The Option Fee and Option Period in a Texas Contract

The option period is one of the most important parts of a Texas home purchase. Here’s how it works on the standard TREC resale contract (TREC No. 20-19, Paragraph 5).

What it is

In exchange for the option fee, the seller gives you the unrestricted right to terminate the contract by giving notice within a set number of days after the effective date. That window is the option period. Many buyers use it for inspections and to decide whether to move forward.

How much and how long

The contract doesn’t set the fee or the number of days. You and the seller fill both in, and both are negotiable.

When the fee is due

The option fee and earnest money are delivered to the escrow agent (usually the title company) within 3 days after the effective date. They can be paid separately or in one payment. If the last day falls on a weekend or legal holiday, the deadline moves to the next business day.

Where the fee goes

The contract authorizes the escrow agent to release the option fee to the seller at any time. If you close, the option fee is credited to the sales price.

If you terminate in time

Notice must be given by 5:00 p.m. local time on the last day. If you terminate on time, the option fee isn’t refunded (it goes to the seller), and your earnest money is refunded to you.

If the fee isn’t paid

If no option fee amount is filled in, or you don’t deliver it on time, you don’t get the unrestricted right to terminate under this paragraph.

Deadlines are strict

The contract says time is of the essence for this paragraph. Put the deadline on your calendar, and schedule inspections early.

Have questions about buying or selling in DFW? Send me a message or call or text me at 602-214-3584. I’m happy to walk you through it.

General information only, not legal advice. Contract terms and local rules vary. Talk to a real estate attorney for legal questions about your situation.