Maryland ADU Construction Contract Checklist: What to Check Before You Sign

Quick answer: Before signing a Maryland ADU construction contract, verify the contractor’s current Maryland licensing, make sure the written agreement identifies the exact contracting entity and scope, and check that design, permits, site work, utilities, allowances, payment milestones, change orders and project closeout are addressed in writing. Maryland Home Improvement Commission (MHIC) rules also impose specific contract requirements for covered home-improvement work, including a written contract and limits on the initial deposit.

Last researched September 25, 2026. This guide is for homeowner planning and does not provide legal advice. Contract rights and licensing requirements can depend on the project and contracting structure.

Contract red flags to check first

Why an ADU contract needs more detail than a headline price

An ADU project can combine architecture, engineering, zoning, building permits, excavation, foundation work, utility upgrades, construction, inspections and final occupancy approval. Two proposals with the same total price can therefore cover very different scopes.

The contract should turn the proposal into a clear description of who is responsible for each part of the project. If a cost or responsibility is important to your budget, do not rely on a sales conversation alone.

Maryland contract rules homeowners should know

The Maryland Home Improvement Commission says a covered home-improvement contract must be in writing and legible, signed by the parties, identify the contractor and MHIC license number, describe the work and materials, state the agreed price, and include approximate beginning and substantial-completion dates. The homeowner must receive a signed copy before work begins.

MHIC also states that a contractor may not accept payment before the contract is signed and may not take more than one-third of the contract price as the initial deposit. After that initial deposit, Maryland’s Home Improvement Law does not prescribe the entire payment schedule, so the remaining milestones deserve careful review.

1. Verify the company that will actually sign the contract

Do not verify only a brand name. Compare the legal business name on the proposal and contract with the contractor’s current Maryland license information. MHIC advises homeowners to use licensed contractors, check license status and obtain a current liability-insurance certificate.

For an ADU, also ask whether the company signing the construction contract is the same company shown in marketing materials and whether separate designers, engineers, modular manufacturers or site contractors will have their own agreements.

2. Define the project before comparing the price

The scope should identify whether the project is an interior conversion, attached addition, garage conversion, detached site-built ADU or factory-built/modular unit. It should also identify the drawings, specifications and other documents incorporated into the agreement.

• ADU size and basic configuration
• demolition and existing-condition work
• foundation and structural scope
• exterior materials and roofing
• windows and doors
• kitchen, bathroom and finish specifications
• HVAC, plumbing and electrical scope
• fire-sprinkler or fire-separation work when applicable
• site restoration and cleanup

If you are still comparing proposals, use the Maryland ADU Cost & Bid Comparison first so each builder is being compared against the same scope.

3. Separate design and permitting responsibilities

“Permits included” is too vague for a complex project. Identify who prepares the zoning/site plan, architectural drawings, structural calculations and any mechanical, electrical, plumbing, civil or energy documents the reviewing jurisdiction requires. The agreement should also explain who responds to plan-review comments and whether redesign after agency comments is included.

MHIC states that the prime contractor on a home-improvement project is responsible for obtaining required building permits or making sure they have been obtained. That does not tell you which design and government fees are included in your price, so those costs still need to be written into the project scope.

4. Put site work and utilities in writing

Detached ADUs can become expensive when a proposal assumes a simple site but the property needs grading, retaining work, long utility trenches, service upgrades, septic work or difficult equipment access.

• survey and site plan
• clearing, excavation and grading
• soil export/import and rock excavation
• foundation
• stormwater or drainage work
• water and sewer routing
• electrical service or panel upgrades
• gas service, if used
• septic or well work
• driveway, fencing and landscaping restoration
• prefab delivery, crane and staging access

Use the Maryland ADU Utilities Guide and Septic & Well Guide before accepting assumptions about these items.

5. Identify allowances instead of treating them as fixed prices

An allowance is not the same as a guaranteed installed price. Ask the proposal to identify allowance amounts for cabinets, countertops, flooring, tile, plumbing fixtures, lighting and appliances, and to explain what happens when the selected item costs more or less than the allowance.

Also ask whether labor, delivery, tax, contractor markup and installation are included in the allowance or charged separately.

6. Tie progress payments to defined deliverables

After the initial-deposit rule, the remaining payment schedule is something the parties negotiate. For planning purposes, a milestone is easier to evaluate when it describes a completed deliverable rather than a vague percentage of “progress.”

Examples might include completion of permit-ready drawings, permit issuance, foundation completion, dried-in shell, rough inspections, interior completion and final closeout. The exact schedule should match the project rather than this example.

7. Read the change-order clause before construction starts

ADU projects often encounter existing conditions or agency requirements that were not visible at the first estimate. The contract should explain how a change is documented, who can authorize it, how pricing and contractor markup are calculated, and whether schedule impacts must be stated before the extra work proceeds.

Keep written change orders with the original contract, invoices, inspection records and payment documentation. MHIC’s consumer guidance recommends keeping project documents and payment records.

8. Define what “complete” means

A building that looks finished may still have open inspections or documentation. Before the final payment stage, identify the required closeout items for your project.

• final building and trade inspections
• certificate of occupancy or other final approval when required
• punch-list completion
• warranty documents and equipment manuals
• final permit records
• keys, controls and access devices
• site cleanup and restoration
• documentation showing subcontractors and suppliers have been paid when appropriate

Maryland regulations make payment of subcontractors, workers and material suppliers a responsibility of the prime contractor so the owner’s property is not subjected to mechanics’ or materialmen’s liens. If you have concerns about lien exposure or releases on a particular project, obtain Maryland legal advice rather than relying on a generic template.

9. Check warranties and dispute language

Read what the contractor actually promises after completion: the warranty period, what is covered, required maintenance, exclusions and the process for requesting repair. MHIC notes that warranty terms should disclose the duration and the procedure for obtaining repair or replacement when a written guaranty applies.

If the contract contains mandatory arbitration, MHIC requires specific disclosures, including who conducts the arbitration, fees, whether the decision is binding and how arbitration affects a Guaranty Fund claim. Do not treat the dispute section as boilerplate you can safely ignore.

10. Do not sign before the property itself is feasible

A well-written construction contract cannot make an infeasible ADU buildable. Confirm the reviewing jurisdiction, current zoning rules, approximate legal size, site constraints and utility or septic issues before committing to a non-refundable project agreement.

1. Use the Jurisdiction Finder.
2. Check the applicable local guide in the Maryland ADU Rules Tracker.
3. Run the Property Feasibility Checker.
4. Normalize contractor proposals with the Cost & Bid Comparison Tool.
5. Then review the actual contract, incorporated plans, exclusions and payment schedule.

Questions to ask the contractor before you sign

• What is specifically excluded from this price?
• Which design, engineering and permit fees could still be added?
• What site or utility assumption is most likely to change the price?
• Which selections are allowances, and what happens if I spend over or under them?
• Who responds if the permit reviewer requires a redesign?
• What exactly triggers each payment?
• What markup applies to change orders?
• What must be complete before the final payment is due?

Maryland ADU contract checklist

Primary Maryland sources checked

• Maryland Home Improvement Commission — Home Improvement Contracts
• Maryland Home Improvement Commission — Consumer Advice
• Maryland Home Improvement Commission — About Permits
• COMAR 09.08.01.12 — Duty of Prime Contractor to Pay Subcontractors and Workmen
• COMAR 09.08.01.26 — Required Notice in Contracts

Maryland ADU Guide is an independent research publication. It is not the Maryland Home Improvement Commission, a contractor, or a law firm. This checklist is designed to help homeowners spot questions to resolve before signing; it does not determine whether a particular contract complies with Maryland law.