Maryland law changes home sale contingency and deposit return rules

A contract clause counts as a contingency when it requires a specific event or action and lets a party end the contract and receive the deposit. This applies to contracts for residential property, including homes with up to four dwelling units and land zoned for residential use. The law takes effect October 1, 2026.

When a purchaser asks in writing for the deposit after ending a contract under a contingency, the holder must return it if the seller does not provide the required papers in time. This applies when a purchaser ends a residential property sale contract under a contingency and asks the holder and seller in writing for the deposit. The seller must give the holder a copy of a court complaint or a notarized written mediation request provided to a mediator within 10 days after receiving the purchaser’s request. If the holder receives either paper within that period, the holder must keep the deposit until a court order or mediation agreement allows payment, or the holder files an interpleader action in District Court. The seller’s 10-day period starts when the seller receives the purchaser’s written request. The holder’s five-day return period starts when that 10-day period ends. The law takes effect October 1, 2026.