David and Linda sign a contract of sale for a single-family home in Annapolis. The contract does not include a financing contingency. Three weeks later, David's mortgage application is denied and he wants to exit the contract without forfeiting his earnest money deposit. David's agent tells him that because the seller chose to provide a disclaimer statement instead of a full disclosure statement under the Maryland Residential Property Disclosure and Disclaimer Act, David may have a right to rescind. Which of the following most accurately describes David's rescission rights in this situation?
Correct Answer
A) David may rescind within 5 days of receiving the disclaimer statement and recover his earnest money deposit
Under the Maryland Residential Property Disclosure and Disclaimer Act, Md. Code Ann., Real Prop. § 10-702 et seq., when a seller provides a disclaimer statement (selling the property as-is rather than providing a full disclosure), the buyer retains a statutory right to rescind the contract within 5 days after receiving the disclaimer statement. This right exists specifically because the buyer is not receiving detailed information about the property's condition. Upon timely rescission, the buyer is entitled to a full refund of the earnest money deposit. This is a Maryland-specific protection tied directly to the disclaimer option.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A counteroffer is a response to an original offer that changes one or more terms of the offer, effectively rejecting the original offer and creating a new offer. The party who makes the counteroffer becomes the new offeror.
Earnest money is a deposit made by the buyer at the time of the offer or shortly after to demonstrate good faith and serious intent to purchase the property. It is also called a good faith deposit.
Equitable title is the buyer's interest in a property after a purchase contract is signed but before closing, giving the buyer the right to acquire legal title in the future. The seller retains legal title until the deed is delivered at closing.
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