What Should FSBO Sellers in Maryland Include in a Basic Purchase and Sale Agreement?

Selling a home without a real estate agent—commonly known as For Sale By Owner, or FSBO—can offer significant financial savings on commission fees. However, assuming the role of the seller also means assuming the responsibility for drafting a legally binding contract that protects your interests. The Purchase and Sale Agreement is the roadmap for the entire transaction, dictating everything from the price to the condition of the home at settlement.

Clear Identification of All Parties and the Property

The foundation of any contract is accuracy regarding who is involved and what is being sold. In Maryland, it is vital to ensure that all legal owners of the property are listed as “Sellers.” If the property is owned by a trust, an estate, or an LLC, the agreement must reflect the correct legal entity and be signed by the authorized representative.

The property description must go beyond the street address. A robust agreement includes the full legal description as recorded in the land records. This typically includes the tax identification number and a reference to the deed. Ambiguity here can cause delays with the title company or even render the contract unenforceable.

Purchase Price, Earnest Money, and Escrow Details

Determining the sale price is the obvious part, but the handling of the earnest money deposit requires careful attention. This deposit demonstrates the buyer’s good faith and commitment to the purchase. The agreement must clearly specify the terms related to this critical fund, including:

The exact amount of the deposit is typically a percentage of the sale price or a fixed amount.
Who will hold the deposit (the “escrow agent”). This is typically a licensed title company or a real estate attorney. FSBO sellers generally should not hold these funds personally to maintain neutrality and comply with state law.
The conditions under which the deposit is forfeited to the seller (e.g., if the buyer defaults on the contract without a valid contingency) or returned to the buyer (e.g., if a financing contingency fails or the seller breaches the agreement).

Maryland law has specific, strict rules regarding the handling of escrow funds, including timelines for deposit and disbursement. Failure to adhere to these regulations can result in significant legal penalties and complications for the seller.

Essential Contingencies for Buyers and Sellers

A contingency is a clause that allows a party to back out of the contract without penalty if certain conditions are not met. While you might prefer a “clean” offer, most buyers will insist on specific protections to safeguard their investment. It is crucial for a For Sale By Owner (FSBO) seller in Maryland to understand and properly address these clauses in the basic Purchase and Sale Agreement. Common contingencies to address include:

Financing Contingency: This is a standard and vital protection for the buyer if they cannot secure a mortgage loan to purchase the property. The contract must be precise, setting a strict, non-negotiable deadline (e.g., 30-45 days from contract ratification) for the buyer to obtain a written loan commitment from their lender. It should also specify what happens if the deadline passes without a commitment—usually allowing the seller to void the contract and potentially retain the earnest money deposit.
Appraisal Contingency: Mortgage lenders will not typically lend more than the independently appraised value of the home, regardless of the agreed-upon sale price. This clause dictates the course of action if the appraisal comes in lower than the purchase price. The agreement should clearly outline whether the parties will renegotiate the sale price to meet the appraised value, the buyer will bring additional cash to the closing to cover the difference, or the buyer has the right to void the deal and receive their earnest money back.
Inspection Contingency: This allows the buyer to hire professional home inspectors (covering general systems, radon, pests, etc.) to evaluate the property’s condition. The agreement must clearly state the inspection period deadline and the buyer’s rights following the inspection. This can vary widely: the buyer may have the ability to negotiate specific repairs with the seller, the property may be sold strictly “as-is” with the buyer’s only recourse being to walk away, or the buyer may simply have the right to void the contract based on the inspection results if they are unsatisfactory, typically by providing a written notice of termination.

Maryland Residential Property Disclosure and Disclaimer Statement

Maryland law requires sellers to provide specific disclosures about the condition of the property. This is not optional. You must typically provide the buyer with the Maryland Residential Property Disclosure and Disclaimer Statement.

Disclosure: You disclose known latent defects, such as basement leaks, roof issues, or structural problems.
Disclaimer: You are selling the property “as-is” with no representations or warranties as to its condition, though you must still disclose latent defects.

Failing to provide this document before the contract is entered into can give the buyer the right to rescind the contract up until the day of settlement.

Mandatory HOA and Condominium Disclosures

If your property is part of a homeowners association (HOA) or a condominium regime, specific state laws strictly govern the sale.

Homeowners Associations: The Maryland Homeowners Association Act applies to communities with mandatory fees for common areas. You must provide the buyer with a resale package containing the community’s declaration, bylaws, and rules. The buyer has a right to review these documents and can cancel the contract within a specific timeframe after receiving them.
Condominiums: The Maryland Condominium Act sets similar requirements. Buyers must receive the declaration, bylaws, and current financial statements of the condo association.

The governing documents are the “constitution” of the community and define the property rights and responsibilities. Your contract must acknowledge the buyer’s receipt of these documents and their statutory right to cancel, or the contract may be voidable.

Fair Housing and Anti-Discrimination Clauses

Even as a private seller, you must be aware of Fair Housing laws. The Maryland Fair Housing Act and the federal Fair Housing Act prohibit discrimination in the sale of housing. Your contract and your selection of a buyer cannot be based on protected classes such as race, color, religion, sex, national origin, familial status, or disability.

Maryland law also adds protections for marital status, sexual orientation, gender identity, and source of income.
Ensure that any language in the contract or during negotiations does not violate these statutes. For instance, refusing to sell to a buyer because they are using a specific type of lawful financing could be construed as a source of income discrimination.

Lead-Based Paint Disclosures

For any home built before 1978, federal and state laws impose strict disclosure requirements regarding lead-based paint. You must:

Disclose the presence of any known lead-based paint.
Provide the buyer with any records or reports pertaining to lead paint in the home.
Provide the EPA-approved pamphlet “Protect Your Family from Lead in Your Home.”
Include a specific Lead-Based Paint Addendum in the contract.

Failure to include this addendum for older homes is a common and costly mistake for FSBO sellers.

Settlement Date and Possession

The agreement must set a firm date for settlement (closing). It should also specify when possession of the property will be transferred to the buyer.

Occupancy: Will you hand over the keys at the settlement table? Or do you need a post-settlement occupancy agreement (rent-back) to stay in the home for a few days while you move?
Walk-Through: The contract typically grants the buyer the right to a pre-settlement walk-through to verify the property is in the agreed-upon condition.

Fixtures and Personal Property

Disputes often arise over what stays with the house and what the seller takes. The contract should explicitly list included fixtures and personal property.

Fixtures: Items permanently attached to the property (e.g., light fixtures, built-in microwaves, ceiling fans) generally convey to the buyer.
Chattel: Personal property (e.g., refrigerators, washer/dryers, curtains) must be specifically written into the contract if they are to be included.

If you intend to take a specific chandelier or the family heirloom rose bushes, you must exclude them in writing to avoid conflict.

Default and Dispute Resolution

What happens if one party fails to fulfill their obligations? A well-drafted agreement outlines the remedies for default.

Buyer Default: If the buyer walks away without a valid contingency, the seller may be entitled to keep the earnest money as liquidated damages.
Seller Default: If the seller refuses to close, the buyer may sue for “specific performance” to force the sale or seek monetary damages.
Mediation: Many contracts include a clause requiring mediation before litigation, which can be a more cost-effective way to resolve disputes.

Take the Next Step for a Secure Sale

Selling your home yourself is a bold financial move, but it does not require you to act as your own attorney. Protecting your largest asset means ensuring your Purchase and Sale Agreement is compliant, comprehensive, and tailored to your specific transaction. If you are preparing to sell your home in Maryland and need assistance drafting or reviewing your contract, contact us today. We can help you navigate the paperwork so you can focus on your move.