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EXPLANATION: CAPITALS INDICATE MATTER ADDED TO EXISTING LAW.
[Brackets] indicate matter deleted from existing law.
Underlining indicates amendments to bill.
Strike out indicates matter stricken from the bill by amendment or deleted from the law by
amendment.
*sb0691*
SENATE BILL 691
N1 6lr2484
CF HB 1029
By: Senator McKay
Introduced and read first time: February 6, 2026
Assigned to: Judicial Proceedings
Committee Report: Favorable
Senate action: Adopted
Read second time: March 3, 2026
CHAPTER ______
AN ACT concerning 1
Real Property – Termination of Residential Real Estate Contracts – 2
Contingency Clauses 3
FOR the purpose of altering the definition of “contingency clause” as it applies to the 4
circumstances under which a residential real estate contrac t may be terminated by 5
a purchaser; altering the time period within which a certain holder of trust money 6
must distribute trust money to a purchaser; and generally relating to contingency 7
clauses and residential real estate contracts. 8
BY repealing and reenacting, without amendments, 9
Article – Real Property 10
Section 10–802(a) 11
Annotated Code of Maryland 12
(2023 Replacement Volume and 2025 Supplement) 13
BY repealing and reenacting, with amendments, 14
Article – Real Property 15
Section 10–803 16
Annotated Code of Maryland 17
(2023 Replacement Volume and 2025 Supplement) 18
SECTION 1. BE IT ENACTED BY THE GENERAL ASSEMBLY OF MARYLAND, 19
That the Laws of Maryland read as follows: 20
Article – Real Property 21
2 SENATE BILL 691
10–802. 1
(a) (1) In this section the following words have the meanings indicated. 2
(2) “Escrow agent” means a person engaged in the business of residential 3
real estate settlements who receives trust money. 4
(3) “Residential real estate” means: 5
(i) Real property improved by four or fewer single –family dwelling 6
units that are designed principally and are intended for human habitation; and 7
(ii) Unimproved real property zoned for residential use by the local 8
zoning authority of the county or municipality in which the real property is located. 9
(4) “Trust money” means a deposit made by a purchaser in connection with 10
a residential real estate sales transaction that the purchaser delivers to an escrow agent to 11
hold for the benefit of the purchaser and the seller. 12
10–803. 13
(a) (1) In this section the following words have the meanings indicated. 14
(2) [(i)] “Contingency” means a clause included in a contract of sale for 15
residential real estate that: 16
[1.] (I) Requires a specific event or action to occur for the 17
contract to be enforceable; and 18
[2.] (II) Entitles a party exercising the contingency to 19
terminate the contract and receive distribution of the trust money. 20
[(ii) “Contingency” includes a clause relating to: 21
1. Appraisals; 22
2. Back–up contracts; 23
3. Building permits, feasibility studies, or other 24
contingencies related to condominium notice; 25
4. Conservation easements; 26
5. Cooperative housing notices; 27
6. Deeds and titles; 28
SENATE BILL 691 3
7. Home or environmental inspections; 1
8. Homeowners association notices; 2
9. On–site sewage disposal system inspections; 3
10. Property condition disclosures and disclaimer act notices; 4
11. Short sales; 5
12. Sales of residential unimproved land; 6
13. Termite inspections; 7
14. Third–party approval not related to financing; or 8
15. Water and sewer assessments notices.] 9
(3) “Holder of trust money” means: 10
(i) An escrow agent as defined in § 10–802 of this subtitle; or 11
(ii) A licensed real estate broker as defined in § 17 –101 of the 12
Business Occupations and Professions Article. 13
(4) “Residential real estate” has the meaning stated in § 10 –802 of this 14
subtitle. 15
(5) “Trust money” has the meaning stated in § 10–802 of this subtitle. 16
(b) (1) (i) If a purchaser terminates a residential real estate contract under 17
the terms of a contingency clause of a contract of sale for residential real estate, the 18
purchaser may request the return of the trust money by providing the holder of the trust 19
money and the seller written notice of the request. 20
(ii) Within 10 days after receiving a request made in accordance with 21
subparagraph (i) of this paragraph, the seller shall provide the holder of the trust money 22
with a copy of a complaint filed in the District Court or a COPY OF A notarized, written 23
request for mediation PROVIDED TO A MEDIATOR relating to the distribution of the trust 24
money. 25
(iii) [Within 30 days after receiving a request made in accordance 26
with subparagraph (i) of this paragraph, the holder of the trust money, if they have ] IF 27
THE HOLDER OF THE TR UST MONEY HAS not received a copy of a complaint filed, or a 28
4 SENATE BILL 691
request for mediation made, in accordance with subparagraph (ii) of this paragraph, THE 1
HOLDER OF THE TRUST MONEY shall: 2
1. Distribute the trust money to the purchaser WITHIN 5 3
DAYS AFTER THE EXPIRATION OF TH E TIME SPECIFIED IN SUBPARAGRAPH (II) OF 4
THIS PARAGRAPH; and 5
2. Notify the purchaser and seller of the distribution. 6
(iv) If the holder of trust money receives a copy of a complaint filed, 7
or a request for mediation made, in accordance with subparagraph (ii) of this paragraph, 8
they shall hold the trust money until: 9
1. A court order or mediation agreement authorizes the 10
distribution of the money; or 11
2. The holder of the trust money files an interpleader action 12
in the District Court. 13
(2) A holder of trust money may not be liable for a decision to distribute 14
trust money made in accordance with this subsection. 15
(c) A claimant who is aggrieved by a distribution of trust money under this 16
section may file an action in the District Court sitting in the district in which the residential 17
real estate is located. 18
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall t ake effect 19
October 1, 2026. 20
Approved:
________________________________________________________________________________
Governor.
________________________________________________________________________________
President of the Senate.
________________________________________________________________________________
Speaker of the House of Delegates.