HB 19
Department of Legislative Services
Maryland General Assembly
2021 Session
FISCAL AND POLICY NOTE
Third Reader
House Bill 19 (Delegate Holmes)
Environment and Transportation Judicial Proceedings
Residential Real Estate Transactions – Escrow Agents and Trust Money
This bill clarifies recently enacted requirements relating to the written agreements entered
into when an escrow agent agrees to hold trust money for certain residential real estate
transactions, primarily by altering statutory definitions.
Fiscal Summary
State Effect: The bill does not affect State government operations or finances.
Local Effect: The bill does not affect local government operations or finances.
Small Business Effect: Minimal.
Analysis
Bill Summary: “Escrow agent” means a person engaged in the business of residential real
estate settlements who receives trust money. “Residential real estate” means (1) real
property improved by four or fewer single-family dwellings units that are designed
principally and are intended for home habitation and (2) unimproved real property zoned
for residential use by the local zoning authority of the county or municipality in which the
real property is located. “Trust money” means a deposit made by a purchaser in connection
with a residential real estate sales transaction that the purchaser delivers to an escrow agent
to hold for the benefit of the purchaser and seller. The bill eliminates a reference to
“beneficial owner” in the modified definition of “trust money” and, thus, also eliminates
the unnecessary definition of “beneficial owner.” The bill makes other stylistic and
clarifying changes; for example, “entrust” is changed to “deliver” and the multiple forms
of “deposit” are eliminated in favor of the one broad term.
Current Law: Chapter 349 of 2019 established requirements within the Real Property
Article for an escrow agent to enter into a written agreement with the purchaser and seller
of certain residential real estate when the escrow agent agrees to hold trust money in escrow
for the transaction. “Escrow agent” means a person engaged in the business of receiving
escrows for deposit. “Trust money” is a deposit, an additional deposit, or a down payment
made by a purchaser that the purchaser entrusts to an escrow agent to hold for (1) the
benefit of the owner or beneficial owner of the trust money and (2) a purpose that relates
to the purchase or sale of residential real estate in the State. “Beneficial owner” means a
person other than the owner of the trust money for whose benefit an escrow agent is
entrusted to hold trust money.
The written agreement must contain (1) the amount of the trust money entrusted to the
agent; (2) the date the trust money was entrusted to the agent; (3) the responsibility of the
agent to notify the purchaser and seller of trust money returned due to dishonored funds;
(4) the conditions under which the escrow agent may release the trust money; and (5) the
process to address disputes over the release of the trust money. An escrow agent is not
prohibited from transferring trust money to another escrow agent, if the purchaser of the
residential real estate for which the trust money is held chooses the escrow agent to whom
the trust money is transferred.
These requirements apply to (1) real property improved by four or fewer single-family
dwelling units that are designed principally and are intended for human habitation and
(2) unimproved real property zoned for residential use by the local zoning authority of the
county or municipality in which the real property is located. The requirements do not ably
to (1) banks, trust companies, savings and loan associations, savings banks, or credit
unions; (2) a home builder registered under specified provisions of the Business Regulation
Article who is engaged in the initial sale of residential real estate; or (3) a real estate
salesperson, associate real estate broker, or real estate broker licensed under specified
provisions of the Business Occupations and Professions Article.
Additional Information
Prior Introductions: None.
Designated Cross File: None.
Information Source(s): Office of the Attorney General (Consumer Protection Division);
Judiciary (Administrative Office of the Courts); Department of Legislative Services
HB 19/ Page 2
Fiscal Note History: First Reader - January 24, 2021
rh/jkb Third Reader - February 17, 2021
Analysis by: Donavan A. Ham Direct Inquiries to:
(410) 946-5510
(301) 970-5510
HB 19/ Page 3


Statutes affected:
Text - First - Residential Real Estate Transactions – Escrow Agents and Trust Money: 10-802 Real Property
Text - Third - Residential Real Estate Transactions – Escrow Agents and Trust Money: 10-802 Real Property