Maryland Real Estate Contract: Different Types and Key Terms to Include

What is a Maryland Real Estate Contract?

A Maryland real estate contract, often referred to as a residential purchase and sale agreement, is a contract that is negotiated between a buyer and a seller for the purchase of real estate. Real estate contracts are most commonly used when purchasing an existing residential property, but can also be used for land, commercial properties, and investment properties.

In Maryland, most realtors will use a specific form for the real estate contract called the Maryland Association of Realtors Purchase Agreement. This form streamlines the buying and selling process and ensures that all necessary elements of a real estate contract are addressed.

Common Maryland Real Estate Contracts

The most commonly used real estate contract in Maryland is the purchase agreement contract approved by the Maryland Association of Realtors. This contract is specifically for residential real estate. Depending on the type of property being purchased, the following contracts may also be used:

• Real estate assignment contract. Used to purchase investment properties because this contract allows the buyer to assign the contract to a second buyer.
• Commercial property purchase agreement Used when buying or selling a commercial property that is zoned for business purposes like an office building or storefront.

4 Essential Elements of a Maryland Real Estate Contract

A Maryland real estate contract must include specific contract elements to make the agreement a valid and legally binding under Maryland law. The 4 essential elements of a Maryland real estate contract are:

1. Mutual assent between the parties to enter the contract
2. A valid offer, acceptance of the offer, and adequate consideration
3. Legal capacity of the parties to enter the agreement
4. Legal purpose

What Must Be Included in a Maryland Real Estate Contract?

Every real estate contract in Maryland should include the following information to ensure the interests of both parties are protected during the transaction:

• Property information. The contract must provide detailed information about the property, including the address, legal description, and any known defects or issues.
• Purchase price. The contract must clearly state the purchase price and any contingencies or contingencies related to financing or inspections.
• Financing. The buyer will usually need to secure financing to purchase the house. The contract must indicate whether the buyer will be obtaining a mortgage and if so, the terms of that mortgage.
• Earnest money deposit. An earnest money deposit is paid by the buyer once the seller accepts their offer. This deposit shows the seller that the buyer is serious about purchasing the house.
• Disclosures. The contract must include a disclosure statement, which will provide information about the property and any known defects or issues.
• Signatures. The contract must be signed by both the buyer and the seller in order to be legally binding.
• Deadlines. During the home buying process, there will be several deadlines that both parties must be aware of. For example, the deadline to complete a home inspection and most importantly, the closing date.

How Long Do You Have to Cancel a Real Estate Contract in Maryland?

In Maryland, the time frame for canceling a real estate contract can vary depending on the specific terms and conditions of the contract. Typically, a buyer has the right to cancel a contract within a certain period after signing it, usually known as the "right of rescission" or "cooling-off period."

However, the right of rescission is not a requirement in Maryland, and some contracts may not include this provision. If the contract does not include a right of rescission, the buyer may only cancel the contract if the seller is in default or if there is a provision in the contract that allows for termination.