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WES MOORE, Governor Ch. 716
Chapter 716
(Senate Bill 691)
AN ACT concerning
Real Property – Termination of Residential Real Estate Contracts –
Contingency Clauses
FOR the purpose of altering the definition of “contingency clause” as it applies to the
circumstances under which a residential real estate contract may be terminated by
a purchaser; altering the time period within which a certain holder of trust money
must distribute trust money to a purchaser; and generally relating to contingency
clauses and residential real estate contracts.
BY repealing and reenacting, without amendments,
Article – Real Property
Section 10–802(a)
Annotated Code of Maryland
(2023 Replacement Volume and 2025 Supplement)
BY repealing and reenacting, with amendments,
Article – Real Property
Section 10–803
Annotated Code of Maryland
(2023 Replacement Volume and 2025 Supplement)
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND,
That the Laws of Maryland read as follows:
Article – Real Property
10–802.
(a) (1) In this section the following words have the meanings indicated.
(2) “Escrow agent” means a person engaged in the business of residential
real estate settlements who receives trust money.
(3) “Residential real estate” means:
(i) Real property improved by four or fewer single–family dwelling
units that are designed principally and are intended for human habitation; and
(ii) Unimproved real property zoned for residential use by the local
zoning authority of the county or municipality in which the real property is located.
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Ch. 716 2026 LAWS OF MARYLAND
(4) “Trust money” means a deposit made by a purchaser in connection with
a residential real estate sales transaction that the purchaser delivers to an escrow agent to
hold for the benefit of the purchaser and the seller.
10–803.
(a) (1) In this section the following words have the meanings indicated.
(2) [(i)] “Contingency” means a clause included in a contract of sale for
residential real estate that:
[1.] (I) Requires a specific event or action to occur for the
contract to be enforceable; and
[2.] (II) Entitles a party exercising the contingency to
terminate the contract and receive distribution of the trust money.
[(ii) “Contingency” includes a clause relating to:
1. Appraisals;
2. Back–up contracts;
3. Building permits, feasibility studies, or other
contingencies related to condominium notice;
4. Conservation easements;
5. Cooperative housing notices;
6. Deeds and titles;
7. Home or environmental inspections;
8. Homeowners association notices;
9. On–site sewage disposal system inspections;
10. Property condition disclosures and disclaimer act notices;
11. Short sales;
12. Sales of residential unimproved land;
13. Termite inspections;
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WES MOORE, Governor Ch. 716
14. Third–party approval not related to financing; or
15. Water and sewer assessments notices.]
(3) “Holder of trust money” means:
(i) An escrow agent as defined in § 10–802 of this subtitle; or
(ii) A licensed real estate broker as defined in § 17–101 of the
Business Occupations and Professions Article.
(4) “Residential real estate” has the meaning stated in § 10–802 of this
subtitle.
(5) “Trust money” has the meaning stated in § 10–802 of this subtitle.
(b) (1) (i) If a purchaser terminates a residential real estate contract under
the terms of a contingency clause of a contract of sale for residential real estate, the
purchaser may request the return of the trust money by providing the holder of the trust
money and the seller written notice of the request.
(ii) Within 10 days after receiving a request made in accordance with
subparagraph (i) of this paragraph, the seller shall provide the holder of the trust money
with a copy of a complaint filed in the District Court or a COPY OF A notarized, written
request for mediation PROVIDED TO A MEDIATOR relating to the distribution of the trust
money.
(iii) [Within 30 days after receiving a request made in accordance
with subparagraph (i) of this paragraph, the holder of the trust money, if they have] IF
THE HOLDER OF THE TRUST MONEY HAS not received a copy of a complaint filed, or a
request for mediation made, in accordance with subparagraph (ii) of this paragraph, THE
HOLDER OF THE TRUST MONEY shall:
1. Distribute the trust money to the purchaser WITHIN 5
DAYS AFTER THE EXPIRATION OF THE TIME SPECIFIED IN SUBPARAGRAPH (II) OF
THIS PARAGRAPH; and
2. Notify the purchaser and seller of the distribution.
(iv) If the holder of trust money receives a copy of a complaint filed,
or a request for mediation made, in accordance with subparagraph (ii) of this paragraph,
they shall hold the trust money until:
1. A court order or mediation agreement authorizes the
distribution of the money; or
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Ch. 716 2026 LAWS OF MARYLAND
2. The holder of the trust money files an interpleader action
in the District Court.
(2) A holder of trust money may not be liable for a decision to distribute
trust money made in accordance with this subsection.
(c) A claimant who is aggrieved by a distribution of trust money under this
section may file an action in the District Court sitting in the district in which the residential
real estate is located.
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect
October 1, 2026.
Approved by the Governor, May 26, 2026.
–4–Every fact on this page links to its source, starting with the official bill record.