98 [7 9 O p
. A tt ’y
C R E D IT RE GU L AT I ON
H OM E I MP ROV EMENT C ONTRACTS

) L I CE NS I NG R EQUI REMENTS

J anuary7, 1994

M r

. Jos eph E. O w ens D eput y Sec r etar

y of Li cens i ng & Regul at i on
Y ou have r eques t ed our opi ni on w hether a hom e i m pr ovement con t ract or i s requ i red t o o btai n an i nst al l m ent l oan l i cense as a p r e r e q u i s i t e t o o f

f e r i n g i t s c u s t o me r s f i n a n c i n g f

or h o me im p rov em en t pro

jects. Y o u h av e a ls o a s k e d w h ethe r t h ere are ci r cumst ance s underw hi ch a h o m e i m pr ovement contr act orm i ght need a m or t gage l ender ’ s l i cens e i f t he off er ed fi nanci ng i s s ecur ed bya l i en on the homeow ner ’ s r es i dence

. T he ans w er s t o t hes e ques t i ons cannotb e s i m pl ys t at ed, beca us e of the var i ed f ea tur es of t r ans act i ons t hatm aybe off er ed
u n d e r se v e ra l cr e d it s tatu tes ; th e se tra n sa c tio n s, in tu rn , sig n if ica n tly af fe ct t h e a n aly sis w h ethe r ce rt ain licen sing p rov is io n s ap p ly

. In bri ef, ou r concl usi on s ar e as foll ow s:
1. I f a home i m pr ovement contr act orfi nances i t s s al e of goods and s er vi ces t o a homeow nerand t hatfi nanci ng i s s ecur ed by
a lien o n th e h o m e o w n e r’s re sid e n c e , th e c o n tra c to r is re q u ire d to o b ta in a m o rtg a g e len d e r’s lice n se u n les s th e f in a n c in g c o n tra c t is
as s i gned w i t houtr ecour s e t o a mort gage l ender l i cens ee ( ora per s on exempt fr om m or t gage l enderl i cens i ng) w i t hi n 30 d ay s af t ert he contr acti s compl et ed.
2

. If a h o m e im p ro v e m e n t co n tra c to r e x ten d s c r e d it t o cus t om er s underT i t l e 12, Subt i t l es 9 or 10 of t he C om m er ci al L aw ( “C L ”) A r t i cl e, M ary l and C ode ( w hethers ecur ed i n an y w ayor uns ecur ed) and als o ext ends anycr edi ts ecur ed bya s econda r yl i en on r es i dent i al r eal pr oper t yi n t hatoranothert r ans act i on, t he contr act orpr obabl yi s r equi r ed t o obt ai n an i ns t al l m entl oan l i cens e. T hi s concl us i on, how ever , cannot be fr ee fr om doubt gi ven a gl ar i ng i ncons i s t encyi n t he r el evant s t atut or y l anguage , and i tappea r s t hat
m anycont r ac tors m aynothave obt ai ned s uch a l i cens e bec aus e ofG en. 98] 99

“Home improvement” a nd “home improve ment contra ct” a re 1 define d in BR §8-101.
Th e do wn pa

y me nt l imi tatio n ( on e -t

hird o f t hepurc ha sepric e ) i s 2 (continued...) a good- fai t h bel i ef thatt heyw er e notr equi r ed t o do s o. T hi s m at t er d e s e r v e s p r o m p tr e v i e w b y t h e G e n e r a l A s s e m b l y.
3

. If a h o m e im p ro v e m e n t co n tra c to r e x ten d s c r e d it t o cus t om er s underanys ubt i t l e of CL T i t l e 12 other t han S ubt i t l es 9 or 10 or under t he comm on l aw “t i m e- pr i ce di ffe r ent i al ” doctr i ne, t he
c o n tr a c to r i s n o t r e q u ir e d to o b ta in a n in s ta llm e n t lo a n lic e n s e
. I
Fac t ual Backg r ound
F or purpo ses of t his analy si s, t he fo l l ow i ng w i l l ser ve as a fac tual sum m aryof t he manneri n w hi ch home i m pr ovement contr act or s conduct t hei r bus i nes s and undert ake t o obt ai n fi nanci ng of thei r cont ract s for hom eow ners w ho are th e ir cust om ers
. A l t ho ug h thi s sum m ary refl ect s w hat w e un derst and i s the b usi ness pr act i ce of

m os thom e i m pr ov em entcontr act or s , t her e maybe
v ariati o n s in t erm s an d p roc ed u res from co n tr ac tor to c o n trac tor; t hese va ri at i on s could r esul ti n d i ffere nt concl usi on s than t ho se r eac hed i n t hi s opi ni on.
H om e i m pr ovement contr act or s (her eaf t err efe r r ed t o as “C on t ract ors”) t ypical l ysel l b oth goo ds and ser vices

)t hati s , t he
m at eri al s that w i l l be added or affixed t o the hom eow ner’ s prem i ses, t og e ther w i t h the l abo r and ex pert i se t o assem ble ori nst al l t ho se go o d s
. Th e s e a c t i v i t i e s a r e r e g u l a t e d b yt h e M a r y l a n d Ho me Im provem ent C om m i ssi on (“M H IC ”) un der T i t l e 8 o f t he B usi ness R egul at i ons ( B R ”) A r t i cl e, M ary l and C ode. T he M H I C has i s s ued 1
r egul at i ons t hatgover n m os tas pect s of t he bus i nes s , i ncl udi ng t he contr actbetw een the C ont r act orand the hom eo w nerand r el at ed t er m s of t he contr actual r el at i ons hi p. E xcept for a r equi r ement t hat t he c o n t r a c t o r ma y n o t r e q u i r e a d o wn p a y me n t t h a t e x c e e d s one t hi r d of t he t ot al cont rac t p ri ce, no pr ovi s i on of t he s t atut e or r egul ati o n s thatt he M H I C enfor ces purpor tt o govern anyof t he f in a n c in g a sp e c ts o f

a h o m e im p ro v e m e n t co n tra c t. 2100 [7 9 O p
. A tt ’y

(...continued) 2 set out in BR §8-617. G e n e r al l ys peaki ng, C ont r act or s as s i s tt hei rcus t om er s w i t h t he f i n a n c i n g a s p e c to f

a h o me i mp r o v e me n tp r o j e c ti n e i t h e r o f

t wo w ay s
. Fi r s t , t he C ont r act orm ayi t s el f ext end cr edi tt o t he h o m eo w n er. T h is m etho d is call ed “ind ir ec t fi n an cing

. ” T h is t erm re f lec ts th e f

a c t th a t m o st ho m e im p ro v e m e n t c o n tra c to rs d o n o t h o ld the d ef erred p ay m en t con tr ac ts, b u t r athe r sell o r assign them to third par t i es i n excha nge for cas h. T he ul t i m at e cr edi t or( t he as s i gnee of th e p a p e r) i s th e n c o n sid e re d a n “ in d ire c t” e x ten d e r o f th e c re d it, v ia th e C o n tr a c to r.
S ec o n d , the C o n tr ac tor ca n iden ti fy fo r th e h o m eo w n er a third par t yw i l l i ng t o m ake a l oan in the am ountof t he contr actpr i ce. T his m et ho d i s call ed “dir ectfi nan ci ng
. ” T he C on t ract or m ayassi st t he homeo w n eri n appl y i ng fort he cr edi tand eve n actas a l i ai s on betw een b orr ow er and l end er. In direct fi nan ci ng si tuati on s, how ever , t he contr act orgener al l y d o es n otr ece i ve anyaddi t i onal compensa t i on at tr ibu ta bl e t o t he r efe r r al of t he cus t om ert o t he l enderfora di r ectl oan.
T hes e ci r cums tanc es have, overt i m e, r es ul t ed i n t he d ev elop m en t of

o n g o ing b u sine ss relati o n sh ips b etw ee n C o n tr ac tors and t hi r d par t ys our ces o f fundi ng s uch as depos i t or yfi nanci al i nst i tuti on s ( e. g. , ban ks, and savi ng s and loan associa tio ns, al so know n as s avi ngs banks ) and ot her s i m i l ar s our ces of fundi ng ( her eaft err efe r r ed t o as “fi nanci ng ent i t i es ”)

. I n fac t , a fi nanci ng ent i t yt ypi cal l ys peci fi es t he manneri n w hi ch the fi nanci ng as pectof t he t r ans act i on m us tbe conduct ed and suppl i es t he w r i t t en document s t o ens ur e thatt he fi ni s hed fi nanci ng co nt r actcompl i es w i t h those r equ i rem ents

. O vert he y ear s , C ont r act or s and thei rfi nanci ng ent i t i es have dev el op ed a w i de vari et y of con t ract t erm s an d form s to refl ectt ho se pr ovi s i ons
. T hes e var i ous t er m s di ct at e w hi ch of t he s ever al s ubt i t l es underC L T i t l e 12 appl yt o t he tr ans act i on and, acc or di ngl y , w hat t ype of l i cens e, i f any , m us tbe obt ai ned fr om t he C om m i s s i onerof C ons um erC r edi t

. O f s peci al per t i nence i n t hi s r egar d ar e the type of pr oper t yi n w hi ch a s ecur i t yi nt er es ti s t aken t o s ecur e the l oan and
w h e th e r th e lo a n is i n ten d e d to b e m a d e u n d e r C L T itl e 1 2 , S u b tit le 1 0 , o r p u rsu a n t to so m e o th e r su b tit le o f C L T itl e 1 2 . G e n e ra llyG en. 98] 101

Th e de fi nition

of “ mor tg a g e len der” se t f

or th i n F I§1 1- 50 1(

j) 3 i n cludes “any

person who ... [f]or a fe e or othe r valua ble consideration, wh e ther re c e ive d dir e c tly or indir ect ly , aids or

a ssi sts any

pe rs on in procuring a

mortg ag e loan ....” speaking, t he loan m aybe u nsecured; s ecured b yt he “g oo ds”
s u p p l i e d b yt h e c o n t r a c t o r , wh i c h a r e t o be u s e d i n t h e h o me i m pr ovement w or k t o be done unde rt he contr act ; s ecur ed bya l i en on t he homeow ner ’ s r es i dence ; ors ecur ed b y bot h t ypes of
c o lla te ra l.
II
D i r e c t Fi nanc i ng
I f a f i nanci ng ent i t ym akes a l oan of moneydi r ectl y t o t he hom eow n er, the C ont r act orneed notobt ai n ei t heran i ns t al l m ent lo a n lice n se o r a m o rtg a g e len d e r’s lice n se
. T h e o n ly p o ss ib le l i cens i n g i s s u e h e r e wou l d a r i s e i n t h e e v e n tt h a tt h e Con t r a c t or r ece i ved compens at i on, ei t herfr om t he borr ow erort he fi nanci ng ent i t y , forr efe r r i ng t he l oan appl i cat i on t o t he l enderorper for m i ng ot hers er vi ces di r ect l y co n nect ed w i t h t he fi nanci ng as pectof t he t r ansa cti o n, as oppos ed t o t he home i m pr ovement i t s el f. I f s uch compensa t i on i s r ece i ved i n a l oan tr ans act i on s ecur ed bya l i en on t he r es i dent i al r eal pr oper t y , t hen the C ont r act orw oul d be ac t i ng as a m or t gage br oker and w oul d be s ubj ect t o l i cens ur e un d er t he M ary l and M or t gage LenderL aw ( “M M L L ”) , T i t l e 11, Subt i t l e 5 of t h e F i n a n c i a l I n s t i tu t i o n s ( “ F I ” ) A r t i c l e , M a r yl a n d C o d e
. S i m i l a r l y, 3 i f t he C ont r act or r ece i ved compens at i on forr efe r r al of an uns ecur ed l oan orfora l oan s ecur ed by col l at er al ot hert han r eal pr oper t y , t he C ont r act orw ou ld fa l l w i t hi n t he def i ni t i on of a “ cr edi ts er vi ces b u sin e ss ” se t f

o rth a t C L § 1 4 -1 9 0 1 a n d w o u ld b e re q u ire d to o b tain
a n in s ta llm e n t lo a n lic e n s e
. See C L §14- 1908. T he typi cal di r ect fi nanci ng t r ans act i on, how ever , does noti nvol ve anycompensa t i on t o t h e C o n t r a c t o rf

o rr e f e r r i n g t h e c u s t o m e rt o t h e f i n a n c i n g e n t i t y.
W hethert he l oan i s r eal l y m ade “di r ect l y ” t o t he borr ow erm ay depend on the fa ct s of t he part i cul ars i tuat i on. For exampl e, t he contr actfort he w or k t o be done a nd the financ i ng agr eementm ay b e c o me i n t e r mi n g l e d i f t h e l o a n t r a n s a c t i o n a n d t h e h o me i m pr ovement pr ovi s i ons ar e evi dence d byt he s ame docum ent

. T he s i tuat i on i s par t i cul ar l ypr obl emat i c w hen the contr acti s s i gned by t he homeow nerbefor e the w or k under the home i m pr ovement102 [7 9 O p
. A tt ’y

c o n tra c t b e g in s a n d is n o t tran s f e r r e d to th e f

in a n c in g e n tityu n til a f ter c o m p letio n . A c o n c lu sio n th a t a tra n sa c tio n is tru ly“ d ire c t” fi nanci ng can onl ybe r eac hed af t er an as s es s m ent of t he part i cul ar fac tual ci r cumst ance s
. I f a l oan i s t rul y “di r ect , ” how ever , t hen the Co n t r a c t o r d o e s n o t n e e d a n i n s t a l l me n t l o a n l i c e n s e o r a n M M LL l i cens e.
III
I ndi r e c t Fi nanc i ng
A
. Mort

gage L en der L i cen se
W hen a c ont rac t orent er s i nt o a fi nanci ng pl an w i t h a hom eow nerand t he pl an i s s ecur ed byt he cus t om er ’ s r es i dence , t he C ont r act ori s engagi ng i n a tr ans act i on t hator di nar i l yw oul d br i ng th e C o n tr a c to r u n d e r th e lic e n s in g re q u ir e m e n t o f th e M M L L

. See FI §§11- 501 and 11- 504. H ow ever , FI §502( a) ( 10) pr ovi des t hatt he l i cens i ng r equi r ement does notappl yt o a “home i m pr ovement con tra c to r l i censed un der A rt i cl e 56 of the C od e w ho assi gn s a m or t gage l oan w i t hout r ecour s e w i t hi n 30 day s aft ercompl et i on of t he contr actt o a per s on l i cens ed unde r t hi s s ubt i t l e ort o an i ns t i tut i on t hati s exempt fr om t hi s s ubt i t l e under par agr aphs ( 1) and ( 2) of t hi s s ubs ect i on. ”
W hi l e t her e maybe fa ctual i s s ues aboutw hen a pa r t i cul ar contr acthas been “ compl et ed , ” the l anguage i n t hi s s ubs ect i on w o u ld se em to se tt le t h e q u esti o n w h e ther a m o rt g ag e len d er’s lic e n s e is re q u ir e d if th e c o n tr a c t is tr a n s f e rr e d “ w ith o u t r e c o u rs e ,” s o l ong as t he tr ans fer ee i s ei t her an M M L L l i cens ee oran i ns t i tut i on listed a s e x e m p t. B e c a u se th e M M L L li c e n se re q u ire m e n t is t r i gger ed by t he t ype of c ol l at er al s ecur i ng t he cr edi t( t hati s , a l i en on res i den t i al re a l p ro p erty ), rather t han w here t he creditfi nd s a hom e among t he var i ous s ubt i t l es of C L T i t l e 12, t hi s conc lusion appl i e s t o a n y i n d i r e c t c r e d i t s e c u r e d b y a f i r s t o r a s e c o n d l i e n on re s id e n tia l r e a l p ro p e rt y
. B
. Install

m en t L oa n L i cen se 1. T im e-P r i ce v. L oan of

Money
T h e q u e stio n o f

w h e n a n in sta llm e n t lo a n lice n se is n e e d e d in i ndi r ectfi nanci ng s i tuat i ons m us tbegi n w i th an i nqui r yi nt o t he di ffe r ence betw een a l oan of moneyand w hat i s know n as a “t i m epr i ce di ffe r ent i al

. ” The cour t s have a cce pt ed t he pr i nci pl e thatw henG en. 98] 103
th e p u rc h a se p ric e in a sa le tran sa c tio n is d e f e rre d o v e r tim e , ev e n if the to tal p ay m en ts ex ce ed the p ri ce o f th e it em o r serv ice if itw ere b o u g h t o u trig h t at th e tim e th a t th e sa le is in iti a ted , the d if f e re n c e in t he pr i ce i s notcons i der ed “i nt er es t ” bec aus e the transa ct i on i s not c o n s id e re d a lo a n
. F i n a n c i a lCr e d i t Co r p

. v

. Wi l l i a ms , 246 M d. 575, 2 2 9 A .2 d 7 1 2 (1 9 6 7 ); R othm an v. Si l ver , 245 M d. 292, 226 A

. 2d 308 (1 9 6 7 ); Fal cone v

. P alm er F o rd, I nc. , 242 M d. 487, 219 A

. 2d 808 ( 1966)

. T her efor e, t he co ur t s have he l d t hatt he us ur yl aw s do not a p p lyto th e se “ tim e -p ric e ” tra n sa c tio n s:

[A ] bona fi de sale of per s onal t yata def err ed p u rc h a se p ric e g re a ter th a n th e c a sh p ric e is nots ubj ectt o t he us ur yl aw s , even though t he pr i ce on c r edi ti s arr ived at byaddi ng a per centt o t h e c a s h p r i c e i n e x c e s s o f t h e l e gal rat e of i nter est or is st at ed as a r at e of int eres t ( w hi ch w oul d b e u sur i ous i f t he tr ans act i on w er e a l oan) on a not e gi ven for al l or par tof the p u rch ase p ri ce
. . . . T h e re a so n s g iven are t hat a sale of pr oper t yi s nota l oan or forbear ance of m oneyand t he ow nerof pr oper t yhas a r i ght t o name t he pri ce a tw hi ch h e w i l l s el l and mayoffe rhi s pr oper t yatone p ric e f o r ca sh o r a m u c h h ig h e r pr ice o n c re d it a n d th e a d v a n c e d p ric e w ill n o t co n stitu te u s u ry ....
R othm an v. Si l ver , 2 4 5 M d

. at 29 8 -99 (cit ati o n s o m itted).
In d ire c t f

in a n c in g b ya h o m e im p ro v e m e n t co n tra c to r f a lls s quar el y w i t hi n t hi s “t i m e- pr i ce” doctr i ne and i s t her efor e not cons i der ed t o be a l oan of m oney , r egar dl es s of w hethert her e i s an a t t e n d a n tg r a n to f

a s e c u r i t y i n t e r e s ti n r e a l o rp e r s o n a l p r o p e r t y. M or eover , t he as s i gnm ent or t r ans fer t o a fi nanci ng ent i t yaft ert he c re d it h a s b e e n e x ten d e d d o e s n o t af f e c t th is tre a tm e n t. T h e c re d it cont i nues i n ch ara ct eras or i gi nal l ym ade. T hi s r es ul thas im p lica tio n s f

o r th e a p p lic a tio n o f v a rio u s s tatu to ryc re d it r egul at i ons t o t hes e tr ans ac t i ons , and henc e the appl i cat i on of t he l i c e ns i ng r e qu i r e ment s un de rt he I ns t a l l ment Loa n La w ( “ I LL”) , FI T i t l e 11 , Su bti t l e 3. T he type o f prop ertyt aken as securi t yal so m a tte rs in d e te rm in in g w h ic h s u b title s o f C L T itle 1 2 a p p ly.104 [7 9 O p
. A tt ’y

“Revolving ” credit is ty

pified by a bank- issued cre dit card w ith a 4
maximumc re dit

lin e . The balanc e may inc re a se and de c re a sefrom time to timedepe nding up on the c ard ho lder’ s us e and repa

y me nt. In c ontr a st, “close d-end”cre dit envisions a single e x tensionof credit in a fixed am o untth ati s r ep a i d

e i th e r i na l ump s umo r

p e ri o d i c p ay

m e nt s
. In closed-end credit, repa

y ments do not enable thedebtor to ac cess a ny further advanc es beyond the initial credit extended. (continued...) 2
. T h e IL L L ice n sin gS ta tu te
FI §11- 302 pr ohi bi t s a per s on fr om engagi ng i n t he bus i nes s of m aki ng “i ns t al l m entl oans , ” or m aki ng m or e t han fi ve s uch l oans per y ear , unl es s t he per s on i s l i cens ed ori s exempt fr om l i cens ur e. T hat s ame se ct i on t hen goes on t o defi ne “i ns t al l m ent l oan” as “a l oan or ext ens i on of cr edi tm ade f or cons i der at i on under§§12- 103( a) ( 3) or ( c) , T i tl e 12, Subt i t l e 9, orT i t l e 12, Subt i t l e 10 of the C om m er ci al L a w Ar t i c l e
. ” Th e q u e s t i o n whe t h e r a Con t r a c t o r n e eds an i ns t al l m entl oan l i cens e w i l l fi r s tdepend upon w hethert he i ndi r ect ext ens i on of cr edi t is m ade underanyof t hes e l i s t ed pr ovi s i ons of th e C o m m e rc ia l L a w A rt ic le

.

a. T itle 12, Subtitle 1
B e c a u s e o f th e ti m e-p ri ce d iffe ren ti al do ctri n e, w e c an v ery qui ckl yel i m i nat e C L §12- 103( a) ( 3) and ( c) as a bas i s forl i cens ur e. T hes e provi s i ons , by t hei r t er m s , govern l oans of m oney , nott i m epr i ce s al es
. T h e d ef

init i ons governi ng t he ent i r etyof Ti t l e 12, Subt i t l e 1 make t hatconcl us i on unques t i onabl e: A “borr ow er ” i s “a per s on w ho bor r ow s m oney undert hi s s ubt i t l e”; a “l ender ” i s “a per s on w ho make s a l oan u n d er thi s s ubt i t l e”; and “us ur y ” i s “the char gi ng of i nt er es tby a l enderi n an amount w hi ch i s gr eat ert han th a t allo w e d b yth is s u b tit le.” C L § 1 2 -1 0 1 (b ), (f ), an d (k ) (e m p h a sis s u p p lie d ).
A n i ndi r ectext ens i on of cr edi tby a C ont r act ori s nota l oan of m o n e ya n d th e re f

o re is n o t m a d e u n d e r C L § 1 2 -1 0 3 (a )( 3 ) o r ( c ).
b. C L T itle 12, Subtit

les 9 and 10
C ont r act or s are eli gi bl e t o ext end cr edi tunderC L T i t l e 12, Subt i t l e 9 ( for rev o lvi ng cr edi t ) and C L T i t l e 12, Subt i t l e 10 ( for cl os ed- end cr edi t )

. C L §12- 1001( b) i ncl udes w i t hi n t he def i ni t i on 4G en. 98] 105

(...continued) 4 Contractors do not off

er revolvingcre dit under Subtitl e 9 on an indir e c t ba sis . T he re fo re , th e e ns uin ganalysis ta lks on ly abo ut Sub tit le 10 . H ow e ve r, it i s p os sib lefo r re vo lvi ngc re dit to b e e xten de d e ith e r i n thefo rm of a ho mee qu ity

lin e of c re dit or an uns e c ure d li ne of c re dit , wh ic h th e fi na

nc inge nti ty

take s b y a ssi gnment a ft e r t

hec ontr a c t is c omp le te d. Th e lic e ns ing analysis fo r thi s poss ibi lity is larg e ly thesame a s th at pre se nte d w ithre ferenc e to Sub tit le 10

. Th e re are , ho we ve r, so me difference s with respec t to home-secured revolving cre dit that will not be dis c us se d in

thi s opin ion

be c a us e , a s f ar a s w e areawa

re, no ho me improvement contra ctors cur ren t ly offe r even direc t financingon a re vo lvi ngba sis

. This provision wa s enac ted in Chapter 404 ( House B ill 424) of the 5 L aws of Ma

ryland 1993, a leg islative response to the de cision of the Court of Appe als in Biggus v. Ford Motor Credit Corp. , 328 Md. 188, 613 A.2d 986 (1992). of “c r edi tgr ant or ” the t er m “r et ai l er
. ” W hi l e “r et ai l er ” i s not d e f in e d in th e su b tit le, it is h ig h ly lik e ly th a t th e ter m w o u ld b e h e ld byt he court s t o i ncl ude anys el l erof goods and s er vi ce s to the c o n s u m in g p u b lic , s u c h a s a h o m e im p ro v e m e n t c o n tr a c to r. See C r af t s m an P ai nt ers & D ecor at ors v. C ar pent er , 111 C ol o. 1, 137 P .2 d 4 1 4 (1 9 4 3 ); C api t olB ui ldi ng C o. v. Langt on, 101 R

. I

. 131, 221 A

. 2d 99 ( 1966)

. A ccor di ngl y , C L Subt i t l e 10 i s cl ear l yavai l abl e for
u s e b ya C o n tr a c to r t o f i n a n c e t h e s a le o f

g o o d s a n d s e rv ic e s
. See C L §12- 1002.
A s a r es ul tof an a m endment eff ect i ve O ct ober1, 1993, i f t he C o n tra c to r d e sire s to e x ten d c re d it u n d e r S u b tit le 1 0 , the d o c u m e n ts evi denci ng t he ext ens i on of cr edi tm us tcont ai n a w r i t t en el ect i on of t hat s ubt i t l e
. CL §1 2

- 1 0 1 3

. 1

. I f t h e yd o n o t , t h e p r o v i s i o n s of 5 S u b tit le 1 0 w ill n o t ap p ly , lea v in g th e C o n tr a c to r to c o n ten d w ith
w h a tev e r o th e r c re d it l a w s e n a c ted p rio r to S u b tit le 1 0 m a ya p p lyto th e typ e o f

c re d it b e in g e x te n d e d

. I f t he C ont r act or el ect s t o ext end cr edi tunderSubt i t l e 10, t hen t he i s s u e o f l i c e n s i n g u n d e r t h e I LL mus t b e a d d r e s s e d

. W h i l e t he defi ni t i on of “i ns t al l m entl oan” i n FI §11 -302 cl ear l yi ncl udes any cr edi text ended unde rSubt i t l e 10, t her e i s an exe m pt i on fr om t he l i cense r equi r ement t hatm ayappl yt o s om e C ont r act or s
. FI §11- 3 0 1 (b )(6 ) p ro v id e s a s f

o llo w s:106 [7 9 O p
. A tt ’y (b ) T h e lice n sin g p ro v isio n s o f th is s ubt i t l e do not a ppl yt o anyof t he fol l ow i ng p e rso n s, if

o rg a n ize d u n d e r th e law s o f th is S tate o r o th e rw ise q u a lifie d to d o b u sin e ss in t hi s St at e:

. . . (6 ) A se ller o f

g o o d s o r se rv ice s o r b o th notengage d i n: (i ) M aking l oan s; (ii) O fferi ng extensio n s o f c re d it s ecur ed bys econda r yl i ens on r es i dent i al r eal pr oper t y ; or ( i i i ) A ct i n g a s a c r e d i t s e r v i ces bus i nes s as defi ned underT i t l e 14, Subt i t l e 19 of t he C om m er ci al L aw A r t i cl e.
U nder t hi s pr ovi s i on of t he l i cens i ng s t atut e, t her efor e, a C ont r act or i s exempt fr om t he I L L l i cens e ( and thus m aym ak e l oans under S u b ti tl e 1 0 w ith o u t o b tai n ing the licen se) un l ess t he C on t ract or al so m akes l oans , ext ends cr edi ts ecur ed by sec o n d l i ens on r es i dent i al propert y , or act s as a cr editser vices bu si ness.
A s w e s t at ed att he out s et , C ont r act or s t ypi call ydo notm ake l oans of m oney , norar e theyengage d i n act i vi t i es w hi ch w oul d br i ng t hem w it h i n t he def

i ni t i on of “c r edi ts er vi ces bus i nes s
. ” See CL § 1 4 -1 9 0 1 (b ). A sig n if

ica n t n u m b e r of C o n tra c to rs d o e x ten d c re d it sec u red b ysec o n d aryli en s o n reside n ti al real p rop erty , h o w ev er. I t appea r s fr om t he l anguage of FI §11- 301( b) ( 6) t hat , i f a c ont r act or does any s econd- l i en sec ur ed i ndi r ectfi nanci ng, t hen thi s exempt i on fr om l i cens ur e does nota p p l y.
W hi l e the l i m i t s of t he exe m pt i on i n t he I L L pr ovi s i ons appea r c lea r, C L § 1 2 -1 0 1 5 (a ) m u d d ies th e w a ter s c o n sid e ra b ly . T h is se c tio n p ro v id e s a s f

o llo w s: ( a) E xcept for a s el l er of goods ors er vi ces notengage d i n m ak ing c as h advanc es t o be p a i d t o o r f

o r th e a c c o u n t o f a b o rr o w e r, a cr edi tgr ant orm aki ng a l oan or ext ens i on of cr edi tun d er t hi s s ubt i t l e i s s ubj ectt o t he l i cens i ng, i nves t i gat or y , enfor cementandG en. 98] 107 penal t ypr ovi s i ons of Ti t l e 11, Subt i t l e 3 of t he F in a n c ia l I n s titu tio n s A rt ic le

. I n t hi s s ect i on, bas i cal l y the sam e l i cens i ng exempt i on exi s t s for s e l l e r s o f

g o o d s o rs e r v i c e s f

o u n d i n t he I LL. Unl i k e t h e I LL exem p t i on pr ovi s i on, how ever , t he exe m pt i on i n C L §12- 1015( a) does appl yt o a s el l erw ho al s o ext ends cr edi ts ecur ed bya s econd l ie n on r es i dent i al r eal pr oper t y
. T hus , a C ont r act orw ho s ecur es i n d i r e c tf

i n a n c i n g wi t h a s e c o n d l i e n o n t h e c u s t o me r ’ s h o me appea r s under C L § 1 2 -1015 t o be exe m ptfr om t he I L L l i cens i ng pr ovi s i ons , w hi l e FI §11- 301( b) ( 6) unequi vocal l yr equi r es t he C o n tra c to r to o b tain a lice n se
. In th is res p e c t, th e tw o sta tu tes a re in d ir e c t, ir re c o n c ila b le c o n f lic t.
T hi s i s nota si tuati on i n w hi ch the part i cul arcr edi tgr ant or pr ovi s i on i n the C o m m er ci al L aw A r t i cl e i s s i l entaboutan e x e m p tio n f

ro m th e lice n sin g p ro v isio n , w h ile th e IL L sp e c if ica lly s uppl i es t hos e exe m pt i ons ( forexampl e, t he exempt i on of banks and ot herdepos i t or yi ns t i tut i ons )

. I n t hats i tuat i on, t he s t atut es c an be har m oni zed. C L §12- 1015 m akes no m ent i on of banks orot her i ns t i tut i ons but s i m pl y m akes al l “cr edi t gr ant or s ” (de fi ned i n §12- 1001( b) t o i ncl ude such i ns t i tut i ons ) “s ubj ect ” t o t he pr ovi s i ons of t he I L L

. T her efor e, t he exe m pt i ons i n t he l i cens i ng s t atut e a re not m ent i oned, l etal one contr adi ct ed, i n t he cr edi ts t atut e. I n m ar ked c o n t r a s t , b o t h s t a tu t e s a d d r e s s t h e e x e mp t i o n f o rs e l l e r s i n t wo differ ent, dir ect l ycon fl i ct i ng w ay s.
W e a re n o t w ith o u t g u id a n c e in a ttem p tin g to re so lv e c o n f licts o f th is k in d

. F irst, w e a re to p re su m e th a t th e G e n e ra l A ss e m b ly i nt ended a l l of i t s enac t m ent s t o oper at e t ogetheras a cons i s t entand h a rm o n io u s b o d yo f l a w
. Far m ers & M er chant s B ank v. Sch l ossberg , 3 0 6 M d. 48, 61, 507 A

. 2d 172 ( 1986)

. R epea l by im p lic a tio n is n o t f

a v o re d

. S ta te v . Ha rr is , 327 M d. 32, 607 A

. 2d 5 5 2 (19 9 2 ). If tw o statu tes are in irrec o n cil ab le c o n fli ct, h o w ev er, “t he sam e presum ed legi sl at i ve i ntentrequi res t hat the st atute w ho se re lev a n t su b sta n tiv e p ro v isio n s w e re e n a c ted m o st re c e n tlyb e h e ld t o have r epea l ed byi m pl i cat i on anyco nfl i ct i ng pr ovi s i ons of t he ear l i ers t atut e. ” Far m ers & M er chant s B ank v. Schl os s ber

g, 306 M d . a t 6 1

. S e e a ls o P la z a C o r p . v . A lb a n T

r a c to rC o ., 219 M d. 570, 1 5 1 A

. 2 d 1 7 0 (19 5 9 ).108 [7 9 O p
. A tt ’y
A l t ho u g h t he s t ar t i ng pl ace fori nt erpr et i ng a s t atut e i s t he l anguage us ed by t he G ener al A s s embl yr ead i n a nor m al w ay , “the gener al purpos e [of

a s t atut e] i s a m or e i m por t ant ai d t o t he meani ng t han anyrul e w hi ch gr amm arorl ogi c mayl aydow n. ” Kacz or ow s ki
v . C it y of Ba l t i m ore , 309 M d. 505, 525, 525 A

. 2d 628 ( 1987 ). Som et i m es t hatpurpos e ca n be di s cerned t hr ough a r evi ew of t he his t oryw hen t he st atutory tex t it sel f fail s t o co nv eyt he p urpose a d e q u a te ly. 3 0 9 M d . a t 5 1 5

. C L Su b t i t l e 1 0 ( t o g e t h e r wi t h CL S u b t i t l e 9 ) was e n a c t e d as C hapt er143 ( Senat e B i l l 591) of t he Law s of M ary l and 1983. T he l egi s l at i ve hi s t or yi ndi cat es t hatt he bi l l w as or i gi nal l ypr opos ed as a resp o n se to a m o re p erm issi v e reg u lat o ryen v ir o n m en t i n D elaw are and othercont i guous s t at es , w hi ch had hel ped t hes e s t at es dr aw j obs in th e f in a n c ia l in d u s tr ya w a yf ro m M a ryla n d

. T he i ni t i al pr opos al s w oul d have c r eat ed new l endi ng s t atut es app l i cable t o b ank s only

. A s the b ill took shape, how ever, m ost o th e r b u sin e ss e s e n g a g e d e ith e r in len d in g o r e x ten d in g c re d it t o faci l i t at e sal es saw t he ad van t ages of t he n ew l end i ng subti t l es. T hes e ot her l ender s per s uaded t he L egi s l atur e t o i ncl ude t hem i n t he defi ni t i on of “c r edit g r ant or , ” thus m aki ng t hem el i gi bl e t o us e the n e w l a w.
A s non- depos i t or yl ender s w er e m ade el i gi bl e t o us e w hatw as to b e c o m e C L S u b tit les 9 a n d 1 0 , a p ro v isio n w a s in c lu d e d in S e n a te B i l l 591 r equi r i ng cert ai n cr edi tgr ant or s t o obt ai n a l i cens e undert he a l r e a d y e x i s t i n g I LL p r o v i s i o n s
. Se v e r a l a me n d me n t s l a t er , t he p ro v isio n s re g a rd in g lice n sin g in C L S u b tit le 1 0 , w h ich u lt im a tely
w er e ena ct ed as C L §12- 1015, exempt ed cert ai n s el l er s of goods and se rv ice s a n d re a d a s f

o llo w s: ( a) E xceptfora s el l erof goods and s er vi ces notengage d i n m aki ng cas h advanc es t o be pai d t o or for t he acc ountof a borr ow er or o f f er i ng ext ens i ons of

cr edi ts ecur ed by a
se c o n da ry lien o n re sid e n tia l re a l p ro p e rty , a cr edi tgr ant o rm aki ng a l oan orext ens i on of cr edi t under t h is s ubt i t l e nots ecur ed by a
se c o n da ry lien o n re sid e n tia l re a l p ro p e rty is s u b j e c t t o t h e l i c e n s i n g , i n v e s t i g a t o r y, e n f orcem ent and p enaltyprovis i on s of T i t le 11, Subt i t l e 3 of t he Fi nanci al Ins t i tut i ons A r t i cl e.G en. 98] 109 ( b) I n addi t i on t o t he l i cens e r equi r ed by s ubs ect i on ( a) of t hi s s ect i on, a cr edi tgr ant or m a k in g a lo a n o r e x ten sio n o f c re d it u n d e r th is s ubt i t l e s ecur ed bya s econda r yl i en on r es i dent i al r eal pr oper t yi s s ubject t o t he l i cens i ng, i nves t i gat or y , enfor cementand penal t ypr ovi s i ons of Ti t l e 12, Subt i t l e 3 of t he Fi nanci al I ns t i tut i ons A r t i cl e. (E m p h a sis su p p lied .) T h e 1 9 8 3 v e rsio n o f C L § 1 2 -1 0 1 5 (a ) is cert ai nl ym uch cl os er than tha tof t he curr entpr ovi s i on t o t he wor d i ng o f

t h e e x e mpt i o n i n FI § 1 1

- 3 0 1 ( b ) ( 6 )

. I n f a c t , t h e I LL e x e m p tio n f

o r s e llers (w h ich , as w e h a v e se e n , d o e s n o t ex ten d to s el l er s w ho do s econd- l i en s ecur ed i ndi r ectfi nanci ng) w as enac t ed f o r the fir stt i m e as partof the sam e l egis l at i on
. T herefore, atfi rs t b lu sh it w o u ld a p p e a r th a t, at lea st in 1 9 8 3 , the G e n e ra l A ss e m b ly i nt ended t o exempt fr om I L L l i cens ur e onl ys el l ers o f g o o ds and s er vi ces w ho di d nots ecur e thei rext ens i ons of cr edi tw i t h a s econd l i en on r es i dent i al r eal pr oper t y
. Y eteven thi s concl us i on i s m ade p ro b lem a tic b yth e se c o n d h a lf o f th e sin g le s e n ten c e e n a c te d in 1983 as C L §12- 1015( a)

. T he s econd i ndepende ntcl ause o f t hat s ent ence , w hi ch begi ns aft ert he fi r st c o m m a w i t h t he w or ds “a c re d it g ra n to r m a k in g a lo a n
.. ., ” se e m s to b e sa y in g th a t a c r e d it g ra n to r is o n lysu b

jec t to IL L lice n su re in th e f irst p lac e if

th e c re d it grant or i s e x t end i ng credi tt hat i s nots ecur ed bya s econd l i en on re sid e n tial re a l p ro p e rty . If th is la n g u a g e w e re g iv e n lit e ra l ef f e c t, t he pr ece di ng cl aus e, l i m i ti n g t he s cope of t he exe m pt i on fr om l i cens i ng, w o ul d be meani ngl es s
. T hes e s eemi ngl yi ncons i s t ent p r o v i s i o n s a p p e a ri n t h e s a me s e n t e n c e a n d we r e e n a c t e d a tt h e s a me t i m e.
P erh ap s a g rad e-sc h o o l t ea ch er o f a g en era ti o n ag o co u ld so rt outt hi s gr amm at i cal m or as s of doubl e ne g ati v es. U ndert he t eac hi ng of Kacz or ow s ki , h o w e v e r, su c h g yra tio n s ar e n o t th e ro u te t o d i scer ning t he p urpose o f t he st atutor y sch em e. T he b est r econc i l i at i on of t hes e pr ovi s i ons i s t o vi ew t he fi r s t h alf an d t he s econd ha l f of the 1983 ver s i on of C L §1 2 -1015( a) as eac h a d d re ss in g a lto g e th e r d if f e re n t s u b jec ts, a lb e it th e lan g u a g e f a ils to m ake the di s t i nct i on cl ear
. T he fi r s thal f of the s ubs ect i on conce r ned s el l er s of goods or servi ces onl y
. T he sec ond hal f gave a s epar at e, ind ep en d en t exe m p ti o n to li ce n see s u n d er the fo rm er S e c o n d ary M or t gage Loan Li ce n si ng L aw and w as noti nt ended t o aff ect sel l ers
.110 [7 9 O p
. A tt ’y

The only mention of home improvement contra ctors inthe 6 leg islative history

is inconclusive. I n s uppor tof t hi s vi ew , s ubs ect i on (b) of C L §12- 1015 expr es s l ym ade the l i cens i ng r equi r ement fors econ d ary m or t gage l e n d e r s t h e n i n e f

f e c ta p p l i c a b l e t o e x t e n s i o n s o f c r e d i t un d e rCL Subt i t l e 10, i f t heyw er e s ecured bya s econda r yl i en on r es i dent i al
r eal p rop er t y
. A ft ert he ena ct m entof C hapt er143, t he C o m m issi o n er o f C o n su m e r C red itd id n o t r eq u ir e se co n d ary m o rtg a g e lice n se e s to o b tain a lice n se u n d e r th e IL L a s a p re re q u isite t o us i ng C L Subt i t l e 10. T hi s admi ni s t r at i ve pol i cy w as bas ed upon t he vi ew t hat the s econd ha l f of CL §12- 1015( a) addr es s ed

)and exempt ed

)se c o n d a rym o rtg a g e lo a n lic e n se e s. A p ra c tice o f th is k in d , es tab lish e d so o n a f ter th e p a ss a g e o f

a sta tu te , is q u ite per s uas i ve i n i nt erpr et ing pr ovi s i ons appl i ed byt he admi ni s t r at i ve b o d y
. See, e. g. , Mar

yland C l as s i

f i ed Em pl oyee s A s s ’ n v. Schaef er , 3 2 5 M d . 1 9 , 3 3 , 5 9 9 A .2 d 9 1 (1 9 9 1 ); Fal i k v. P r i nce G eor ge’s H os p. , 3 2 2 M d . 4 0 9 , 4 1 6 , 5 8 8 A .2 d 3 2 4 (1 9 9 1 ).
M or eover , t he pr ovi s i ons enac t ed i n the IL L as a partof t he s a m e b i l l d i d n o ts u f f e rf r o m t h e s a m e i n t e r n a l a m b i g u i t y. P re su m a b ly , h a d th e e x e m p tio n f o r se c o n d m o rtg a g e s e sta b lish e d in t he seco nd half of C L §1 2-101 5(a) been i ntende d to affect s el l ers , t hen the s ame l anguage w oul d have found i t s w ayi nt o t he pert i nent l i c e n s i n g p r o v i s i o n o f

t h e I LL.
T he ups hoti s t hat , w hi l e ther e r emai ns s om e doubt , t he bett er v iew is that in 1 9 8 3 the G en era l A ssem b lyinten d ed to ex em p t sel lers o f g o o d s a n d s e r v i c e s who want ed t o u s e CL Su b t i t l e 1 0 f r o m I LL l i cens e onl yi f t heydi d not ext end cr edi t s ecur ed bya s econd l i en on r e s i d e n t i a l r e a l p r o p e r t y. 6

Fr om t hi s l es s t han certain concl us i on, w e move t o t he 1989 e n a c tm e n t o f

th e M M L L , w h ich a m e n d e d C L § 1 2 -1 0 1 5 f ro m its p rio r ap p a re n t in ter n a l in c o n sis ten c y to its p re se n t ir r e c o n c ilab le co n fli ct w ith F I §1 1 -30 1 (b)(6 ).
I n 1989, t he G ener al A s s embl ydec i d e d t o r evamp t he l i cens i ng req u ir em en ts fo r m o rt g a g e len d ers. Pre v iou sly , tw o statu tory s chemes w er e pot ent i al l yappl i cabl e to non- depos i t or ym or t gage l ender s , t he M or t gage Ba n k er/ M or t gage Broke rl aw , FI T i t l e 12, Subt i t l e 5, admi nist er ed byt he B ank C om m i s s i oner , and the SecondaryM or tgage L oan Li cens i ng L aw , for m erFI T i t l e 12,G en. 98] 111
S u b tit le 3 , ad m in iste re d b y th e C o m m iss io n e r o f C o n su m e r C re d it. L i cens ees undert he l at t erl aw w er e perm i t t ed t o engage i n anyt ype o f m o rt g ag e len d ing , b u t the statu tory sch em e p rov ided n o stru cture forr egul at i ng t hes e l i cens ees w hen theyengaged in t r ans act i ons o ther th an sec o n d m o rt g ag es. S ee 73 O pi ni ons of

the At t or ney G ener al326 ( 1988)

. M or t gage Banker li cens ees coul d onl ym ake orbr okerfi r s tm or t gages
. A m ong ot herthings, t he bondi ng req u ir em ent s and l i cens e fe es w er e i ncons i s t ent

. For t hes e and a hos tof ot herr eas ons des cr i bed i n t he l egi s l at i ve hi s t or y , C hapt er476 of t he L aw s o f M ary l and 19 89 w as enacted, repeal i ng bo t h o f t hese lice n sin g law s a n d re p lac in g th e m w ith th e M M L L , g o v e rn in g a ll
m ort gag e l end ers
. A s p artof t hi s enac t m ent , m anyr efe r ence s t o t he Seconda ry M o rtg a g e L o a n L ice n sin g L a w a n d th e M o rtg a g e B a n k e r s ta tu te w er e del et ed orchange d i n t he C om m er ci al L aw A r t i cl e. A m ong t hes e cha nges , al l r efe r ence s t o sec o n d li ens on r es i dent i al r eal p ro p e rtyw e re d e lete d f

ro m C L § 1 2 -1 0 1 5 , inc lu d in g th e e x c e p tio n to t he exem pt i on for s el l er s
. N ot i ng i n t he t i t l e orl egi s l at i ve hi s t or yof C hapt er476 i ndi cat es t he s l i ght es ti nt ent i on t o s ubs t ant i vel ychange t he I LL l i cens i ng pr ovi s i on s as they appl i ed t o s el l er s of goods or s er vi ces ext endi ng cr edi tunderSubt i t l e 10.
T he exem pt i on fr om I L L l i cens ur e t hat t he sec ond hal f of §12- 1015( a) had pr evi ous l yaff or ded t o s econda r ym or t gage l oan l i cens ees w as r emove d

. N o s i m i l arexempt i on w as enac t ed for M M L L l i cens ees
. A ccor di ngl y , s i nce the ef fec t i ve d ate of t he M M LL, t h e Commi s s i o n e ro f Con s u me rCr e d i th a s r e q u i r e d M M LL l i cens ees to o b t ai n an I L L l i cens e as a pr er equi s i t e t o ext endi ng cr edi tunderSu b t i t l e 10. G one, t her efor e, i s t he i nt ernal i ncons i s t encyi n C L §12- 1015( a)

. B u t t her e i s no cl ue expl ai ni ng w hyt he fi r s thal f of CL §12- 1015( a) w as change d ( as a partof t he e n a c t me n to f

t h e M M LL) , c r e a t i n g t h e c o n f l i c twi t h t h e I LL l i cens i ng s t atut e.
T h e s t o r yd o e s n o te n d t h e r e , b e c a u s e Ch a p t e r6 2 8 o f t h e L a ws of M ary l and 1991 adde d an addi t i onal exce pt i on t o the exe m pt i on fors el l er s s etfor t h i n FI §11- 301( b) ( 6). A s w as t rue of the 1983 e n a c tm e n t, th e G e n e ra l A ss e m b ly w a s c h a n g in g th e lice n sin g sta tu te t o r efl ecta new r equi r ement t hata per s on s ubj ectt o r egul at i on under a di ffe r ents t atut or ys cheme obt ai n an I L L l i cens e. T hi s t i m e i tw as “cr edi ts er vi ces bus i nes s es
. ” See C L §14- 1901. T he new exce pt i on m ade c l eart hata s el l erof s er vi ces coul d notes cape t he l icensi ng requi rem ent i f i teng aged i n credi tser vices bu si ness act i vit i es.112 [7 9 O p
. A tt ’y
A ppl y i n g the pr i nci pl es of s t atut or yi nt erpr et at i on di s cus s ed ear l i ert o t hes e s t atut es , w e conc l ude that the prudentcour s e of a c tio n f o r a C o n tra c to r d o in g in d ire c t f in a n c in g u n d e r S u b tit le 1 0 is t o obt ai n an i ns t al l m entl oan l i cens e, unl es s t he C ont r act orext ends
no c r e d i ts e c u r e d b y a s e c o n d l i e n o n r e s i d e n t i a l r e a l p r o p e r t y. A l t hough t he 1989 M M L L enac t m enti s t he l at es tl egi s l at i ve e n a c tm e n t th a t d ire c tlyc h a n g e d th e e x e m p tio n p ro v isio n s a p p l i cable t o s el l er s w hos e fi nanci ng i s s ecur ed bya s econda r y m or t gage, t hat l aw di d nots t at e s uch a change as par tof i t s purpos e. M or eover , t he G en era l A ssem b lyh as s in c e a m en d ed the e x em p ti o n fo r sell ers found i n t he I L L l i cens i ng pr ovi s i ons , w i t houtdi s turbi ng t he s econd
m or t gage l anguage
. A ddi t i onal s uppor tfort hi s concl us i on m aybe der i ved fr om t he f a m ili a r ru le o f sta tu to ry in ter p re tatio n th a t e n a c tm e n ts d e a lin g w ith a sp ec ifi c top ic w il l go v ern in the ev en t of a c o n fli ct w ith a m o re gener al s t atut e, w i t h r es pectt o s i tuat i ons t hatfal l w i t hi n t he pur vi ew o f b o th e n a c tm e n ts

. G E

IC O v. Insurance C om m ’r , 332 M d. 124, 1 3 2 , 6 3 0 A .2 d 7 1 3 (1 9 9 3 ); Far m ers & Mer chant s N at i onal B ank v. Sch l ossberg , 3 0 6 M d . at 4 8 ; A .S . A b e ll P u b lish in gC o . v. Mezz a n o te , 297 M d. 26, 464 A

. 2d 1068 ( 1983)

. T he I L L i s m or e s peci fi c than Subt i t l e 10 as t o l i cens i ng i s s ues , beca us e l i cens i ng i s t he t ot al s um and s ubs t ance of t he ILL

. Subt i t l e 10 i s a gener i c cr edi tr egul at i on gover ni ng al l as pect s of t he ext ens i on of cl os ed- end cr edi t

. T o t he ext entl i cens i ng i s addr es s ed, i ti s par tof a l arg er, m or e gene r al s c h e m e
. T o su m m a riz e , o u r b e st a ss e ss m e n t o f th is statu to ry p u z z le is t hati f t he ques t i on w er e l i t i gat ed, t he court s ar e m or e l i kel y t han not t o hol d t hatt he I L L l i cens i ng pr ovi s i ons pr edomi nat e. B utt he r eal a n sw e r o u g h t to c o m e f ro m th e G e n e ra l A ss e m b ly , w h ich n e e d s to re so lv e th e c o n f

lict an d b rin g c e rta in ty to th o se e n g a g e d in th is b u s in e s s
. C
. Statutes f

orW hi ch N o L i cens e is N

eede d
1. C L T itle 12, Subtitle 4
D es pi t e ourconcl us i on t hatan I L L l i cens e i s n ec essa ryfor cert ai n C ont r act or s t o ut i l i ze Subt i t l e 10, t her e ar e al t ernat i ve means o f c re d it e x te n s io n th a t d o n o t r e q u ir e a lic e n s e
.G en. 98] 113
I ndi r ectfi nanci ng t hati s s ec u r ed bya s econd l i en on r es i dent i al
r eal pr oper t ym aybe made underC L T it l e 12, Subt i t l e 4, t he SecondaryM or t gage Loan Law

. I n fac t , aft erO ct ober1, 1993, i f t he d o c u m e n ts e v id e n c in g th e f in a n c in g a g re e m e n t d o n o t ele c t S u b tit le 1 0 in w r iti n g , the lo a n w ill a u to m a tica llyb e d e e m e d su b jec t to S u b title 4 . C L § 1 2 -1 0 1 3 .1

. See al s o Schm i dtv. B enef

i ci alF i nance Co

. , 285 M d. 148, 400 A

. 2d 1124 ( 1979)

. Subt i t l e 4 appl i es t o t i m epr i ce f i nancing as w el l as a l oan of money

. T he def i ni t i on of “secon darym ort gag e l oan ” setfort h at C L §1 2-401 (i ) i s as fol l ow s:

“Seconda r y m or t gage l oan” means a l oan ordef er r ed pur chas e pr i ce se c u re d in w h o le o r in p a rt b y a m o rtg a g e , d e e d o f tru st, se c u rity a g re e m e n t, or o th e r lien o n re a l p ro p e rty lo c a ted in th e S tate , w h ich p ro p e rty : (i ) Is subject t o th e lie n o f o n e o r m o re p r i o r e n c u mbr a n c e s , e x c e p t a g r o u n d r e nt or ot herl eas ehol d i nt er es t ; and ( i i ) H as a dw el l i ng on i tdes i gned pr i nci pal l ya s a r e s i d e n c e wi th a c comm odat i on for no tm ore t han fou r fam i l i es. (E m p h a s is s u p p lie d .)
In an ex tens ive an aly sis o f th e m ea n ing an d sco p e o f th e term “d ef erred p u rch ase p ri ce , ” the n A ssist an t A tt o rne yG en era l R o b ert deV

. Fr i er s on concl uded that i t w as i nt ended t o i ncl ude the fi nanci ng o f h o me i mp r o v e me n t s ; a c c o r d i n g l y , “ a n i n s t a l l me n t s a l e h o me i m pr ovement t r ans act i on s ecur ed bya sec ondarym or t gage i s s ubj ect to th e [ S e c o n d a ryM o rtg a g e L o a n L a w ] u n les s th e tra n sa c tio n is
m a d e p u rs u a n t to S u b title 1 0 o f th e C o m m e rc ia l L a w A rt ic le .” L e tter o f a d v ice to C o m m iss io n e r o f C o n su m e r C re d it A lan T . F e ll, at 12 (Jan u ary2 4 , 1 9 8 6 ). W e c o n cu r.
O ther tha n the M M L L li ce n se, w h ich, as discu ssed in P art II IA a b o v e , ca n b e a v o id e d b ytra n sf e rrin g th e f

in a n c in g c o n tra c t w ith in 30 day s of com pl et i on, t her e i s no l i cens e r equi r ement form aki ng a lo a n o r e x te n s io n o f

c re d it u n d e r S u b title 4

.114 [7 9 O p
. A tt ’y

In Mary land, UCC Ar

ticle 2 is c odified as CL Title 2. The Sales 7 Article, by

its express ter

ms, a pplies only to sales of “g oods,” as oppose d to s e rv ic e s. 2. R etail

I nstal l m ent Sales
I f t he i ndi r ectfi nanci ng i s s ecur ed byan i nt er es t i n t he goods
s uppl i ed by the C ont r act or , t he fi nanci ng agr eement , i f Subt i t l e 10 is n o t ele c ted , w ill m e e t th e d e f in iti o n o f a n “ in s ta llm e n t sa le
c o n t r a c t ” s e tf

o r t h i n t h e Re t a i l I n s t a l l me n tS a l e s Ac t( “ RI S A” ) , CL T itl e 1 2 , S u b tit le 6 :

“Inst al l m ent s al e agreem ent” m eans a con tractfor t he sal e of c on sum er good s, negot i at ed orent ered i nt o t hi s St at e, under
w hi ch: (i) P a rt o f

a ll o f th e p u rc h a se p ric e is pay abl e i n one or m or e paym ent s aft er t he
m aki ng of t he contr act ; and ( i i ) T h e s el l ert akes col l at er al s ecur i t yor keeps a s ecur i t yi nt er es ti n t he goods s ol d.
C L § 1 2 -60 1 (1)(1 ).
T he r e i s l i v e l yd e b a t e a s t o whe t h e ra h o me i mpr o v e me nt c o n tra c t, w h ich in v o lv e s th e sa le o f b o th g o o d s a n d se rv ice s, c a n f a ll
w ith in th e re a c h o f

R IS A ’s r e g u lato ry c o v e ra g e , b e c a u se th e sta tu te purpor t s t o govern onl y s al es of “t angi bl e per s onal pr oper t y , ” w hi ch is th e d e f

in iti o n o f th e ter m “ g o o d s.” C L § 1 2 -6 0 1 (g )

. T h e d e b a te stem s l ar gel yfr om cas e l aw ar ound t he countr y , and i n M ary l and, t hatdr aw s a di s t i nct i on betw een c ont r act s fort he s al e of goods
ver s us s er vi ces forpurpos es of det er m ining t he appl i cabi l i t yof A rt icl e 2 , “S ales,” o f th e U n ifo rm C o m m erc ial C o d e (“ U C C ”). In 7 M ary l and, atl eas tt w o t es t s have b ee n ar t i cul at ed byt he C our tof A ppeal s for det er m i ni ng w hetherA r t i cl e 2 appl i es t o a contr actfor t he s al e of both goods and s er vi ces
. T he first is the “pr edomi nant purpos e” t es t , w hi ch as ks w hethert he p redom i nantpurpos e i s t he
s al e of goods , w i t h i nci dent al l abor i ncl uded (f or exampl e, s al e and in sta llatio n o f a w a ter h e a ter ), o r in ste a d is th e sa le o f a se rv ice w ith goods added i nci dent al l y( forexampl e, a contr actw i t h an ar t i s tforG en. 98] 115

a p a in tin g ). B u r to n v . A r te r y C o

. , In c ., 279 M d. 94, 367 A

. 2d 935 (19 7 7 ).
T he othert es t , cal l ed the “gr avaman” t es t , w as announce d by t he C our tof A ppeal s i n a pr oduct s l i abi l it y ca s e aga i ns tt he
s e lle r/ in s ta lle r o f

a n in -g ro u n d s w im m in g p o o l. A ntho ny P o o l s v. Sheehan , 295 M d. 285, 455 A

. 2d 434 ( 1983)

. T he C our thel d i n t hat
cas e thatt he w arr antypr ovi s i ons of t he U C C Sal es A r t i cl e appl i ed b ec au se th e inju ryw as all eg ed ly ca u sed b y a de fe cti v e divin g b o ard ( goods ) , r athert han negl i genti ns t al l at i on s er vi ces
. T hus t he “gr avaman” of the i s s ue i n di s put e i nvol ved the goods , r ather than th e se rv ice s, irre sp e c tiv e of the “ p re d o m in a n t p u rp o se ” f o r th e w h o le
c o n tra c t.
T h e re is g o o d re a so n to b e liev e th a t n e ith e r o f th e se tes ts w o u ld be w hol l y det er m i nat i ve of t he appl i cabi l i t y of a cred itr egul at i on s t atut e s uch as R I SA

. Fi r s t , t he C our tof A ppeal s has l i m i t ed app l i cat i on o f th e predo m i nan tpu rpose t est , ho l ding, i n a tax case not i nvol vi ng t he U C C , t hat i t w as onl y one of s ever al per t i nent f a c to rs
. C om

ptr ol l erof

the Tr eas ur

y v. E qui t abl e Tr us tC o. , 296 M d. 459, 464 A

. 2d 248 ( 1983)

. M or eover , the C o u rt has al r eady appl i ed R I SA t o hom e i m pr ovement con tr ac t s , al t hough never d i r e c t l y a d d r e s s i n g t h e i s s u e whe t h e r t h e s e r v i c e s s o l d u n der t he
c o n tr a c t a f

f e c t th a t a p p lic a b ility. See Fi nanci alC r edi tC or p. v. Wi l l i a ms , 2 4 6 M d

. 5 7 5 , 2 2 9 A .2 d 7 1 2 (1 9 6 7 ). S ee al s o U ni t ed St at es v. B l and , 1 5 9 F . S u p p . 3 9 5 (D . M d .), a ff’d , 2 6 1 F .2 d 1 0 9 (4 th C i r
. 1958)

. So, t oo, has t he A t t or neyG ene ral. 56 O pi ni ons of

the A t t or ney G ener al2 4 4 (19 7 1 ).
F i n a l l y , t h e f

e w c a s e s i n t e rp r e t i n g t h e c r e d i tr e g u l a t i o n l a ws m a k e m u c h o f

th e re m e d ia l n a tu re o f

th e s ta tu te s
. U

ni t ed Stat es v. B l and , 1 5 9 F . S u p p . at 3 9 6 ; H uds on v. M

ar yland St at e Hous i ng C o. , 2 0 7 M d . 3 2 0 , 1 1 4 A .2 d 4 2 1 (1 9 5 5 ); S trid e v . M a rtin , 184 M d. 446, 41 A

. 2d 489 ( 1945)

. I n contr as t , t he U C C i s m or e of a nonr egul at or ys cheme foror der i ng ci vi l l i abi l i t yi n comm erc i al t r a n s a c t i o n s
. Th e s e p r i n c i p l e s a p p e a r t o h a v e l e d t h e Cour t of A ppeal s t o apply one s etof r egul at or yl aw s governi ng cr edi t , even w h e n t h e c o n t r a c tm a y h a v e b e e n i n t e n d e d t o b e g o v e r n e d b y a d if f e re n t s ta t u te

. B ig

g u s v . Fo rdMo to r C re d it , 328 M d. 188, 613 A

. 2d 986 ( 1992 ) (d iscus s i ng appl i cat i on of R I SA pr ovi s i ons t o a contr actm ad e underSubt i t l e 10) ; Schm i dtv. B enef i ci alF i nance Co. , 2 8 5 M d . at 1 5 7 (S u b tit le 4 , g o v e rn in g se c o n d m o rtg a g e s, a p p lied to a co n t r a c ti n t e n d e d t o b e o f f e r e d u n d e rSu b t i t l e 3 , t h e Con s u m er116 [7 9 O p
. A tt ’y

It is also possibl e that, if the financ ing contra ct is secure d both by 8 the g oods supplied and a seconda ry mortg ag e on the customer’ s residenc e, both RI SA and Subtitl e 4 might simul taneously apply

. Such appea rs to be the teac hing of Bi

ggus v. Fo rd

Mo tor Credit . Thus, the terms of the fi n an cingwould be re quired to comply with the regulatory

restric tions under both statutes. Ne ither of thesestatutes requires an ILLlicense, howeve r. L o a n L a w ). In b o th o f th e se c a se s, th e C o u rt o f A p p e a ls s e e m e d to a n a ly z e th e a p p lica b ili tyo f th e p a rticu lar c re d it l a w b ysim p ly compar i ng t he t er m s of t he contr actw i t h t he defi ni t i ons found i n t he
s t atut e, n ot w i t hs t andi ng t hatot hert er m s of t he contr actm etot her defi ni t i ons el s ew her e. T hus , i n S c h m id t, i t di d notm at t ert hatm any of t he t er m s o f the cont r actonl yappea r ed i n l oans m ade unde rt he C ons um erL oan L aw , s o l ong as ot her t er m s m et t he def i ni t i on of a “s econda r ym or t gage l oan” unde rSubt i t l e 4.
For t hes e r eas ons , t he l i kely resul ti s t hata contr actfort he
m i xed s al e of goods and s er vi ces , s uch as a hom e i m p r ovement contr act , w i l l be s ubj ectt o R I SA s i m pl ybeca us e a pa r tof t he contr act , t he s al e of goods , fa ll s w i t hi n t he def i ni t i on i n C L §12- 601( 1) of “i ns t al l m ents al e contr act

. ” T her e i s , how ever , no di r ect 8 f i n a n c i n g u n d e r RI SA a n d n o l i c e n s i n g r e q u i r e me n tu n d e rt h e I LL.
3. O th er Credi t

Mech an ism s Fi nal l y , t her e ar e tw o p o ssibl e al t ernat i ves t o uns ecur ed l endi ng underSubt i t l e 10, nei t herof w hi ch r equi r es an I L L l i cens e.

I ti s atl eas tar guabl e t h at t he cl os ed- end cr edi tpr ovi s i ons of t he R et ai l C r edi t A ccount s L aw ( “R C A L ”) , C L T i t l e 12, Subt i t l e 5, m ayappl yt o uns ecur ed i ndi r ectfi nanci ng, i f Subt i t l e 10 i s not el ect ed. A “r et ai l cr edi tacc ount ” i s defi ned i n C L §12- 501( 1) as “an agr eementort r ans act i on fort he r et ai l s al e of goods an ds er vi ces , w h ich is n e g o tiate d o r e n ter e d in to a n d p u rsu a n t to w h ich a tim e sa le pr i ce i s es t abl i s hed. ” T hi s s t atut e does not pr ovi de fort he ext ens i on o f c red ito n a se cu red b asis. T h e R C A L d ef init ion o f th e term

“ g o o d s ” e x p r e s s l y exc l udes “[h] om e i m pr ovement , as defi ned i n t he M ary l and H om e I m pr ovement L aw , oranyt r ans act i on undert hat law

. ” C L § 1 2 -50 1 (h)(3 )(i ii ). T h e d ef init ion o f “ serv ices,” h o w ev er, i ncl udes “s er vi ces fur ni s hed i n connec t i on w i t h t he i m pr ovement of
r eal pr oper t y
. ” C L §12- 501( n) ( 2)

. T hes e fa ci al l yi ncon sist entG en. 98] 117

This analysis is notaltog eth ersatisfac tory either, be causethe 9 definition of “home improve ment” under the Bu s i ness Regulations Articles doe s not lim it the term to contrac t s wh er e g oods as well as service s areprovided. B R §8-101(g ).
Un de r RI SA, thede fi nition of “ g oo ds ” is lim it ed to“ tang ibl e 10 personal property

that has a cash price of $25,000 or less.”CL§12-601(j). pr ovi s i ons can be har m oni zed byi nt erpr et i ng t he def i ni t i on of “s er vi ces ” as excl udi ng m i xed contr act s for the sale of goods a nd s er vi ces
. U ndert hi s anal y sis, a cont r actw i t h a homeow nerw hi ch i nvol ves t he C ont r act orpr ovi di ng l aborand expe r t i s e onl y , m i ght fal l w i t hi n t he R C A L

. I f, how ever , t her e i s anys al e of goods t hat fa ll s w ith in the d ef

initio n o f a “h o m e im p rov em en t, ” o r a “tr ans act i on undert hatl aw , ” i t appea r s t hatt he contr actfal l s out s i de th e d e f in iti o n o f a re tail c re d it ac c o u n t. 9
O n b a lan c e , itis m o st lik e lyth a t th e c o u rts w o u ld n o t ap p ly R C A L , as i t p rese n tl y r eads , t o m i xed s al es of goods and s er vi ces t hat m eett he d efi nit i on o f “ h om e i m provem ent” i n the B usi ness R egul at i ons A rt icl e. H ow ever , a home i m pr ovement contr actfor s e r v i c e s o n l y wou l d a p p e a r t o b e s u b j e c t t o t h e p r o v i s i o n s o f RCA L. I n anyevent , no I L L l i cens ee i s neede d t o ext end cr ed itunder RCA L.
E ven i f R C A L i s notan ava i l abl e al t ernat i ve t o Subt i t l e 10, uns ecur ed, i ndi r ectfi nanci ng m aybe off er ed bya C ont r act orunder
w hathas come to b e know n i n t he l endi ng i ndus t r yas t he “unr egul at ed t i m e- pr i ce di ffe r ent i al doctri ne. ” Thi s doctr i ne c u rre ntl yhas i ts m o st c o m m o n a p p lica tio n to tim e -d e f e rre d c o n tra c ts fort he s al e of goods t hat , al t hough ot herw i s e m eet i ng t he def i ni t i on of an “ inst al l m ents al e agr eement ” underR I SA , ar e out s i de the
r egul at or y fr amew or k beca us e t he pr i ce of t he goods ex cee ds $2 5, 00 0. T hu s, a sel l er that fi nan ces t he sal e of an i t em w i t h a cash

10 pr i ce hi ghert han thatamount i s ar guab ly leftuncover ed byanyof t he pr ovi s i ons of C L T i t l e 12, as s um i ng t hatSubt i t l e 10 has notbeen el ect ed.
T he unr egul at ed t i m e- pr i ce doc t r i ne s eems t o fi tt he s i tuat i on i n w hi ch a Cont r act oroff e r i n g i n d i r e ct , uns ecur ed fi nanci ng does not el ectSubt i t l e 10. I f t he R C A L cannotbe appl i ed t o t he t er m s of t he fi nanci ng contr act , t her e i s no ot herni che i n C L T i t l e 12 i nt o w hi ch t hi s t ype of fi nanci ng fi t s
. A s m i ght be ant i ci pat ed, no l i cens e under118 [7 9 O p
. A tt ’y

t he I L L i s r equi r ed for ext endi ng cr edi t undert he unr egul at ed t i m ep ri c e d o c tr in e
.

IV
C oncl usi on
I n s um , a hom e i m pr ovement contr act ort hatdes i r es t o ext end i ndi r ectfi nanci ng underC L T i t l e 12, Subt i t l e 10 i s pr obabl yr equi r ed t o obt ai n an I ns t al l m ent L oan L aw l i cens e fr om t h e C om m i s s i oner o f C o n su m e r C re d it, a lth o u g h th is co n c lu sio n is no t f re e f ro m d o u b t. I f t he C ont r act ort akes a sec ur i t yi nt er es ti n t he cus t om er ’ s r es i dence , a m or t gage l ender ’ s l i cens e i s r equi r ed unl es s t he fi nanci ng contr act i s t r ans ferr ed w i t hi n 30 day s aft ercompl et i on of t he contr act

. I f t he C ont r act ori s ext endi ng i ndi r ect fi nanci ng out s i de of Subt i t l e 10, t he C o n tr a c to r n e e d n o t o b ta in a n In s ta llm e n t L o a n L a w lic e n s e
. Jo sep h C u rran , Jr. A t t or ney G ener al
J

. St even Lovej oy A s s is ta n t At t or ney G ener al
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