Maryland Real Estate Contracts: Exam Study Guide

Maryland Real Estate Contracts: Exam Study Guide

Contracts make up approximately 17% of the national section — the single largest topic category. Maryland also has specific contract rules that appear in the state section. Understanding both national contract principles and Maryland-specific requirements is essential.

Elements of a Valid Real Estate Contract

Every enforceable real estate contract requires:

1. Mutual assent (offer + acceptance) — Both parties must agree to identical terms.
2. Consideration — Something of value (earnest money, promises, purchase price).
3. Legally competent parties — Adults of sound mind, not under duress or fraud.
4. Lawful purpose — The contract cannot require illegal acts.
5. In writing — Under the Statute of Frauds, real estate contracts must be in writing.

Listing Agreement Types

Exclusive Right to Sell — Broker earns a commission regardless of who produces the buyer (including the seller). Most common and most protection for the broker.

Exclusive Agency — Broker earns a commission unless the seller finds the buyer independently. The seller can avoid the commission by selling themselves without broker involvement.

Open Listing — Multiple brokers may market the property. Commission paid only to the broker who produces the buyer. The seller can also find a buyer independently.

Net Listing — Broker's commission is anything above a set net price to the seller. Illegal in Maryland and most states because of conflict of interest. The exam will test that this is prohibited.

Purchase Agreement Essentials

A Maryland purchase agreement typically includes: - Identification of parties and property - Purchase price - Financing contingency (inspection, appraisal) - Home inspection contingency - Earnest money amount and holder - Closing date - Seller's disclosure or disclaimer reference

Maryland-Specific Contract Rules

Brokerage agreements in writing — Both listing agreements and buyer representation agreements must be in writing in Maryland.

HOA Resale Disclosure — For condominiums and HOA properties, Maryland law requires the seller to provide specific disclosure documents. Buyers have a right of rescission for a defined period after receiving HOA documents.

Net Listing Prohibition — Net listings are explicitly prohibited by MREC rules and are a common exam topic.

Key Contract Concepts

Counteroffer — Rejects the original offer and creates a new offer. The original offer is legally terminated when a counteroffer is made.

Contingency — A condition that must be satisfied for the contract to proceed. Common contingencies: financing, inspection, appraisal, and sale of buyer's current home.

Earnest money — Held in escrow. If buyer defaults without cause, seller may keep it. If seller defaults, buyer typically receives it back.

Time is of the essence — When included, all deadlines are strictly enforced. Missing a deadline may constitute breach.

Option contract — Buyer pays for the right (not obligation) to purchase at a set price within a specified time. The seller is obligated but the buyer is not.

Common Exam Mistakes

• Forgetting that net listings are illegal in Maryland
• Confusing exclusive right to sell with exclusive agency
• Not knowing that a counteroffer terminates the original offer
• Forgetting that HOA disclosures trigger a buyer rescission right

Practice Maryland Contract Questions

[CARealestate.com/states/maryland](https://carealestate.com/states/maryland) has contract practice questions with Maryland-specific context. 5 free questions — no signup needed.