2.3 Maryland Residential Property Disclosure
Key Takeaways
- Real Property §10-702 requires sellers of 1–4 unit residential property to deliver either a Disclosure Statement or a Disclaimer Statement on the MREC form.
- A disclaimer sells "as is," but the seller still may not actively conceal known latent defects, commit fraud, or refuse to answer a direct question truthfully.
- Several transfers are exempt from §10-702, including most new construction, foreclosure/REO, estate, and transfers among co-owners or family.
- Maryland ground rent must be disclosed; the settlement agent must notify the buyer of redemption rights, and redemption amounts are fixed by statute.
- Federal lead-based-paint rules apply to pre-1978 homes: EPA pamphlet, known-hazard disclosure, and a 10-day inspection opportunity (waivable).
Real Property §10-702: Disclosure OR Disclaimer
Maryland's disclosure rule lives in the Real Property Article §10-702 of the Annotated Code, implemented on the MREC Residential Property Disclosure and Disclaimer Statement form (COMAR 09.11.07). It applies to single-family residential property of one to four units and gives the seller a choice between two paths.
Option 1 — Disclosure Statement
The seller affirmatively reports defects and conditions actually known to the seller. The form is organized by category:
| Category | Examples disclosed |
|---|---|
| Structural | Foundation, roof, walls, floors, windows |
| Systems | HVAC, plumbing, electrical, water supply, sewer/septic |
| Environmental | Lead paint, underground storage tanks, radon, asbestos |
| Site | Drainage, flooding, boundary/easement issues |
| Title/community | HOA or condo fees and restrictions, ground rent |
Option 2 — Disclaimer Statement
The seller makes no representations and sells the property "as is." Responsibility to investigate shifts to the buyer. It must be the MREC form, in writing, and signed.
The Limit of a Disclaimer
A disclaimer is NOT a license to hide problems. Even under a disclaimer, a Maryland seller may NOT:
- Actively conceal a known latent (hidden) defect
- Commit fraud or make affirmative misrepresentations
- Answer a direct question falsely
- Omit conditions other law requires disclosing (e.g., lead paint)
Trap: "As is" defeats only the duty to volunteer condition information. It never defeats fraud, active concealment, or a direct-question lie.
Exemptions from §10-702
Some transfers are exempt from the disclosure/disclaimer requirement. Common tested exemptions include:
| Exempt transfer | Reason |
|---|---|
| First sale of a never-occupied new home | Builder warranty/new construction |
| Foreclosure or deed-in-lieu (lender/REO) | Seller lacks occupancy knowledge |
| Sale by personal representative of an estate | Fiduciary lacks personal knowledge |
| Transfer between co-owners or to family | Non-arm's-length |
| Tax sale, sheriff's sale, court-ordered transfer | Involuntary/judicial |
Even when exempt from §10-702, a licensee's independent duty to disclose known material defects to all parties still applies—and federal lead-paint rules still apply.
Ground Rent (Maryland-Specific)
Ground rent is a Maryland leasehold arrangement: the homeowner owns the building but leases the land, paying an annual ground rent to the ground-lease holder. Key tested points:
- Ground rent must be disclosed to the buyer; it appears on the disclosure form.
- A settlement agent must notify the buyer of the right to redeem (buy out) the ground rent; the redemption price is fixed by statute though terms may be negotiated.
- Ground rents must be registered with the Maryland Department of Assessments and Taxation (SDAT); since April 1, 2023, previously irredeemable ground rents became redeemable.
Federal Lead-Based-Paint Disclosure (Pre-1978)
For any housing built before 1978, federal law (Title X / EPA-HUD) requires the seller to:
- Provide the EPA pamphlet "Protect Your Family From Lead in Your Home."
- Disclose any known lead-based paint or hazards and provide available records.
- Give the buyer a 10-day opportunity to conduct a lead inspection (the buyer may waive it).
- Include the Lead Warning Statement with signatures in the contract.
Buyer Due Diligence
Buyers should read every disclosure carefully, hire independent inspectors (general, radon, termite, mold), review HOA/condo documents, and verify ground-rent status rather than relying solely on seller statements. A signed disclaimer makes this diligence essential.
Other Maryland and Federal Disclosures to Know
Beyond §10-702, several disclosures recur on the state exam:
| Disclosure | Trigger | Key point |
|---|---|---|
| Lead paint (federal) | Housing built before 1978 | EPA pamphlet + known-hazard disclosure + 10-day inspection (waivable) |
| Ground rent | Property subject to a ground lease | Disclose; buyer told of statutory redemption right |
| Single-family dwelling deferred water/sewer | Property in certain districts | Annual front-foot/deferred charges disclosed to buyer |
| Notice of HOA fees (Md. HOA Act) | Lot in a homeowners association | 5-day rescission right after receiving HOA documents |
| Maryland Condominium Act resale | Resale condo unit | Buyer gets resale certificate; rescission rights apply |
| Latent defects (common law + license law) | Known hidden defect | Licensee must disclose regardless of seller's choice |
HOA and Condo Rescission
For a resale lot in an HOA, the buyer generally has a 5-day right to rescind after receiving the required association disclosures; resale condominium buyers receive a resale package and likewise enjoy a statutory rescission window. These timelines are favorite exam details—do not confuse the HOA 5-day window with the lead-paint 10-day inspection period.
Worked Disclosure Scenario
A seller of a 1965 Baltimore rowhome chooses the Disclaimer Statement to avoid listing every quirk. The basement floods every spring and the seller knows it but says nothing on the form. A buyer who later discovers the recurring flooding can still sue: a disclaimer does not shield active concealment of a known latent defect, and if the seller painted over water stains to hide them, that is affirmative concealment/fraud. Because the home predates 1978, the seller also owed the lead-paint disclosure and EPA pamphlet regardless of the disclaimer.
Disclosure Traps
| Trap statement | Correct rule |
|---|---|
| "'As is' ends all liability" | Fraud, concealment, and direct-question lies survive |
| "Lead disclosure is optional in Maryland" | Federal law mandates it for pre-1978 homes |
| "Ground rent need not be disclosed" | It must be disclosed and is redeemable |
| "§10-702 covers a 10-unit apartment building" | It covers 1–4 unit residential only |
Bottom line: Disclosure or disclaimer—either way honesty is mandatory; pre-1978 means lead paint; ground rent and HOA/condo rights have their own notice and rescission rules.
Under Real Property §10-702, what choice do most Maryland sellers of one-to-four-unit homes have?
A Maryland seller who delivers a Disclaimer Statement is STILL prohibited from:
Which statement about Maryland ground rent is correct?