A recent decision by the Maryland Supreme Court underscores the importance of following registration and licensing requirements for builders and contractors. In SM Landover, LLC v. Sanders, 489 Md. 614, 330 A.3d 1129 (2025), the Court allowed a suit to proceed against an unregistered homebuilder that would have been time-barred had the builder been properly registered with the state.
What Was the Case About?
The decision was rendered in the consolidated appeal of two class action suits brought by home purchasers who had bought new homes from two companies: SM Landover and SM Parkside. These companies were part of Stanley Martin Homes, a well-known builder that was properly registered with the state. Here's the catch: SM Landover and SM Parkside themselves were not registered as builders in Maryland, even though they were the ones signing the sales contracts.
The sales contracts contained a one-year deadline for any legal claims arising from the home sale. In the absence of such a contractual limitation, the purchasers would have had three years to bring suit. The contracts also contained a provision under the heading "Estimated Deferred Water and Sewer Charge Disclosures," which disclosed that the home purchaser would be liable for deferred water and sewer fees amounting to over $20,000 spread out over 30 years.
After the expiration of the one-year contractual limitations period, but within the three-year statutory period, the homeowners brought suit claiming, among other things, that the water and sewer disclosures were faulty. The builders moved for summary judgment on this basis in the trial court, which was granted and which was upheld by the intermediate appellate court. However, the Maryland Supreme Court granted certiorari and ultimately reversed.
What Did the Court Say?
The Maryland Supreme Court's ruling arises from Maryland's Home Builder Registration Act, which states in relevant part that a "contract for the performance of any act for which a home builder registration number is required is not enforceable unless the home builder was registered at the time that the contract was signed by the owner." Md. Business Regulation Code §4.5-605. With this decision, the Maryland Supreme Court broadened the scope of this provision to, in this instance, invalidate the contractual limitations period because of the builders' lack of registration—even though they were subsidiaries of a registered builder. This expansive reading of the statute should put home builders on notice of the critical importance of properly registering in Maryland.
Broader Lesson
The outcome of this case is, as with all litigation, in many ways specific to these facts—the Maryland Home Builder Registration Act, the contractual provisions at issue, etc. Yet, it is not uncommon for states, counties, and municipalities to impose registration requirements on contractors. And it is not uncommon for courts to interpret statutes broadly when those statutes are, at least in theory, intended to protect consumers and homeowners. As such, contractors should recognize the registration and licensing requirements of the jurisdictions in which they operate and remember to investigate the requirements of any new jurisdiction into which they are expanding. And then, of course, implementing good compliance practices is key. As this case demonstrates, failure to understand or to follow the registration and licensing requirements where you operate can yield drastically negative results.
Please note: Summer Associate, Alexandria Wilson, contributed to the writing of this blog post.
