The Maryland Real Estate Contract: How the Standard Residential Contract of Sale Works

Most resale homes in Maryland are bought and sold on the Residential Contract of Sale published by Maryland REALTORS®, plus a stack of addenda. The form itself is a copyrighted document for REALTOR® members, so this post does not reproduce it. It explains how the form works, the statutes behind it, and where deals go sideways before settlement.

If you work across the river, the Virginia real estate contract guide covers the same ground on the other side.

How the form is organized

The edition on the Maryland REALTORS® site (dated 2023) runs in sections from general provisions through breach and dispute resolution. Forms get revised and county-specific addenda get added, so check which version and addenda are actually attached.

Three general provisions shape everything else:

• Time is of the essence. Missing a deadline in the contract is a default, and the other side can void the contract on written notice.
• "Days" means calendar days. The form counts consecutive calendar days, weekends and holidays included, with the count starting the day after the triggering event.
• The contract is the whole deal. Anything agreed in a text message or phone call that never made it into a signed addendum is not in the contract.

Deposits: who holds the money and how it comes back

The form asks who will hold the deposit. When a Maryland real estate broker holds it, state law controls the timing:

"a real estate broker promptly, but not more than 7 business days after the acceptance of a contract of sale by both parties, shall deposit trust money in an account"

— Md. Code, Bus. Occ. & Prof. § 17-502

If someone other than a licensed broker holds the deposit, such as a title company or an attorney, the form calls for a separate escrow agreement.

What people miss is how the money comes back if the deal falls apart. Under the standard form, a deposit held by a broker is normally released on a Release of Deposit agreement that both parties sign. If one side will not sign, § 17-505 lets the broker send written notice of how it intends to distribute the money, and either party can block that by protesting "within 30 days." A cancelled contract does not guarantee a quick refund.

Financing and appraisal contingencies

The financing paragraph makes the buyer's obligation depend on getting a written loan commitment, and the details live in whichever addendum is checked: conventional, FHA, VA, USDA, assumption, gift of funds, or no financing contingency at all. The main form sets two separate clocks, one for the buyer to apply for the loan and one for the commitment. If the commitment deadline passes, either side can void the contract on the terms the form sets out, which include written evidence from the lender when the buyer is the one voiding.

On the conventional financing addendum, the appraisal contingency is a sequence, not a simple walk-away right. If the appraisal comes in low, the buyer gives written notice (with the appraisal) and either proceeds or asks the seller to reduce the price. The seller then agrees or declines, and the buyer then chooses to void or proceed. Each step has its own blank for a number of days. The detail that is easy to miss: on that addendum, a buyer who stays silent past the final deadline is treated as having chosen to go ahead at the full contract price.

Inspections are not in the base contract

The main form does not include an inspection contingency on its own. It says one must be set up through an addendum, and it has a place for the buyer to initial that inspections were declined. An inspection period exists only if an inspection addendum is attached and its deadlines are filled in.

The form also says the property is sold "as is" except as the contract provides, with a pre-settlement walk-through right for the buyer.

The seller's disclosure-or-disclaimer election

For most resales of single-family homes, Maryland makes the seller choose between two statements on a form produced by the Maryland Real Estate Commission:

"A vendor of single family residential real property shall complete and deliver to each purchaser: (i) A written residential property condition disclosure statement… or (ii) A written residential property disclaimer statement"

— Md. Code, Real Prop. § 10-702

Even a seller who disclaims must still disclose latent defects they actually know about that threaten health or safety. The statute exempts some transfers, including certain new construction, foreclosure sales and estate transfers.

Timing is what matters. A buyer who gets the statement on or before signing has no statutory rescission right based on what it says. A buyer who does not has an "unconditional right" to rescind, either before receiving the statement or "within 5 days following receipt," and is entitled to the return of their deposit. That right can end earlier once the buyer applies for a mortgage, if the lender gives the notice the statute describes, and it ends at closing or occupancy, whichever comes first. Getting the signed acknowledgment attached at ratification avoids the issue.

HOA and condominium resale packages: two different statutes, two different clocks

The HOA and condo rules are easy to mix up.

Homeowners associations. Under the Maryland Homeowners Association Act, the seller must deliver the required disclosures on or before contract, or within 20 calendar days after. The contract must carry a notice that says:

"If you have not received all of the MHAA information 5 calendar days or more before entering into the contract, you have 5 calendar days to cancel this contract after receiving all of the MHAA information."

— Md. Code, Real Prop. § 11B-106

A separate 3-day cancellation window applies to later notices of fee increases over 10 percent or other material changes that adversely affect the buyer.

Condominiums. Resales are governed by § 11-135 of the Condominium Act (§ 11-126 covers a developer's initial sale of a unit, which is a different regime). The unit owner must deliver the resale information "not later than 15 days prior to closing," and the buyer can rescind:

"at any time within 7 days following receipt of all of the information required"

— Md. Code, Real Prop. § 11-135

Once the sale closes, that right ends. The rescission clock does not start until the complete package arrives, so a late or partial packet leaves the contract open. Order it when the listing goes live, not at ratification.

Transfer and recordation taxes: the default split and the first-time buyer rule

Maryland sets a default that the contract can change:

"it is presumed in the absence of a contrary provision in the agreement or the law, that the parties to the agreement intended that the cost of any recordation tax or any State or local transfer tax shall be shared equally"

— Md. Code, Real Prop. § 14-104

Contracts for one- and two-family homes must include a notice of that rule under § 14-117.

The first-time Maryland homebuyer rule is where money moves. For an owner-occupant who has never owned a principal residence in Maryland, Tax-Property § 13-203 cuts the state transfer tax rate from 0.5% to 0.25%, and the seller pays all of it. Under § 14-104, the seller also pays the recordation tax and local transfer tax unless the parties expressly agree otherwise. The standard form's transfer-charges paragraph splits recordation and local transfer taxes equally unless the parties write in something different, so a first-time buyer should read that paragraph closely and ask whether it changes the statutory default. The buyer also has to check the first-time-buyer box and sign the affidavit at settlement. See the Maryland first-time homebuyer transfer tax exemption for who qualifies and what it saves, and who pays closing costs in Maryland for the full breakdown.

The buyer chooses the title company

Maryland requires broker-prepared contracts for single-family homes to say this in bold:

"a statement that the buyer has the right to select the buyer's own: (1) title insurance company; (2) settlement company; (3) escrow company…"

— Md. Code, Bus. Occ. & Prof. § 17-524

The standard form includes that notice. It also encourages an owner's title policy, noting that the lender's policy does not protect the buyer. In practice, who picks the title company is still often negotiated. This guide covers who chooses the title company in Maryland and how to raise it before the contract is locked in.

Property-specific notices worth reading, not skimming

The form carries notices that matter only for some properties:

• Chesapeake and Atlantic Coastal Bays Critical Area. Required by § 14-117. Extra land-use rules can apply to land near tidal water and wetlands. The statutory notice lists the counties with no Critical Area land, and Montgomery, Howard and Frederick are among them.
• Deferred water and sewer charges. Where a recorded covenant has set them up, the buyer may become liable for them after closing. Prince George's County has additional disclosure rules for deferred private water and sewer assessments on new homes.
• Lead-based paint. Sales of homes built before 1978 generally require the federal disclosure form and EPA pamphlet.
• Ground rent, conservation easements and agricultural use assessment. Each has its own paragraph.

Run the numbers before you sign

The Maryland closing cost calculator estimates buyer- and seller-side costs, including transfer and recordation taxes by county, and the title insurance calculator prices the owner's and lender's policies. For line-item detail, see Maryland closing costs.

Get the settlement side lined up at ratification

Most contract problems at the settlement table began as an empty blank, a late packet or an unchecked box.

Will Rapuano handles title and settlement across Maryland, Virginia and DC with Pruitt Title. If you are writing or reviewing a Maryland contract and want the settlement side set up correctly from day one, get in touch. For questions about your legal rights under a contract, talk to a Maryland real estate attorney.

This page describes how Maryland residential contracts customarily work and the statutes behind them. It is general information, not legal advice about your transaction.