell her you don't require a deposit — you'll bill at each milestone
   Generous but risky

   No deposit means you're funding materials and labor out of pocket until the first milestone payment. If the client cancels or disputes, you've invested significantly with no commitment from them. A reasonable deposit (10-15%) demonstrates mutual commitment. Being too generous with payment terms can hurt your cash flow and attract clients who aren't serious.