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Is There a Right of Rescission in Real Estate?

According to, the right of rescission is “the right of an individual involved within a contract to return to the identical state as before they entered into the agreement, due to courts not recognizing the contract as legally binding.”

I am not an attorney, so I can’t provide any “legal advice” on when the right of rescission is (or is not) used in real estate, but I can pass on this information from Andrew G. Levy, Esq. regarding this matter when the home being sold is in default:

In a largely ignored and misunderstood provision contained in the 2008 revisions to The Protection of Homeowners in Default Act (“PHFA”) the MD legislature provided any “homeowner of a residence in default” with the unconditional right to rescind a contract of sale for the transfer of the residence in default within 5 days after execution of the contract.

The Real Estate Sales Contract used by most real estate licensees in Maryland includes notice of this right of rescission. There is no provision in PFHA, however, which requires that a seller or seller’s agent disclose if the property is a “residence in default”…

The issues which might arise, under these circumstances, can be very confusing for both buyers and sellers.  In fact, when a home in default is being sold, I believe selling or buying “for sale by owner” is a recipe for legal issues. 

My suggestion:  Work with an experienced real estate agent who keeps up to date on constantly evolving legislation, like this, and one who has a good professional relationship with local real estate attorneys they can recommend to you, if the need arises.

For more information, call me at the Crofton office of Long & Foster, 410–721–1500 (office) or 301–346–2923 (direct), or email me at [email protected]


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