As of last October, Maryland’s law regarding return of earnest money deposits, or EMDs, has changed.

The new provision of the Real Estate Brokers Act applies to EMDs delivered to the title company or broker (escrow agent) after Oct. 1. The new process is only triggered when the buyer terminates the contract.

The biggest change with the new process is that if the seller does not want the EMD disbursed to the buyer, the onus is now on the seller to act within 10 days of receipt of notice of termination from the buyer. Specifically, the seller shall provide the holder of the trust money with a copy of a notarized, written request for mediation from a mediation company relating to the distribution of the trust money.

A seller’s inaction will result in the escrow agent being able to return it to the buyer within 30 days. This process will prevent sellers from holding deposits hostage after real estate deals go south. But, for the new deposit process to apply, the buyer must terminate the contract pursuant to one of the specified contingencies below to trigger the new process.

“Contingency” includes a clause relating to (notice financing, in and of itself, is not on the list):

• Appraisals

• Back-up contracts

• Condominium notices

• Conservation easements

• Deeds and titles

• Home or environmental inspections

• Homeowners association notices

• On-site sewage disposal system inspections

• Property condition disclosures and disclaimer act notices

• Termite inspections

• Third-party approval not related to financing; or

• Water and sewer assessments notices

In cases where an EMD is being held and a seller terminates a contract, the old deposit handling process is still used, as well as in cases where a buyer terminates outside of the list of specified, allowable contingencies.

Lauren Bunting is a Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.