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Update on Changes to Maryland’s EMD Law


Director of Legal Affairs for Maryland REALTORS®’.


Q: Maryland law regarding return of the EMD changed on October 1, 2023. As a broker who holds EMDs, please share additional details on the new law.

A: The new provision of the Real Estate Brokers Act applies to EMDs delivered to the title company or Broker (“Escrow Agent”) after October 1, 2023. The process is only triggered when the BUYER terminates the contract. If you are holding an EMD in a transaction where the seller terminated the contract, you should continue to follow the same procedure that you have been following for years.

The Buyer must terminate the Contract pursuant to a specified contingency to trigger the new process.

“Contingency” includes a clause relating to:

  1. Appraisals
  2. Back-up contracts
  3. Condominium notices
  4. Conservation easements
  5. Deeds and titles
  6. Home or environmental inspections
  7. Homeowners association notices
  8. On-site sewage disposal system inspections
  9. Property condition disclosures and disclaimer act notices
  10. Termite inspections
  11. Third-party approval not related to financing; or
  12. Water and sewer assessments notices

If the Buyer terminates pursuant to any of the above contingencies, the Escrow Agent holding it would follow the new, expedited process.

The biggest change with the new expedited process is that if the Seller does NOT want the EMD disbursed to the Buyer, the Seller must act within 10 days. The Seller’s inaction will result in the Escrow Agent returning it to the Buyer within 30 days.

For example, if the Buyer wants to terminate the Contract on the basis of the Condo or HOA Resale Package, the Buyer will complete the Notice of Unilateral Termination of Contract. The Buyer will also complete the Mutual Release of Deposit Agreement. The Buyer’s Agent will send both documents to the Listing Agent and to the Escrow Agent.

The Listing Agent sends a copy of both documents to the Seller and explain to the Seller what their options are. If the Seller agrees that the EMD should be returned to the Buyer, the Seller can simply sign the Mutual Release of Deposit Agreement and the Listing Agent would send it to the Escrow Agent. The Escrow Agent would then disburse the EMD to the Buyer and notify the Buyer and Seller of that disbursement, within 30 days If the Seller agrees that the EMD should be returned to the Buyer, the Seller doesn’t sign the Mutual Release of Deposit Agreement. The result is the same. If the Buyer terminates pursuant to a specified contingency, the Seller’s refusal to sign the Mutual Release of Deposit Agreement will NOT prevent the Escrow Agent from returning the EMD to the Buyer.

The new process clearly states what the Seller must do if they do NOT want the EMD to be returned to the Buyer. Within 10 days after receiving the Buyer’s request, the Seller shall provide the holder of the trust money with a copy of a NOTARIZED, written request for mediation relating to the distribution of the trust money.

If the Escrow Agent RECEIVES a copy of a notarized request for mediation, they must hold the EMD until: (1) A court order or mediation agreement authorizes the distribution of the money; or (2) The Escrow Agent files an interpleader action in the District Court.

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