Real Property - Termination of Residential Real Estate Contracts - Contingency Clauses
Summary
SB 691 revises Maryland law governing the termination of residential real estate contracts when a purchaser relies on a contingency clause. The bill narrows and clarifies the definition of “contingency” by removing the detailed statutory list of examples and instead defining it more generally as a clause requiring a specific event or action before a contract becomes enforceable and allowing termination with return of trust money. It also updates the process for returning earnest money or other trust money when a buyer terminates under a contingency.
Under the bill, after a purchaser gives written notice requesting return of trust money, the seller must provide the escrow holder with either a District Court complaint or a notarized written request for mediation within 10 days. If the holder does not receive one of those documents, the holder must release the trust money to the purchaser within 5 days after that deadline and notify both parties. If a complaint or mediation request is timely provided, the holder must keep the funds until a court order, mediation agreement, or interpleader action resolves the dispute. The bill takes effect October 1, 2026.
Impact
SB 691 amends Title 10 of the Real Property Article, specifically § 10-803, affecting residential real estate settlement practices, contingency-based contract terminations, and the handling of trust money by escrow agents and licensed real estate brokers. It changes the timing of required responses in disputes over earnest money and gives clearer direction to holders of trust money about when they must release funds or continue to hold them pending litigation or mediation. The bill does not appear to alter broader property ownership rules, but it does change the procedural rights and obligations of buyers, sellers, brokers, and settlement agents in residential sales transactions.
Sentiment
The bill appears to have been broadly supported and noncontroversial in the legislative process. It received favorable committee action and passed the Senate 42-0 and the House 124-0, indicating unanimous support in both chambers. The available record shows no committee transcript debate, suggesting the measure was viewed as a technical or procedural clarification rather than a contentious policy change.
Contention
The main policy issue is the balance between protecting purchasers’ ability to recover trust money promptly and preserving sellers’ ability to contest termination or seek mediation. The bill shortens the default time for the holder of trust money to release funds if the seller does not act, which may be seen as favoring buyers and reducing delays. Any concern would likely come from sellers, brokers, or escrow agents who may prefer more time or more explicit statutory examples of contingencies, but the recorded votes and lack of debate indicate no significant opposition in the legislative process.
Relating to certain municipal regulation of certain mixed-use and multifamily residential development projects and conversion of certain commercial buildings to mixed-use and multifamily residential occupancy.