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contractor's contract interest rate

I am a licensed contractor in Maryland and my contract calls for 24% interest on unpaid balances when they are past due. Is it legal for me to charge the 24% interest If it's prejudgment? And once I get a judgment then the interest rate would then be at the legal rate in Maryland. Or do I have to change my contract so that it's at the post-judgment interest rate from the date of the default.

1 reply

May 19, 2020

You can certainly keep your contract at a 24% interest rate - whether a judge will give that to you pre-judgment or not is a different story. After a judgment is granted, the interest merges with the judgment and only 10% may be applied moving forward. In general, though, mechanic's lien or bond claims are far more powerful collection tools than a straight lawsuit, but those proceedings generally do not allow for pre-judgment interest, at least not at a 24% rate.

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