Late Fees on Invoices in Maryland
What Maryland contractors and small businesses need to know about charging late fees, interest rates, prompt payment laws, and mechanics lien deadlines.
Max Interest Rate
6% per annum (default legal rate); higher by contract for commercial transactions
Small Claims Limit
$5,000
Small Claims Court (District Court)
Mechanics Lien Deadline
180 days from the last day of work
Maryland Prompt Payment Act
Maryland Prompt Payment Act, Md. Code, State Fin. & Proc. § 15-103 et seq.
Maryland requires state agencies to pay within 30 days. The Trust Fund Act protects subcontractor payments on private construction projects.
Late fee rules for Maryland invoices
Maryland allows reasonable contractual late fees. The Maryland Trust Fund Act makes it a criminal offense for contractors to misappropriate funds intended for subcontractors.
Maryland's default legal interest rate is 6% per annum. The Prompt Payment Act provides interest at the state's legal rate on late government payments.
Important disclaimer
This page provides general information about Maryland late fee rules. It is not legal advice. Laws change, and your specific situation may have unique factors. For disputes involving significant amounts, consult a licensed attorney in Maryland.
Demand letters and mechanics liens in Maryland
Maryland requires a written Notice of Intent to File a Lien at least 30 days before filing on residential projects. A demand letter satisfies this.
Mechanics lien deadline: 180 days from the last day of work. A Petition to Establish Mechanics Lien must be filed in the circuit court.
Sample late fee clause for Maryland invoices
“Payment is due within the terms specified above. A late fee of 1.5% per month (6% per annum (default legal rate); higher by contract for commercial transactions maximum per Maryland law) will be applied to all balances remaining unpaid after the due date. Pursuant to Maryland Code, Real Property § 9-101 et seq. (Mechanics' Liens), the undersigned reserves all rights to pursue collection including but not limited to mechanics lien filing, small claims action (up to $5,000 in Small Claims Court (District Court)), and referral to collections.”
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Start Free TrialFrequently asked questions — Maryland
What is the maximum late fee I can charge on an invoice in Maryland?▾
In Maryland, Maryland's default legal interest rate is 6% per annum. The Prompt Payment Act provides interest at the state's legal rate on late government payments. Always disclose late fee terms in your contract or invoice before work begins.
Does Maryland have a prompt payment act?▾
Yes. Maryland requires state agencies to pay within 30 days. The Trust Fund Act protects subcontractor payments on private construction projects.
What is the small claims court limit in Maryland?▾
The small claims court limit in Maryland is $5,000. Claims are filed in Small Claims Court (District Court). You generally do not need an attorney for small claims.
How long do I have to file a mechanics lien in Maryland?▾
In Maryland, 180 days from the last day of work. A Petition to Establish Mechanics Lien must be filed in the circuit court.
Do I need to send a demand letter before filing a lien in Maryland?▾
Maryland requires a written Notice of Intent to File a Lien at least 30 days before filing on residential projects. A demand letter satisfies this.