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Dos and Don'ts

When filling out the Maryland Land Contract Addendum form, there are several important actions to take and avoid. Below is a list of recommendations:

  • Do ensure all parties are present at settlement. This includes anyone who will be on the title or responsible for the mortgage.
  • Do provide accurate identification. Proper identification may be required at the time of settlement.
  • Do prepare for additional costs. Be ready to pay settlement costs and any balance due under the contract.
  • Do seek legal advice. If you do not understand any terms of the contract, consulting an attorney is advisable.
  • Don’t neglect to check for zoning restrictions. Ensure the intended use of the property complies with local laws and ordinances.
  • Don’t ignore environmental considerations. Be aware of any hazardous materials that may affect the property.

Misconceptions

Here are ten common misconceptions about the Maryland Land Contract Addendum form, along with clarifications to help you understand the true nature of this important document.

  1. It’s only for residential properties. Many believe this addendum is exclusively for residential properties. However, it can also apply to unimproved residential land and may need additional clauses for other types of properties.
  2. Verbal agreements are enough. Some think that verbal agreements can suffice. In Maryland, a contract for the sale of real property must be in writing to be enforceable.
  3. Buyers don’t need to worry about zoning laws. It's a misconception that zoning laws don't affect buyers. Zoning laws can restrict how a property is used, so buyers should always check local regulations.
  4. Settlement is a simple process. Many assume that settlement is straightforward. In reality, it involves various requirements, including identification and proof of insurance, which can complicate the process.
  5. Ground rent is always disclosed. Some people think that all ground rent situations are automatically disclosed. Sellers must specifically disclose any existing ground rent in the contract.
  6. Tenants have no rights during a sale. There’s a belief that tenants are entirely disregarded during a sale. In fact, local laws may grant tenants certain rights, including the right to purchase the property.
  7. Environmental concerns are not the buyer's responsibility. Many believe environmental issues are solely the seller's concern. Buyers should be proactive about potential hazards like lead paint or asbestos.
  8. Insurance is optional. Some think that insurance is not a necessity. However, lenders typically require proof of hazard insurance and may also ask for flood insurance.
  9. All properties have a warranty. It’s a common misconception that every property comes with a warranty. New home warranties are only required for newly constructed dwellings, not for existing homes.
  10. Notices can be delivered verbally. Many believe that notices can be communicated verbally. In reality, notices must be in writing and can be delivered through various means, including fax.

Understanding these misconceptions can help you navigate the Maryland Land Contract Addendum form more effectively. Always consult with a legal professional if you have questions about your specific situation.

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Key takeaways

  • Written Agreement: A land contract must be in writing to be enforceable in Maryland. Once signed, it becomes a legally binding agreement.
  • Intended Use: The contract is designed for single-family residences or unimproved residential property. If the buyer has other plans for the property, additional clauses may be necessary.
  • Settlement Requirements: All parties involved in the title should be present at settlement. Proper identification and various certifications may be required.
  • Ground Rent Disclosures: If applicable, sellers must disclose any existing ground rent associated with the property.
  • Rental Registration: Buyers planning to rent the property may need to register with local government and pay a yearly fee.
  • Environmental Considerations: Buyers should be aware of potential environmental hazards, including lead paint, asbestos, and radon. Inspections may be advisable.
  • Insurance Requirements: Lenders often require proof of hazard and possibly flood insurance as a condition of mortgage approval.

Guidelines on Utilizing Maryland Land Contract Addendum

Filling out the Maryland Land Contract Addendum form is a straightforward process. This form is crucial for ensuring that all parties involved in a real estate transaction are clear on the terms and conditions of the sale. Here’s how to complete it efficiently.

  1. Obtain the Form: Download the Maryland Land Contract Addendum form from a reliable source or request it from your real estate agent.
  2. Fill in the Addendum Number: Write the addendum number on the top of the form, ensuring it corresponds with the related Contract of Sale.
  3. Enter Contract Details: Provide the date of the original Contract of Sale, the names of the Buyer(s), Seller(s), and the Property address.
  4. Review Each Section: Go through each section of the addendum carefully. Pay attention to legal requirements, intended use, settlement details, ground rent, and any other relevant information.
  5. Complete Required Fields: Fill in any necessary fields specific to your transaction, such as disclosures regarding rental properties, homeowner associations, and environmental considerations.
  6. Signatures: Ensure that all parties involved, including Buyers, Sellers, and the Broker/Salesperson, sign and date the form where indicated.
  7. Make Copies: After completing the form, make copies for all parties involved for their records.
  8. Submit the Form: Provide the completed addendum to the appropriate parties, including your real estate agent and any involved attorneys.

Form Preview Example

UNIMPROVED LAND CONTRACT ADDENDUM

ADDENDUM dated _________________________________________________ to Contract of Sale

between Buyer ____________________________________________________________________

and Seller ________________________________________________________________________

for Property known as ______________________________________________________________.

The following provisions are included in and supersede any conflicting language in Maryland REALTORS® Unimproved Land Contract of Sale (the Contract).

Only those paragraphs 1 - 11 initialed by both Buyer and Seller shall apply to this Unimproved Land Contract Addendum.

1. SURVEY BY A LICENSED SURVEYOR:

Boundary Survey

Site Improvement Survey

Property Corners located and marked

•Survey to be ordered by Buyer Seller.

•Survey to be completed, and results delivered to Buyer (if ordered by Seller) within

___________________ ( ____) days from the Date of Contract Acceptance.

• Cost of survey to be paid by

Buyer

Seller or

as follows:

________________________________________________________________________

2.BUYER AND SELLER TO PHYSICALLY INSPECT THE PROPERTY BOUNDARIES TOGETHER ON OR BEFORE _____________________________________________. (Date)

3.OTHER BOUNDARY REVIEW AS INDICATED:

___________________________________________________________________________.

Regarding paragraphs 1, 2 and 3 (if initialed), in the event the Buyer is dissatisfied with the results of the survey or boundary review, Buyer may terminate the Contract by delivery of written notice to Seller within __________________ (____) days from the Date of Contract

Acceptance, and all Deposit(s) shall be disbursed in accordance with the Deposit(s) paragraph of the Contract.

4.PRICE ADJUSTMENT: In the event a boundary survey performed by a licensed surveyor shows the total acreage to be conveyed is more or less than the size indicated in the Contract, the Contract price shall be adjusted as follows:

•If size is in excess of ___________________( ac./ sq. ft.), price shall be increased by $ __________________ per ( ac./ sq. ft.) prorated over the excess amount.

•If size is less than _____________________ ( ac./ sq. ft.) price shall be decreased by $ __________________ per ( ac./ sq. ft) prorated over the difference.

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1/23

5.SIZE OF PROPERTY IS A MATERIAL CONSIDERATION IN THIS CONTRACT: In the event a survey by a licensed surveyor indicates the size of the property to be conveyed is less

than _________ (

ac./ sq. ft.) Buyer may terminate the Contract by delivery of written

notice to Seller within ______________ (___) days from the Date of Contract Acceptance, and

all Deposit(s) shall be disbursed in accordance with the Deposit(s) paragraph of the Contract.

6.SUITABILITY/FEASIBILITY FOR BUYER’S PURPOSE: Buyer will secure, at Buyer’s expense and risk, satisfactory feasibility studies to determine whether the Property is acceptable for Buyer’s intended use as _____________________________ (type of use). In the event Buyer, in Buyer’s sole discretion, determines the contemplated use is not feasible, Buyer may terminate the Contract by delivery of written notice to Seller within ____________

(____) days from the Date of Contract Acceptance, and all Deposit(s) shall be disbursed in accordance with the Deposit(s) paragraph of the Contract.

7.PERMITS: Buyer will obtain (or determine Buyer can obtain) all permits required for Buyer’s intended use as ____________________________________ (type of use). The cost to obtain all necessary permits shall be the expense of Buyer. If permits cannot be obtained, Buyer may terminate the Contract by delivery of written notice to Seller within _____________

(____) days from the Date of Contract Acceptance, and all Deposit(s) shall be disbursed in accordance with the Deposit(s) paragraph of the Contract.

8.ENVIRONMENTAL INSPECTION: Buyer will obtain, at Buyer’s expense and risk, an inspection of the property by a qualified expert selected by Buyer. Such inspection(s) may include, but are not limited to, the existence and integrity of underground oil/gasoline tanks and the presence of hazardous materials. In the event Buyer, in Buyer’s sole discretion, determines the inspection report is not satisfactory, Buyer may terminate the Contract by delivery of written notice to the Seller within __________________(days) from the Date of Contract Acceptance, and all Deposit(s) shall be disbursed in accordance with the Deposit(s) paragraph of the Contract.

9.PROOF OF VALID PERCOLATION TEST: Seller shall provide Buyer written evidence of a valid percolation test satisfactory to Buyer from the appropriate governmental authority within

_____________ (____) days from the Date of Contract Acceptance. Should Buyer not receive such evidence, Buyer may terminate the Contract by delivery of written notice to Seller within

_____________ (____) days from the Date of Contract Acceptance, and all Deposit(s) shall be disbursed in accordance with the Deposit(s) paragraph of the Contract.

10.PERCOLATION TEST: A valid percolation test, satisfactory to Buyer, shall be obtained at a location satisfactory to Buyer within ____________ (___) days from the Date of Contract Acceptance from the appropriate governmental authority. Should test results be unsatisfactory to Buyer, Buyer may terminate the Contract by delivery of written notice to Seller within

______________ (____) days from the Date of Contract Acceptance, and all Deposit(s) shall be disbursed in accordance with the Deposit(s) paragraph of the Contract.

•

Percolation test to be ordered by:

Buyer or

Seller

•

Percolation test to be paid by:

Buyer or

Seller

Page 2 of 3 1/23

Unimproved Land Contract Addendum

11.WELL DRILLING: A well shall be drilled on the property at a location acceptable to Buyer within _____________(____) days from the Date of Contract Acceptance. The well shall meet all requirements of appropriate governmental authorities in regard to location, depth, water yield, and water quality.

•

Well Drilling to be ordered by:

Buyer or

Seller

•

Cost of well permits, drilling, and testing to be paid by:

Buyer or

Seller or

as follows: ________________________________________________________

•Total cost of well not to exceed $ _____________________________________

If well is drilled but does not meet appropriate governmental authorities’ standards, or if the cost of drilling an acceptable well is estimated to exceed the total cost specified above, any incomplete well shall be capped at the expense of the party paying for well drilling, and either Buyer or Seller may terminate the Contract by delivery of written notice to the other party within

_________________(____) days from the Date of Contract Acceptance, and all Deposit(s)

shall be disbursed in accordance with the Deposit(s) paragraph of the Contract.

12.BUYER MAY BE REIMBURSED FOR COSTS: If Seller is unable to convey title in accordance with terms of the Contract without fault of Buyer, Seller shall promptly reimburse Buyer for any costs incurred by Buyer in Paragraphs 1 through 11 above, upon being furnished by Buyer with receipts for the actual payment of such costs. Reimbursement liability on the part of the Seller shall not exceed $_____________________.

13.RESTORATION OF PROPERTY: In the event Buyer i) defaults under the terms and conditions of this Agreement OR ii) terminates this Contract as herein provided, Buyer shall, at Buyer’s sole cost and expense, restore the Property to its original condition and shall remove all debris and grade and re-seed ground cover in all areas which result from or were disturbed or damaged as a result, directly or indirectly, from any test(s) or inspection(s) performed by Buyer, whether such debris, disturbance or damage was caused by Buyer or any third-person(s), including contractors(s) or subcontractor(s) performing such test(s) or inspection(s). Seller acknowledges that Broker and/or real estate licensees affiliated with Broker are not responsible i) for damage to the Property resulting from a test(s) or inspection(s) as herein provided and ii) for any restoration of the Property, including removal of debris, resulting from test(s) or inspection(s).

All other terms and conditions of the Contract of Sale remain in full force and effect.

__________________________________________

__________________________________________

Buyer Signature

Date

Seller Signature

Date

__________________________________________

_________________________________________

Buyer Signature

Date

Seller Signature

Date

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1/23

Copyright 2023 Maryland REALTORS®. For use by REALTOR® members of Maryland REALTORS® only. Except as negotiated by the parties to the Contract, this form may not be altered or modified in any form without the prior express written consent of Maryland REALTORS®.

Common mistakes

  1. Incomplete Information: Failing to fill in all required fields can lead to significant delays. Ensure that all sections, including names of buyers and sellers, property details, and contract dates, are complete.

  2. Incorrect Property Description: Providing an inaccurate or incomplete description of the property can result in legal disputes. Double-check the address and any relevant property identifiers.

  3. Missing Signatures: All parties involved must sign the addendum for it to be valid. Omitting a signature can invalidate the entire agreement.

  4. Ignoring Local Regulations: Not considering local zoning laws or restrictions can lead to issues with property use. Research local ordinances to ensure compliance.

  5. Overlooking Contingencies: Failing to include necessary contingencies, such as financing or inspection clauses, can expose buyers to unforeseen risks. Always include these protections in the contract.

Free Maryland Land Contract Addendum PDF

Learn More on This Form

What is the purpose of the Maryland Land Contract Addendum form?

The Maryland Land Contract Addendum form serves as a general addendum to the Maryland Association of REALTORS® Residential Contract of Sale. It outlines essential terms and conditions that must be adhered to when buying or selling residential real estate in Maryland. The addendum is designed to clarify specific obligations and requirements of both buyers and sellers, ensuring that all parties are aware of their rights and responsibilities.

What happens once the Contract is signed?

Once the Contract is signed by both parties, it becomes a legally binding agreement. This means that the original terms of the Contract can only be changed if both parties agree to the changes in writing. It is important for all parties involved to understand the terms of the Contract and to seek legal advice if they have any questions or concerns.

Are there any specific requirements for settlement?

Yes, all individuals who will be on the title or responsible for the mortgage must be present at the time of settlement. They may need to provide proper identification. Prior to settlement, buyers typically must obtain a homeowner's insurance policy, a termite inspection report, and any necessary certifications. Buyers should also be prepared to cover settlement costs and the remaining balance due under the Contract using cash, wired funds, or certified checks.

What should buyers know about ground rent?

If a property has an existing ground rent or if one is to be created, the seller must disclose this information through an appropriate clause or addendum in the Contract. Buyers should be aware of any implications that ground rent may have on their ownership and responsibilities regarding the property.

What are the implications of renting a portion of the property?

If buyers plan to rent any part of the property, they may need to register the property with local government authorities. This registration could involve a yearly fee. Additionally, if the property has been rented previously, local laws may grant tenants certain rights to purchase the property, which should be clearly stated in the Contract.

How does the Maryland Land Contract Addendum address environmental concerns?

The addendum includes provisions regarding various environmental concerns, such as hazardous materials, lead paint, radon, and asbestos. Buyers are advised to seek further information and possibly engage specialists to assess these risks. The addendum emphasizes the importance of being informed about any environmental hazards that could affect the property.