Maryland Transaction Guide: How Closings Work

Maryland real estate transactions occupy an unusual middle ground. The state does not technically require an attorney at closing by statute, but attorney involvement is so customary — especially in the Baltimore metro area and throughout central Maryland — that closing without one is both uncommon and risky. Add some of the highest combined transfer and recordation taxes in the country, and Maryland closings have a distinct character that investors moving into the market need to understand.

This guide covers how closings work for both retail and investment deals, what the costs look like, and what wholesalers in particular need to know about operating in Maryland. For wholesaling-specific disclosure and compliance requirements under HB 124, see our Maryland compliance guide.

How Closings Work in Maryland

Most Maryland closings are conducted by a settlement attorney or a title company working in conjunction with an attorney. In the Baltimore metro area, attorney involvement is nearly universal. In more rural parts of the state, some transactions close through title companies alone, but even then an attorney typically reviews the documents.

The settlement attorney (or title company) handles the title search, prepares the deed and settlement statement, coordinates with lenders, holds escrow funds, and conducts the closing. Maryland uses a HUD-1 or ALTA settlement statement, and both parties typically sign at the same closing table — though remote closings and mail-away closings have become more common since 2020.

Maryland also has a unique requirement: the seller must provide a disclaimer/disclosure statement (the Maryland Residential Property Condition Disclosure and Disclaimer Statement) unless the property qualifies for an exemption. Investment properties sold by entities that never occupied the property often qualify for the disclaimer option rather than the full disclosure.

One practical consideration: not every settlement attorney or title company in Maryland is comfortable with investor transactions, double closings, or assignments. If you are doing wholesale deals, identify investor-friendly closing agents before you have a deal under contract.

Termination Rights and Due Diligence

Retail / Owner-Occupant Deals

The standard Maryland residential contract (MAR form or similar) includes a home inspection contingency. The buyer typically has 10 to 15 days to conduct inspections. During this period, the buyer can request repairs, negotiate a credit, or terminate the contract if the inspection reveals issues the buyer finds unacceptable.

There is also a financing contingency if the buyer is obtaining a mortgage. The appraisal contingency protects the buyer if the property does not appraise at or above the purchase price. These contingencies provide multiple exit points for retail buyers before their earnest money goes hard.

Maryland does not use a Texas-style option fee. The inspection contingency is the primary mechanism for buyer protection on retail deals.

Investment / Wholesale Deals

Off-market investment deals in Maryland typically have no inspection contingency. The buyer accepts the property as-is, understanding that the discount reflects the property's condition. Earnest money is non-refundable from the date of contract execution. There is no financing contingency because the buyer is paying cash or using private money.

On-market investment properties listed with a realtor may still include an inspection period because the standard contract forms include one by default, but experienced investor buyers often waive it or shorten it significantly to make their offer more competitive.

Earnest Money

Retail Deals

Retail earnest money in Maryland typically ranges from 1% to 3% of the purchase price. In competitive markets like Montgomery County, Howard County, or parts of Baltimore County, deposits of 2% to 3% are common. The deposit is held by the settlement attorney or title company in an escrow account.

The earnest money is refundable during the inspection contingency period and during any other active contingency. Once all contingencies expire, the deposit goes hard and becomes the seller's liquidated damages if the buyer defaults.

Investment and Wholesale Deals

Investment and wholesale deals in Maryland typically require non-refundable deposits of $1,000 to $5,000. The amount depends on the deal size, the relationship between the parties, and the seller's expectations. Deposits are held by the settlement attorney or title company — not by the wholesaler, even though this sometimes happens in practice.

For wholesale assignments specifically, the end buyer's deposit is typically $2,500 to $10,000 and is also non-refundable. This deposit is held by the same closing agent handling the A-to-B transaction.

Who Pays for What

Retail Transaction Customs

Maryland's closing costs are among the highest in the country, primarily because of the layered transfer and recordation taxes:

• State transfer tax: 0.5% of the sale price (split equally between buyer and seller by custom, though negotiable)
• County transfer tax: Varies from 0.5% to 1.5% depending on the county. Baltimore City charges 1.5%. Montgomery County charges 1.0%. The county tax is typically split between buyer and seller.
• Recordation tax: Assessed on the deed and on any new mortgage. The rate varies by county — in Baltimore City, it is $5.00 per $500 of consideration (1.0%). In most counties, the rate is $3.50 to $7.00 per $500. The seller customarily pays the deed recordation tax; the buyer pays the mortgage recordation tax.
• Owner's title insurance: Negotiable. No strong statewide custom — this is often a point of negotiation.
• Lender's title insurance: Buyer pays.
• Settlement fee: Varies, typically $500 to $1,500. Often split or assigned to one party by negotiation.
• Realtor commissions: Typically 5% to 6%, paid by the seller from proceeds.

On a $300,000 retail transaction in Baltimore City, the combined transfer tax, recordation tax, and settlement costs can easily exceed $10,000 before you count realtor commissions. This is significantly higher than states like Texas (no transfer tax) or Indiana (no transfer tax).

Investment Transaction Customs

On investment deals, the cost allocation is often negotiated differently:

• Transfer and recordation taxes: Still apply at the same rates. On wholesale assignments, the tax is assessed on the end purchase price. On double closings, taxes are assessed on each transaction — this is a significant cost consideration.
• Owner's title insurance: Often waived by cash investors, especially repeat buyers who are familiar with the property or the seller.
• Settlement fee: Investor-friendly attorneys may charge reduced fees for simple cash closings.
• No realtor commissions: Off-market deals have no commission, which partially offsets the high transfer taxes.

Title Work and Insurance

Title searches in Maryland are conducted by the settlement attorney or an affiliated title company. The search covers the chain of title, liens, judgments, and encumbrances. Maryland uses both ALTA and CLTA title insurance forms, though ALTA is more common.

Owner's title insurance is negotiable — there is no strong statewide custom about who pays. In some areas, the seller pays; in others, the buyer pays; in many transactions, it is simply a negotiation point. The lender's title insurance is always paid by the buyer when there is a mortgage.

For investment deals, cash buyers frequently decline owner's title insurance to save money, particularly on lower-value properties or repeat transactions with known sellers. This is a calculated risk — title defects do occur, and the cost of resolving them without insurance can far exceed the premium.

One Maryland-specific issue: ground rent. Some properties in Baltimore City and older parts of Maryland are subject to ground rent — a legacy feudal arrangement where the homeowner owns the building but leases the land. Ground rent must be addressed at closing, either by paying it off (redeeming it) or accounting for it in the title work. This catches out-of-state investors by surprise.

Wholesale-Specific Closing Notes

Wholesaling in Maryland requires attention to several state-specific factors:

• HB 124 compliance: Maryland enacted wholesale-specific legislation (HB 124 / Chapter 508, effective October 2025) requiring written disclosures to both the seller and the end buyer. See our Maryland compliance guide for the full requirements.
• Transfer tax on assignments: When you assign a contract, the transfer tax is assessed on the final purchase price paid by the end buyer. On a double closing, transfer tax applies to both the A-to-B and B-to-C transactions, which can make double closings expensive in Maryland.
• Investor-friendly attorneys: Not every settlement attorney in Maryland handles wholesale deals or double closings. Identify closing agents who understand assignment language and are comfortable with the transaction structure before you market the deal.
• Ground rent: If the subject property has ground rent, the title work must address it. Some end buyers will not purchase a property with unredeemed ground rent. Factor this into your due diligence.
• Recordation tax on assignment documents: Assignment agreements may be subject to recordation tax if they are recorded. Consult with your closing attorney on the tax implications of your specific deal structure.

Typical Closing Timeline

• Retail with financing: 30 to 45 days from contract to close. Attorney coordination, lender requirements, and inspection negotiations all contribute to the timeline.
• Retail cash: 14 to 21 days. Faster than financed deals but still requires title search, attorney document preparation, and transfer tax processing.
• Investment / off-market cash: 10 to 21 days. Depends on title clarity and attorney availability.
• Wholesale assignment: 7 to 14 days from end buyer identification to close. Requires clean title, investor-friendly attorney, and a cooperative seller.
• Double closing: Same day or within 1 to 3 days. Both transactions are typically scheduled at the same settlement office. The closing attorney coordinates the fund flow.

Key Differences from Other States

Frequently Asked Questions

Is Maryland an attorney closing state?

Maryland is not technically an attorney-required state by statute, but attorney involvement is customary in most transactions, especially in the Baltimore metro area. Most title companies work alongside attorneys, and many lenders require attorney involvement. Trying to close without an attorney in Maryland is uncommon and not recommended.

How much are transfer and recordation taxes in Maryland?

Maryland has both a state transfer tax (0.5%) and county transfer taxes that range from 0.5% to 1.5% depending on the county. In addition, recordation tax is assessed on the deed and mortgage at rates that vary by county. Combined, Maryland has some of the highest transfer-related closing costs in the country — often 2% to 4% of the sale price when transfer tax and recordation tax are combined.

How does earnest money work on Maryland investment deals?

On off-market investment and wholesale deals in Maryland, earnest money is typically non-refundable from contract execution. Deposits range from $1,000 to $5,000 depending on deal size and buyer-seller relationship. The deposit is held by the closing attorney or title company. There is no inspection contingency on most investment deals — the buyer accepts the property as-is at a discount.

What is the typical closing timeline for investment deals in Maryland?

Cash investment deals in Maryland typically close in 10 to 21 days. Wholesale assignments can close in 7 to 14 days if title is clean and the closing attorney is investor-friendly. Retail deals with financing take 30 to 45 days. The attorney coordination adds a few days compared to pure title company states.

Does Maryland regulate wholesaling?

Yes. Maryland enacted HB 124 (Chapter 508), effective October 1, 2025, which requires wholesalers to provide written disclosures to both the seller and the end buyer before executing contracts. The law also grants sellers a rescission right and mandates deposit refund protections. See our Maryland compliance guide for full details.

Disclaimer

This information is for educational purposes only and does not constitute legal advice. Transaction customs vary by county and municipality within Maryland, and can change based on market conditions, contract terms, and the parties involved. Transfer tax and recordation tax rates are subject to change. Consult a licensed real estate attorney or experienced settlement company in Maryland before relying on any information presented here.