New legislation in Maryland has been introduced to provide further protections to purchasers of newly constructed homes from earnest money deposit forfeitures, when the transaction is contingent upon the purchasers obtaining a mortgage loan. The new legislation came into existence after it was discovered that a large nationwide homebuilder was routinely collecting forfeited earnest money from purchasers after the purchaser was unable to obtain a mortgage loan.
House Bill 1183 states that contracts for the sale of newly constructed homes “must not only state the maximum interest rate that the buyer is obligated to accept, but also must state the time period within which the purchaser must obtain a written loan commitment.” If the purchaser is unable to obtain a mortgage loan, they or the seller may state in writing the contract is null and void and the earnest money deposit is to be returned to the purchaser if the purchaser has complied with their contractual obligations. House Bill 1183 will take effect on October 1, 2015
Copyright: ARELLO registered. Condensed from ARELLO’S Boundaries magazine (2015 June)