If a Maryland home seller gives the buyer a property disclaimer statement late, after the contract is already signed, can the buyer back out?

Plain-English summary

State Senator Larry E. Haines asked the Attorney General to interpret a brand-new 1993 law, Real Property Article §10-702, that requires a seller of single-family residential real property to give the buyer either a detailed "disclosure statement" about the property's condition or a simpler "disclaimer statement" warning the buyer the property is sold "as is." His specific question was whether the statute allows a seller to deliver the disclaimer statement after the contract is already signed.

The opinion found a drafting gap: the statute's delivery-timing rule treated disclosure and disclaimer statements identically, but a later part of the law describing what happens when a statement arrives late (the buyer's right to rescind within five days, or the contract becoming void if the statement comes more than three days after signing) only mentioned the disclosure statement by name, seemingly leaving disclaimer statements out. Tracing the bill's legislative history through the House and Senate, the opinion concluded this omission was a drafting accident, not a deliberate choice, since nothing suggested the General Assembly meant to treat the two types of statements differently for this purpose. Applying settled principles of statutory construction that look past a drafting gap to the legislature's evident purpose, the opinion concluded a late disclaimer statement should trigger the same buyer protections as a late disclosure statement, while also flagging (in a footnote) a separate, unresolved ambiguity over what "void" means in this statute and recommending the General Assembly clarify both issues through legislation.

Currency note

This opinion was issued in 1994. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or statutory provision mentioned here. Notably, this opinion carries an editor's note that the Court of Appeals resolved the separate "void" versus "voidable" question flagged in the opinion's footnote 5 the following year, in Romm v. Flax, 340 Md. 690 (1995), holding that "void" in this context means voidable at the buyer's option, consistent with what this opinion had predicted.

Common questions

If a Maryland home seller doesn't hand over the required disclosure or disclaimer form until after the contract is signed, does the buyer lose their chance to back out?
No, not necessarily, according to this opinion. It concluded a buyer who receives either type of statement within three days after signing still gets five days from receipt to decide whether to rescind the contract, just as the statute expressly provides for a late disclosure statement.

Does it matter whether the seller chose the detailed disclosure form or the simpler "as is" disclaimer form?
No, according to this opinion. Even though the statute's text on the consequences of late delivery only mentioned the disclosure statement, the opinion concluded the General Assembly intended parallel treatment for both, since nothing in the law's purpose or history suggested a reason to protect buyers differently based on which form the seller chose.

What happens if the seller waits more than three days after signing to deliver either statement?
The opinion did not resolve exactly what "void" means in that circumstance (that question was left to the Real Property Code Revision Committee and eventually settled by the courts a year later), but it concluded whatever consequence applies to a late disclosure statement should apply the same way to a late disclaimer statement.

Background and statutory framework

Real Property Article §10-702, added by Chapter 640 (House Bill 1210) of the Laws of Maryland 1993 and effective January 1, 1994, requires a seller of single-family residential real property to complete and deliver to the buyer either a detailed "residential property condition disclosure statement" listing known defects in specific categories (water and sewer systems, structural systems, hazardous materials, and others) or a simpler "residential property disclaimer statement" warning that the property is sold "as is" with no seller representations. The statute requires delivery on or before contract execution in most cases, RP §10-702(e), and separately addresses what happens when a disclosure statement arrives late: a buyer who receives it within three days after signing gets five days to rescind, RP §10-702(g)(2), while a disclosure statement delivered later than three days after signing renders the contract "void," RP §10-702(g)(1).

The opinion traced the bill's path through the 1993 legislative session, showing the House Economic Matters Committee had deleted the "void" and late-delivery language entirely (leaving disclosure and disclaimer statements on equal footing) before the Senate Judicial Proceedings Committee restored a version of that language, reducing the void-triggering deadline from ten days to three, to match a companion Senate bill, apparently without registering that the restored language, by referring only to "the disclosure statement," no longer matched the parallel treatment established elsewhere in the same section. Applying the Court of Appeals' statutory construction framework from Leppo v. State Highway Administration and Kaczorowski v. City of Baltimore, which looks to legislative purpose and history when a statute's text leaves a gap, the opinion concluded the omission of the disclaimer statement was inadvertent given the "seeming statutory objective... to make uniform the procedures governing disclosure statements and disclaimer statements."

Citations and references

Statutes:

• Real Property Article, §10-702(b)(1), requiring a seller to provide either a disclosure or disclaimer statement
• Real Property Article, §10-702(c)(2), describing the contents of a disclaimer statement
• Real Property Article, §10-702(d)(1)-(4), describing the contents of a disclosure statement
• Real Property Article, §10-702(d)(3)(ii), the notice that the disclosure statement reflects the seller's, not the broker's, representations
• Real Property Article, §10-702(e), the delivery timing requirement applicable to both statement types
• Real Property Article, §10-702(f), the buyer's rescission rights for a timely-delivered disclosure statement
• Real Property Article, §10-702(g)(1) and (g)(2), the consequences of a late-delivered disclosure statement
• Real Property Article, §10-702(g)(3) and (j)(2), limitations on the buyer's rescission rights discussed in the opinion's analysis of the term "void"
• Business Occupations and Professions Article, §16-322(a)(4), a real estate licensee's separate duty to disclose known material facts

Cases:

• Leppo v. State Highway Administration, 330 Md. 416, 422, 624 A.2d 539 (1993), on construing a statute in light of its purpose
• Government Employees Ins. Co. v. Insurance Comm'r, 332 Md. 124, 132, 630 A.2d 713 (1993), on considering legislative history and related statutes
• Kaczorowski v. City of Baltimore, 309 Md. 505, 515, 525 A.2d 628 (1987), on context bearing on legislative purpose
• Harris v. State, 331 Md. 137, 146, 626 A.2d 946 (1993), on giving a statute a reasonable, non-illogical interpretation
• Daugherty v. Kessler, 264 Md. 281, 285, 286 A.2d 95 (1972), on the imprecise use of "void," "voidable," and "unenforceable" by courts
• Kimm v. Andrews, 270 Md. 601, 617-18, 313 A.2d 466 (1974), on a party's inability to invoke a "void after deadline" provision after failing its own undertaking
• United States v. Peco Intern., S.A., 243 F. Supp. 250, 253 (D.C.Z. 1965), a federal court construing "void" in a statute to mean voidable
• In re Reardon's Estate, 243 Cal. App. 2d 221, 52 Cal. Rptr. 68, 73 (1966), a California court construing "void" to mean voidable
• Jones v. Zoning Bd., 423 Pa. 416, 224 A.2d 205, 208 (1966), a Pennsylvania court construing "void" to mean voidable
• Romm v. Flax, 340 Md. 690 (1995), the later Court of Appeals decision resolving the "void" versus "voidable" question flagged in this opinion

Source

• Landing page: https://oag.maryland.gov/resources-info/Pages/attorney-general%E2%80%99s-opinions.aspx
• Original PDF: https://oag.maryland.gov/resources-info/Documents/pdfs/Opinions/1994/79oag402.pdf

Original opinion text

402 [79 Op. Att'y

                    REAL PROPERTY

C ONTRACTS – D ISCLOSURE AND D ISCLAIMER S TATEMENTS

                       March 11, 1994

The Honorable Larry E. Haines
Maryland Senate

  You have requested our opinion concerning the provision of a

disclaimer statement by a seller of single family residential real
property under §10-702 of the Real Property ("RP") Article,
Maryland Code. Specifically, you ask whether this section permits
a disclaimer statement to be provided by the seller to the buyer after
the execution of the contract.

   For the reasons stated below, we conclude that RP §10-702

should be construed to apply the same time frames to a disclaimer
statement as are expressly applied to a disclosure statement.[1] Hence,
a seller's delivery of a disclaimer statement after the execution of the
contract would leave the buyer and the seller in the same position as
if the seller delivered a disclosure statement at that time. Because
the statutory language does not reflect this construction, however,
the General Assembly should give consideration to clarifying
legislation.

                               I

          Disclosure and Disclaimer Statements

  RP §10-702 was added to the Code by Chapter 640 (House Bill

1210) of the Laws of Maryland 1993. The new section became
effective on January 1, 1994. With certain exceptions that are not
pertinent to this analysis, the new law requires a seller of single
family residential real property to complete and deliver to each buyer
either a "residential property condition disclosure statement" or a

Gen. 402] 403

"residential property disclaimer statement." RP §10-702(b)(1).[2]
Both statements are to be made on forms adopted in a regulation by
the Maryland Real Estate Commission.

  If the seller chooses to provide a disclosure statement, the form

"shall disclose those items that ... the State Real Estate Commission
requires to be disclosed about the physical condition of the
property." RP §10-702(d)(1). The statute goes on to specify much
of what must be included on the form:

             The disclosure form shall include a list of
        defects or information of which the vendor
        has actual knowledge in relation to the
        following:

             (i) Water and sewer systems, including
        the source of household water, water treatment
        systems, and sprinkler systems;

            (ii) Insulation;

            (iii) Structural systems, including the roof,
        walls, floors, foundation, and any basement;

            (iv) Plumbing, electrical, heating, and air
        conditioning systems;

            (v)    Infestation    of   wood-destroying
        insects;

            (vi) Land use matters;

            (vii) Hazardous or regulated materials,
        including asbestos, lead-based paint, radon,
        underground storage tanks, and licensed
        landfills; and

             (viii) Any other material defects known to
        the vendor.

RP §10-702(d)(2).[3] The seller's disclosure is based on the seller's
actual knowledge at the time; the seller "is not required to undertake
or provide an independent investigation or inspection of the property
in order to make the disclosures required by this section." RP §10-
702(d)(4). The disclosure form also notifies buyers "that the
information contained in the disclosure statement is the
representation of the vendor and is not the representation of the real
estate broker or sales person, if any." RP §10-702(d)(3)(ii).[4]

  A seller is not required to provide this detailed disclosure

statement, however. Instead, the seller may opt to provide a
disclaimer statement. This form is intended to warn the buyer that:

            (1) The vendor makes no representations
        or warranties as to the condition of the real
        property or any improvements on the real
        property; and

             (2) The purchaser will be receiving the
        real property "as is," with all defects that may
        exist, except as otherwise provided in the
        contract of sale of real property.

RP §10-702(c)(2).

                              II

                   Delivery of Statements

  In addition to outlining the contents of the respective

statements, the statute also attempts to lay out the details of the
delivery of the statements, the rights of the buyer upon receipt of a
statement, and certain deadlines. Unfortunately, the seeming
statutory objective, to make uniform the procedures governing
disclosure statements and disclaimer statements, given that seller has
the freedom to choose which statement to deliver, is not fully
carried out in the drafting of the provisions.

  The pertinent provisions begin in RP §10-702(e) with an

identical approach to the delivery of a disclosure or disclaimer
statement:

             (1) Except as provided in paragraph (2) of
        this subsection, the vendor shall deliver the
        completed disclosure or disclaimer statement
        required by this section to the purchaser on or
        before entering into a contract of sale by the
        vendor and the purchaser.

             (2) The disclosure or disclaimer statement
        shall be delivered to each purchaser before the
        execution of the contract of sale by the
        purchaser in the case of:

               (i) A land installment contract, as
        defined in §10-101 of this title;

               (ii) An option to purchase agreements;
        and

              (iii) A lease agreement containing an
        option to purchase provision.

            (3) At the time the disclosure or
        disclaimer statement is delivered, each
        purchaser shall date and sign a written
        acknowledgment of receipt, which shall be
        included in or attached to the contract of sale.

  Having established identical requirements for the delivery of

the respective statements, the statute then omits any reference to
disclaimer statements in its recitation of the buyer's rights and the
consequences of a failure to deliver a statement. That is, RP §10-
702(f) provides that a buyer "who receives the disclosure on or
before entering the contract of sale does not have the right to rescind
the contract of sale based upon the information contained in the
disclosure statement." Another provision, RP §10-702(g)(2), deals
with the situation of a buyer "who does not receive the disclosure
statement on or before entering into the contract of sale ...." If the
seller accepts the buyer's offer and executes a contract with the
buyer and then provides the disclosure statement within three days,
the buyer has the right "[t]o rescind the contract of sale at any time
before the receipt of disclosure statement or within 5 days following
receipt of the disclosure statement." RP §10-702(g)(2)(i). But "[i]f
the disclosure statement is delivered later than 3 days after the
vendor enters into a contract of sale with the purchaser, the contract
is void." RP §10-702(g)(1).

  In our view, the omission of a reference to a disclaimer

statement in these latter provisions was inadvertent. Nothing in the
legislative history suggests a decision by the General Assembly to
differentiate disclosure and disclaimer statements in contexts where
no reasoned distinction appears to exist. To the contrary, the
legislative history suggests that the omission of a reference to a
disclaimer statement in RP §10-702(f) and (g) was the result of an
amendment process that focused on policy issues rather than drafting
details.

  When House Bill 1210 was introduced, it already contained the

language now in RP §10-702(b) requiring a seller to deliver either
a disclosure or disclaimer statement. However, it did not contain any
reference to the disclaimer statement in RP §10-702(e), dealing with
the time of delivery. This oversight was corrected by amendment in
the Economic Matters Committee.

 The same amendment dealt with RP §10-702(f) and (g), but the

focus was not on disclaimer statements. As introduced, the bill
contained these subsections, worded as follows:

             (f)   A purchaser who receives the
        disclosure on or before entering into the
        contract of sale does not have the right to
        rescind the contract of sale based on the
        information contained in the disclosure
        statement.

            (g)(1) If the disclosure statement is
        delivered later than 10 days after the vendor
        enters into a contract of sale with the
        purchaser, the contract is void.

               (2) A purchaser who does not receive
        the disclosure statement on or before entering
        into the contract of sale has the unconditional
        right, upon written notice to the vendor or
        vendor's agent:

                 (i) To rescind the contract of sale at
        any time before the receipt of the disclosure
        statement or within 5 days following receipt of
        the disclosure statement; and

                 (ii) To the immediate return of any
        deposits made on account of the contract.

The amendment deleted all of subsection (g) and the phrase "who
receives the disclosure on or before entering the contract of sale"
from subsection (f).

  As the bill passed the House, then, no real discrepancy existed

between disclosure and disclaimer statements. Either had to be
delivered, in most instances, on or before the execution of the
contract by the parties. RP §10-702(e)(1). There was no language
that specified the consequences of post-execution delivery.

  When House Bill 1210 reached the Senate, the provisions in

RP §10-702(f) and (g) that had been amended out by the House
Economic Matters Committee were put back in by amendment in the
Senate Judicial Proceedings Committee. The Senate committee took
this action to conform House Bill 1210 to a Senate companion bill,
Senate Bill 707. Although material in the legislative file does not
explain the reasoning, presumably the Senate's focus was on
contingencies in the event that the seller did not deliver a statement
prior to execution, not on the omission of a reference to the
disclaimer statement. The two chambers ultimately agreed to retain
the provision added by the Senate committee but to reduce to three
days (from ten) the period after which the seller's failure to deliver
the statement would make the contract "void."[5]

  This sequence of events suggests that the General Assembly

simply did not focus on the drafting point that, if provisions on the
consequences of late delivery were to be retained, they should be
conformed to the basic parity between disclosure and disclaimer
statements established in the delivery requirement itself.

  Under these circumstances, we conclude that the omission of

the reference to disclaimer statements in RP §10-702(f) and (g) was
inadvertent. The approach to statutory construction developed by
the Court of Appeals in recent years enables us to give effect to what
we believe was the legislative objective, notwithstanding the
apparent drafting omission.

  In construing these provisions, we must be faithful to "the

purpose of the legislation, determined in light of the statute's
language and context." Leppo v. State Highway Administration, 330
Md. 416, 422, 624 A.2d 539 (1993). "Context may include related
statutes, pertinent legislative history and 'other material that fairly
bears on the fundamental issue of legislative purpose or goal ....'"
Government Employees Ins. Co. v. Insurance Comm'r, 332 Md. 124,
132, 630 A.2d 713 (1993) (quoting Kaczorowski v. City of
Baltimore, 309 Md. 505, 515, 525 A.2d 628 (1987)). See also, e.g.,
Harris v. State, 331 Md. 137, 146, 626 A.2d 946 (1993). Finally,
"construction requires that the statute be given a reasonable
interpretation, not one that is illogical or incompatible with common
sense." Harris, 331 Md. at 145.

   The main purpose of the statute is to provide the buyer with

information that permits an informed decision whether to make an
offer or, if an offer was already made and accepted, to rescind the
contract. See, e.g., Bill Analysis of House Bill 1210, House
Economic Matters Committee. The disclosure statement certainly
provides that information, but so does the disclaimer statement. The
latter is a warning to the buyer that the property is being sold "as is."

  A related purpose of the time frames in the statute is to ensure

finality in transactions by putting limits on the buyer's ability to
rescind. A buyer who receives a disclosure or disclaimer statement
before making an offer will have the information that the General
Assembly intended be provided, so as to decide whether to make the
offer and, if so, at what price. If the buyer who has received either
statement decides to make an offer, there is no logical basis for
either statement to serve as a basis for recision thereafter. RP §10-
702(f). The same parallel treatment logically follows even if the
buyer does not receive a statement until a day or two after the
contract has been fully executed. The buyer then has five days after
receipt of the statement to decide whether the information in the
disclosure statement, or, in our view, the information in the
disclaimer statement, namely that the property is being sold "as is",
warrants exercise of the buyer's right to rescind the contract. RP
§10-702(g)(2).

  We reach the same conclusion about RP §10-702(g)(1), the

provision making the contract of sale "void" if the disclosure
statement is delivered later than three days after the contract is
executed. Whatever the intended meaning of this provision, the
consequences should be the same whether the statement that is
delivered so late (or not at all) is a disclosure statement or a
disclaimer statement.[6]

  In short, the General Assembly was at pains to fashion detailed

provisions on the consequences of post-execution delivery. It would
be inconsistent with this legislative objective to read the statute as if
it left a vacuum when it came to post-execution delivery of
disclaimer statements.

                              III

                           Conclusion

  In summary, it is our opinion that if a seller delivers a

disclaimer statement to a buyer after the execution of the contract but
not later than three days after execution, the buyer has a right of
rescission as specified in RP §10-702(g)(2), just as if the seller
delivered a disclosure statement at that time. If a seller delivers a
disclaimer statement after that time, RP §10-702(g)(1) applies to the
contract, just as it would if a disclosure statement were delivered that
late.

                                         J. Joseph Curran, Jr.
                                         Attorney General

                                         Jack Schwartz
                                         Chief Counsel
                                          Opinions & Advice

Editor's Note:

  The issue discussed in note 5 above was resolved by the Court

of Appeals in Romm v. Flax, 340 Md. 690 (1995), which held that
the term "void," properly construed in this context, means voidable
at the option of the buyer.

[1] This conclusion affirms advice previously given by Assistant
Attorney General Elizabeth H. Trimble in a letter to B. George Ballman,
Esquire (December 20, 1993).

[2] In this opinion, we shall use the term "buyer" and "seller" rather
than the more formal "purchaser" and "vendor," used in the statute.

[3] The form approved by the Real Estate Commission sets out a set
of questions about each of the items listed in the statute. For example,
question 2 on the disclosure statement is: "Basement: any leaks or
evidence of moisture?" The seller is to answer "yes," "no," "unknown,"
or "does not apply." For this and all other items on the form, a blank line
permits the seller to offer any comments or to elaborate on the answer.

[4] This provision does not excuse a real estate broker or other
licensee from compliance with the obligations imposed on licensees.
Under §16-322(a)(4) of the Business Occupations and Professions Article,
Maryland Code, a licensee is subject to discipline if the licensee
"intentionally or negligently fail to disclose to any person with whom the
... licensee deals a material fact that the licensee knows or should know
and that relates to the property with which the licensee ... deals."

[5] We have not been asked to opine about the meaning of this term
in RP §10-702(g)(1), and therefore we do not do so. However, we do
wish to note significant doubt whether the term "void" was intended to
apply in its strict sense, when it means that "an instrument or transaction
is nugatory and ineffectual so that nothing can cure it." Black's Law
Dictionary 1573 (6th ed. 1990). Given the importance of the issue and the
need for certainty, prompt legislative clarification is desirable.

On the one hand, there is evidence that the General Assembly was
aware of the danger in using the term "void" but did so anyway. In a letter
dated March 17, 1993, to the Chairman of the Economic Matters Committee,
Nancy Haas, Esquire, Chair of the Real Property Code Revision Committee
of the Bar Association's Section of Real Property, Planning and Zoning,
pointed out that the apparent power given to the seller to make a contract void
by failing to deliver a statement by the deadline after the execution of the
contract "conflicts with later provisions of the bill which provide that the
contract is voidable at the option of the purchaser based on the seller's failure
to make the required disclosures." (Emphasis in original.) Ms. Haas
suggested deleting the word "void" and substituting the phrase "voidable at the
option of the purchaser." The General Assembly chose instead to retain
exactly the wording that gave rise to Ms. Haas's concern.

On the other hand, it is hard to see why a law intended to aid buyers
would victimize the unwary buyer by giving a seller who entered a contract
without delivering a statement the great advantage of three risk-free days to
look around for a better offer; the seller could then deprive the buyer of the
benefit of the bargain simply by doing nothing, if "void" were read literally.
What's more, unless "void" really means "voidable by the buyer," RP §10-
702(j)(2)(i), which cuts off the buyer's right to rescind the contract after
closing, would be meaningless, for no one can go to settlement within three
days of the contract.

Hence, we lean toward the view that, under these circumstances, the
term "void" should be understood as "voidable," at the election of the buyer
and subject to the limitations on the exercise of that authority in RP §10-
702(g)(3) and (j)(2). As Black's Law Dictionary points out, "The word void' is used in statutes in the sense of utterly void so as to be incapable of ratification, and also in the sense of voidable and resort must be had to the rules of construction in many cases to determine in which sense the Legislature intended to use it." Certainly, cases can be found in which courts have given the latter construction to the term "void" in a statute. See, e.g., United States v. Peco Intern., S.A., 243 F. Supp. 250, 253 (D.C.Z. 1965); In re Reardon's Estate, 243 Cal. App. 2d 221, 52 Cal. Rptr. 68, 73 (1966); Jones v. Zoning Bd., 423 Pa. 416, 224 A.2d 205, 208 (1966). Cf. Daugherty v. Kessler, 264 Md. 281, 285, 286 A.2d 95 (1972) ("Courts have used the wordsvoid,'
voidable,'invalid' and `unenforceable' imprecisely, and when they say an
oral contract is void, usually do not mean it ....") See also Kimm v. Andrews,
270 Md. 601, 617-18, 313 A.2d 466 (1974) (party who failed to carry out
contractual undertaking by specified time may not invoke provision making
contract "void" after that time).

[6] See note 5 above.