3.1 Maryland Purchase and Sale Agreements
Key Takeaways
- Maryland's Statute of Frauds (Real Property Article 5-104) requires any contract for the sale of land to be in writing and signed by the party to be charged.
- Most residential deals use Maryland REALTORS standard forms, and the state-specific portion of the PSI exam (30 questions) tests contract mechanics heavily.
- A contract is 'ratified' only when acceptance is communicated and the fully signed copy is delivered back to the offeror.
- The Maryland Residential Property Disclosure and Disclaimer Statement must accompany resale contracts, and an inspection contingency window is counted in calendar or business days as the form defines.
- Earnest money must be deposited into a broker trust account within 7 business days of acceptance under COMAR escrow rules.
Why This Matters on the PSI Exam
The Maryland salesperson examination administered by PSI Examination Services has 110 multiple-choice questions: 80 national and 30 Maryland-specific. You must score at least 70% on each portion separately (56 of 80 national, 21 of 30 state). Contract mechanics and required disclosures appear on the state portion repeatedly, so memorize the exact triggers below.
Statute of Frauds in Maryland
Maryland's Statute of Frauds, codified at Real Property Article 5-104, requires that any contract for the sale of real property (or an interest in it) be in writing and signed by the party against whom enforcement is sought. An oral listing or purchase agreement is generally unenforceable.
| Essential Term | Why It Is Required |
|---|---|
| Identifiable parties | Buyer and seller must be named |
| Legal description | Property must be identifiable, not just a street address |
| Purchase price | Consideration must be stated or determinable |
| Signatures | The party to be charged must sign |
Ratification: When the Contract Becomes Binding
In Maryland a contract is ratified (binding) only when three things occur:
- All parties sign the agreement and any counter-offers.
- Acceptance is communicated to the offeror.
- The fully executed copy is delivered back to the offeror.
Trap: Signing alone is not ratification. Until delivery of acceptance, either party may revoke. The exam loves the scenario where a seller signs but the agent has not yet notified the buyer — no binding contract exists yet.
Maryland REALTORS Standard Forms
Most residential transactions use the Maryland REALTORS Residential Contract of Sale and its addenda. Key clauses the exam tests:
| Provision | Maryland Rule |
|---|---|
| Earnest money deposit | Held in broker trust/escrow account; deposited within 7 business days of acceptance under COMAR escrow rules |
| Financing contingency | Buyer must apply within a stated number of days (often 7-10) and obtain a commitment |
| Home inspection | Buyer may inspect, then deliver notice to repair, void, or proceed within the contingency window |
| Settlement date | Time is of the essence when the form so states |
Required Maryland Disclosures
Maryland sellers of single-family residential property must deliver the Maryland Residential Property Disclosure and Disclaimer Statement (Real Property Article 10-702). The seller chooses either to disclose known defects or to disclaim (sell 'as is' regarding latent defects) — but a disclaimer never excuses concealing a known latent defect.
Other mandatory items in many resale contracts:
- Lead paint disclosure for homes built before 1978 (federal plus Maryland registration rules).
- Ground rent notice when the property is subject to ground rent (covered in 3.2).
- Property condition / well and septic disclosures where applicable.
Earnest Money and Default
The deposit is negotiable but is escrowed by the broker, title company, or attorney. If a dispute arises, Maryland brokers generally may not release disputed funds without written authorization from both parties or a court order; releasing improperly is a license-law violation.
Worked Scenario
A buyer offers $400,000 with a $10,000 deposit and a 10-day inspection contingency. The buyer's inspector finds a failed roof on day 8. The buyer delivers a written notice to void on day 9. Result: because notice was delivered within the contingency window and time is of the essence, the contract terminates and the $10,000 deposit is returned to the buyer. Had the buyer waited until day 12, the contingency would have lapsed and the deposit would be at risk.
Contingencies in Depth
Maryland resale contracts hang on a handful of buyer protections. Each names a deadline, and because time is generally of the essence, the agent must track every date.
| Contingency | What It Protects | How It Resolves |
|---|---|---|
| Financing | Buyer cannot obtain the stated loan | Buyer voids and recovers deposit if denied within the window |
| Home inspection | Latent defects | Buyer delivers notice to repair, void, or proceed |
| Appraisal | Property must support the price | Buyer may void or renegotiate if it appraises low |
| Home sale | Buyer must sell an existing home first | Seller may keep a 'kick-out' (right to continue marketing) |
Counter-Offers and Amendments
A counter-offer is a rejection of the original offer plus a new offer; it reopens negotiation and the original offeror may now accept, reject, or counter again. Once a contract is ratified, any change must be a written amendment or addendum signed by all parties. Verbal modifications to a land-sale contract are unenforceable for the same Statute-of-Frauds reason the original must be written.
Right to Revoke
An offer may be revoked any time before acceptance is communicated, even if the offeror promised to hold it open (unless the buyer paid separate consideration for an option). The exam tests this against the ratification rule: no communicated, delivered acceptance means no binding deal, so revocation is still possible.
Electronic Signatures
Maryland has adopted the Uniform Electronic Transactions Act, so electronic signatures are valid on real estate contracts when the parties agree to transact electronically. A digitally signed Maryland REALTORS contract satisfies the Statute of Frauds writing requirement just as an ink signature would.
Exam tip: If a question asks what makes a Maryland contract enforceable, the answer is a signed writing — not notarization, not recording, and not witnesses.
Under Maryland's Statute of Frauds (Real Property Article 5-104), which is required for a contract for the sale of land to be enforceable?
A Maryland seller signs the buyer's offer, but the listing agent has not yet notified the buyer. What is the status of the contract?