MHIC NASCLA Contractors Practice Exam 2026 - Free Contractor License Practice Questions and Study Guide

In many jurisdictions, including Maryland, it is typically prohibited for contractors to compensate homeowners for referrals. This is largely due to regulations established to prevent conflicts of interest, ensure fair trade practices, and protect consumers. Such prohibitions are aimed at maintaining professionalism within the construction industry and avoiding any unethical practices that could arise from financial incentives tied to referrals.

Even though some industries allow referral fees or bonuses, the construction field has specific regulations that restrict this practice to promote transparency and ethical behavior. Homeowners may also feel pressured to provide referrals based on compensation rather than the quality of the contractor's work, which can compromise the integrity of business relationships.

As a result, it is essential for contractors to understand these legal and ethical boundaries to avoid potential legal repercussions and maintain their reputation in the industry.