Understanding the MAR Residential Contract of Sale

An agreement to buy or sell real property in Maryland must be in writing, and Buyers and Sellers of residential real estate typically use standardized form contracts to document the transaction. The Maryland Association of Realtors Residential Contract of Sale (the “Contract”) is the most used form contract. The provisions of this Contract are legally binding on the parties and are often required by law, but many are not negotiable. It is therefore important for Buyers and Sellers to understand what they agree to before signing the Contract. 

·      With limited exceptions, the Seller of a single-family home must  provide a property condition disclosure statement or a property condition disclaimer statement to the Buyer before the sale. In the disclosure statement, the seller must identify known defects and other information regarding the condition of the property. These disclosures must be accurate, as they may create liability for the Seller if all known defects are not disclosed. Alternatively, many Sellers choose to provide a disclaimer statement. A Seller who elects to provide a disclaimer statement sells the property “as is” and is only required to identity “latent” or hidden defects, which cannot be discovered by a prudent Buyer who chooses to inspect the property.

·      If negotiated and agreed to by the parties, the Buyer can condition their purchase upon an inspection of the property. These inspections often include the structural and mechanical elements of the property, mold, lead paint, radon, and termites. The contingencies and the terms thereof will be formalized in an addendum to the main Contract.

·      The Contract also contains default provisions and remedies. In the event the Buyer fails to make full settlement or otherwise defaults, the Buyer may forfeit their Deposit and be liable to the Seller for damages caused by the default. If the Seller fails to make full settlement or otherwise defaults, the Buyer may have the legal right to enforce the contract and require the Seller to transfer the property, or alternatively to recover damages.

·      If any disputes arise before, during, or within one (1) year after settlement, the parties are required to participate in a mediation session sponsored by the Maryland Association of Realtors before filing a lawsuit in court.

·      If a lawsuit is filed, the prevailing party is entitled to recover their costs and attorney fees in addition to any damages or other relief they receive. 

If you have questions about the subject of this post, Maryland real estate law, or have encountered any issues when buying or selling residential real property in Maryland, please reach out to Patrick J. L. Dillon, Esquire, pjld@shapirosher.com, (410) 385-4270.