The Maryland Real Estate Contract Details That Can Cost Buyers and Sellers Thousands

By Dawn Riley, Associate Broker, Realtor, MCNE, PSA

 

The Maryland Real Estate Contract Details That Can Cost Buyers and Sellers Thousands

Most people focus on the purchase price when they read a real estate contract.

The price matters. But many of the provisions that create the greatest financial risk appear elsewhere in the agreement and its addenda.

A missed deadline, misunderstood inspection right, vague inclusion, weak financing contingency, or poorly planned appraisal term can change the outcome by thousands of dollars.

Maryland real estate contracts are detailed because they must address many possible issues. The forms are designed to create a framework, but they do not replace careful advice and strategic drafting.

I have spent more than 25 years working with Maryland contracts. Knowing what the language says is only the first step. The real work is understanding how the provisions interact and how they affect a buyer's or seller's position.

The Contract Is More Than the Main Form

A residential transaction may include the primary contract plus several addenda and notices.

Depending on the property and financing, the file may include documents addressing:

• Property inspections

• Financing

• Appraisal

• Seller concessions

• Lead-based paint

• HOA or condominium resale information

• Septic and well

• On-site sewage systems

• Water quality

• Termites

• Radon

• Short-sale approval

• Estate or trust authority

• Inclusions and exclusions

• Post-settlement occupancy

• Buyer-broker compensation

• Agricultural or conservation matters

• Critical Area or waterfront issues

The documents should be read as a complete package.

A term in one addendum may modify, supplement, or create obligations related to the main contract.

Dates and Deadlines Are Not Suggestions

Maryland contracts contain time-sensitive obligations.

A party may need to:

• Deliver the earnest money deposit

• Apply for financing

• Provide lender documents

• Complete inspections

• Deliver notices

• Review HOA or condominium documents

• Respond to repair requests

• Obtain insurance

• Satisfy a home-sale contingency

• Settle on the agreed date

The phrase "time is of the essence" has legal significance. Missing a deadline can affect rights and remedies.

A buyer should not assume an inspection period automatically extends because the inspector was unavailable. A seller should not assume a delayed response is harmless. Extensions should be documented properly.

Calendar management is contract management.

The Earnest Money Deposit Is Not a Casual Payment

The earnest money deposit shows the buyer's commitment and becomes part of the funds used at settlement.

The contract should identify:

• The amount

• When it is due

• Who will hold it

• The form of payment

• What happens if the transaction closes

• What may happen if the transaction terminates

The deposit is not automatically awarded to one party because the other party is accused of default.

Maryland law and the contract govern how brokers and escrow holders handle disputed funds. A release may require written agreement, a legal process, or another authorized procedure.

Buyers should understand when the deposit may be at risk. Sellers should understand that a deposit is not the same as immediate damages.

Financing Language Determines More Than the Loan Type

A financing contingency may address:

• Loan program

• Loan amount

• Interest-rate terms

• Application deadline

• Lender documentation

• Appraisal

• Commitment or approval

• Buyer cooperation

• Seller contributions

• Consequences if financing is denied

A preapproval letter is not a final loan approval.

After contract acceptance, the lender may still review income, assets, credit, employment, property condition, title, insurance, appraisal, and other matters.

Buyers should avoid making major financial changes during the transaction. New debt, job changes, large deposits, missed payments, or moving funds without documentation can affect approval.

Sellers should evaluate the buyer's financing strength before accepting the offer, not only after a problem develops.

Appraisal Terms Can Shift Significant Risk

The appraisal protects the lender's collateral position. It also affects the buyer's financing.

The contract and addenda should make clear what happens if the appraised value is below the purchase price.

Possible outcomes include:

• The buyer proceeds at the contract price

• The buyer brings additional cash

• The parties renegotiate

• The seller reduces the price

• The buyer terminates under an applicable contingency

• The parties split the difference

An appraisal-gap provision should identify the buyer's commitment clearly.

A promise to cover a shortage is meaningful only if the buyer has the funds. Proof of funds and the effect on the buyer's cash reserves should be considered.

Sellers should not assume that an aggressive offer is guaranteed revenue. Buyers should not waive appraisal protections without understanding the financial exposure.

Inspection Choices Are Not All the Same

Maryland transactions may use different inspection structures.

A buyer may have:

• A right to inspect and negotiate

• A right to inspect and terminate

• Limited inspection rights

• Specific inspections only

• No inspection contingency

• An as-is arrangement with a right to inspect

• An as-is arrangement without a contractual right to renegotiate

The exact language matters.

"As is" does not always mean "no inspection." It often means the seller is not agreeing in advance to make repairs, while the buyer may retain a right to evaluate the property and decide whether to proceed.

A buyer should know whether the contingency allows repair requests, termination, or both.

A seller should know how long the property may remain exposed to cancellation and whether the buyer can raise additional issues.

Specialized Inspections Need Separate Attention

A general home inspection does not cover every system or concern.

Depending on the property, buyers may consider:

• Septic inspection

• Well yield and water-quality testing

• Termite or wood-destroying insect inspection

• Radon testing

• Chimney inspection

• Mold evaluation

• Structural engineering

• Roof inspection

• HVAC evaluation

• Sewer scope

• Pool inspection

• Environmental review

• Shoreline or pier evaluation

• Survey

• Feasibility study for land

The contract should provide enough time to schedule the appropriate professionals and receive the results.

A rushed inspection period can force the buyer to make decisions without complete information.

Property Disclosures Do Not Replace Due Diligence

Maryland law generally requires a seller of residential real property to provide either a disclosure statement or a disclaimer statement, subject to statutory exceptions.

A disclosure is based on the seller's actual knowledge. It is not a warranty that every component is free of defects.

A disclaimer does not permit a seller to conceal known latent defects or make false statements.

Buyers should still conduct their own inspections and research. Sellers should answer questions honestly and update information when necessary.

A seller who is unsure should not guess. A buyer who sees a blank or vague answer should investigate.

Inclusions and Exclusions Cause Avoidable Disputes

Many disagreements involve personal property or fixtures.

Common examples include:

• Refrigerators

• Garage refrigerators

• Washers and dryers

• Freezers

• Televisions and mounts

• Ring cameras

• Smart thermostats

• Chandeliers

• Window treatments

• Shelving

• Hot tubs

• Generators

• Sheds

• Play equipment

• Patio furniture

• Boat lifts

• Docks and pier equipment

The safest approach is to identify important items clearly.

Do not rely on assumptions about what is attached, what appeared in the photographs, or what the seller verbally promised.

If an item matters, put it in writing.

Seller Credits Need a Purpose and a Limit

Seller assistance may be used toward allowable buyer closing costs, prepaid expenses, rate buydowns, or other permitted items.

The amount the buyer can use may be limited by:

• Loan program

• Lender guidelines

• Actual closing costs

• Appraisal

• Contract wording

Unused assistance may not automatically become cash for the buyer.

The buyer's lender and settlement company should review the structure. The seller should understand the maximum financial exposure and the likely net.

HOA and Condominium Documents Can Create Cancellation Rights

Properties in homeowners associations and condominiums involve additional documents and statutory rights.

Buyers may receive information about:

• Assessments

• Budget

• Reserves

• Rules

• Architectural restrictions

• Insurance

• Pending litigation

• Special assessments

• Rental restrictions

• Parking

• Pets

• Short-term rentals

• Common elements

• Maintenance obligations

The delivery method and timing can affect the buyer's right to review and cancel.

Sellers should order required resale information early. Waiting until the last minute can delay settlement or extend the buyer's decision period.

Buyers should read the documents, not merely acknowledge receipt.

Title and Survey Issues Can Affect Use and Ownership

A title search may identify:

• Liens

• Judgments

• Unreleased mortgages

• Easements

• Restrictions

• Estate issues

• Ownership discrepancies

• Rights of way

• Boundary concerns

• Ground rent

• Conservation restrictions

A survey or location drawing may reveal improvements near boundaries, encroachments, or access issues.

Title insurance and survey products serve different purposes. Buyers should discuss available coverage and endorsements with the settlement company or attorney.

Sellers should address known title problems early, especially when property is held by an estate, trust, corporation, former spouses, or multiple owners.

Settlement Date Is a Contractual Obligation

The settlement date coordinates lenders, title professionals, movers, utilities, insurance, and the parties' other transactions.

A delay may create:

• Additional mortgage interest

• Storage costs

• Temporary housing

• Rate-lock extension charges

• Moving changes

• Utility problems

• Default claims

• Disruption to another purchase

Parties should not assume settlement can be moved informally.

An extension should be negotiated and documented. The party requesting it may need to address costs or other consequences.

Possession Does Not Always Equal Settlement

Most buyers expect possession at settlement, but some transactions include pre-settlement or post-settlement occupancy.

Any occupancy arrangement should address:

• Start and end dates

• Daily charge

• Security deposit

• Utilities

• Insurance

• Maintenance

• Property condition

• Damage

• Keys

• Access

• Holdover

• Responsibility for systems

A casual handshake agreement creates unnecessary risk.

The contract should explain who is occupying the property and under what conditions.

Default Provisions Matter Before There Is a Default

No one enters a contract expecting it to fail.

But the agreement should explain the parties' rights if someone does not perform.

Potential issues include:

• Buyer financing failure

• Failure to deliver the deposit

• Seller refusal to convey

• Missed settlement

• Unresolved title problems

• Failure to vacate

• Unauthorized property changes

• Failure to complete agreed repairs

Remedies depend on the contract, facts, and law. They may involve deposit disputes, damages, specific performance, termination, or legal action.

A real estate agent can explain the transaction and forms within the scope of the agent's role. Legal disputes should be referred to a qualified attorney.

Verbal Agreements Are Dangerous

Real estate transactions generate many conversations.

A seller may say an appliance can stay. A buyer may agree to extend an inspection deadline. An agent may believe a repair request has been resolved.

Until the agreement is properly documented, the parties may remember it differently.

Important changes should be in a signed writing.

That includes:

• Price

• Credits

• Repairs

• Deadlines

• Settlement date

• Occupancy

• Inclusions

• Exclusions

• Contingency changes

• Compensation

• Release terms

Clear documentation protects relationships as well as legal positions.

Electronic Signatures Still Require Careful Review

Electronic signing is convenient, but convenience can encourage people to click quickly.

Before signing:

• Read the complete document

• Confirm names and vesting

• Verify price and financing

• Review dates

• Check initials

• Review addenda

• Confirm inclusions and exclusions

• Save a complete copy

A missing initial or incomplete addendum can create uncertainty.

Electronic does not mean informal.

How I Review a Contract

My review focuses on three questions.

What does the provision require?

I identify the obligation, deadline, notice method, and available choices.

What risk does it create?

I consider the financial, timing, property, financing, and performance consequences.

How does it interact with the rest of the agreement?

A strong price may be weakened by appraisal language. A quick settlement may conflict with a home-sale contingency. An as-is term may still allow termination after inspection.

The contract must be analyzed as a whole.

My negotiation training helps me look beyond whether a term is favorable. I also consider how it may be used later and how the other party is likely to respond.

Frequently Asked Questions

Can my agent give me legal advice?

A real estate licensee can explain real estate forms and transaction issues within the scope of the license. Questions requiring legal opinions or representation should be directed to a Maryland attorney.

Does as is mean the buyer cannot inspect?

Not necessarily. The contract may preserve a right to inspect and terminate. Read the exact addendum.

Is a preapproval a guarantee?

No. Final approval depends on continued buyer qualification, property review, appraisal, title, and lender conditions.

Can a seller keep the earnest money if the buyer cancels?

Not automatically. The contract, contingency rights, facts, and Maryland escrow rules determine what happens.

Do disclosures guarantee the home's condition?

No. They reflect the seller's required statements and actual knowledge. Buyers should perform independent due diligence.

Can a contract deadline be extended by email?

Do not assume an informal message is sufficient. Material changes should be documented in a properly signed agreement.

Does the refrigerator automatically convey?

It depends on the contract. Important items should be specifically included or excluded.

Can the settlement date change?

Yes, if the parties agree and document the change. One party generally should not assume it can move the date unilaterally.

The Bottom Line

A Maryland real estate contract is a financial and legal roadmap.

The purchase price may be the most visible term, but deadlines, inspections, financing, appraisal, deposits, disclosures, title, occupancy, and written notices often determine whether the transaction succeeds.

The most expensive contract mistake is frequently not a dramatic error. It is a small provision that no one stopped to examine.

For experienced guidance with a Maryland real estate contract, contact Dawn Riley at 410-414-2438.

This article provides general real estate information and is not legal advice. Buyers and sellers should consult a qualified Maryland attorney when legal advice is needed.

Sources and Further Reading

 

• Maryland Realtors, Residential Contract of Sale sample: https://www.mdrealtor.org/Portals/22/adam/Files/o3HJo4TKMUOCRX9w6ZX2ng/FileLink/Residential%20Contract%20of%20Sale_1-23.pdf

• Maryland Realtors, Property Inspections Notice: https://www.mdrealtor.org/Portals/22/adam/Files/sKS66yI4YEm-r0K_e8-35w/FileLink/Property%20Inspections%20Notice_10-22.pdf

• Maryland General Assembly, Real Property Section 10-702: https://mgaleg.maryland.gov/mgawebsite/laws/StatuteText?article=grp&section=10-702

• Maryland Realtors, Update on Changes to Maryland's EMD Law: https://www.mdrealtor.org/news/update-on-changes-to-marylands-emd-law