Contingencies in seven states: the buyer's rights to end the contract, and the earnest money
A buyer's rights to end a purchase contract, their deadlines, and what happens to the earnest money differ from state to state. For Texas, Florida, California, New York, Georgia, Arizona, and Colorado, this page gives a selection of the facts Reddy has a reviewed source for: the buyer's main rights to end the contract, such as after an option or inspection period, for the loan, or for the appraisal, the deadline or the default period when a source states one, and what happens to the earnest money or deposit. Not every state has a fact on every point. For California, the page gives the rights to terminate an offer after a late disclosure and the deposit rules, and not the contract's own contingency periods. For New York, it gives the mortgage contingency and the down payment on the New York City Bar form, and what a licensee may fill in on a contract. For Georgia, it gives the earnest money rules, and not the due diligence period on the member-only GAR forms. Two facts are federal rules, not state rules: the lead-based paint inspection, in the California section, and HUD's FHA appraisal clause, in the Georgia section. The page gives each of them in one section only. The list at the end names each point that has no fact. Many facts say what a standard contract form says, not what the law requires: read the contract itself for the dates of a given deal. Do not carry a state rule or a form's term from one state to another: read the section for the state where the property is. Every fact comes from a state statute, a state real estate commission's or department's rules or publications, a federal agency, or a standard contract form, and links to its source.
Every fact links to its source. Checked Oct 6, 2026
Texas: the option period
On TREC's resale contract, TREC No. 20-19, the buyer delivers the option fee to the escrow agent within 3 days after the Effective Date. For the Option Period, the number of days after the Effective Date that the parties write in Paragraph 5B, the buyer has an unrestricted right to end the contract by notice to the seller, given by 5:00 p.m. local time on the last day. When the buyer ends it on time, the seller keeps the option fee and the buyer gets the earnest money back. If no option fee amount is stated, or the buyer delivers it late, the buyer has no unrestricted right to end the contract. Time is of the essence for Paragraph 5. (Source: TREC)
TREC says that a period in a TREC contract starts on the day after the Effective Date (the final execution date), and that each day is a calendar day. (Source: TREC)
On TREC's Third Party Financing Addendum, TREC No. 40-11, Buyer Approval (Paragraph 2A) is a choice. When the contract is subject to it and the buyer cannot get it, the buyer may end the contract within the days written in after the Effective Date, by giving the seller a notice of termination and a copy of the lender's written statement of its reasons. The earnest money is refunded. If the buyer does not end the contract in that period, the contract is no longer subject to Buyer Approval. (Source: TREC)
Property Approval (Paragraph 2B of TREC No. 40-11): if the lender determines that the property does not meet its underwriting requirements for the loan, including appraisal, insurability, and lender required repairs, the buyer may end the contract on or before the 3rd day before the Closing Date, by giving the seller a notice of termination and a copy of the lender's written statement of its reasons. The earnest money is refunded. If the buyer does not end the contract, Property Approval is deemed obtained. For Other Financing (Paragraph 1G), the parties check whether the buyer waives this right for that loan. (Source: TREC)
The Addendum Concerning Right to Terminate Due to Lender's Appraisal, TREC No. 49-1, is used only with the Third Party Financing Addendum, and not with FHA or VA financing. The parties check one: (1) the buyer waives the Paragraph 2B right to end the contract when the appraised value does not meet the lender's requirements; (2) the buyer waives it only when the appraised value is at least the amount written in; or (3) the buyer may also end the contract within the days written in after the Effective Date if the lender's appraisal is below the amount written in and the buyer gives the seller a copy, and the earnest money is refunded. Under (1) and (2), if the lender reduces the loan because of the value, the cash part of the price increases by that amount. (Source: TREC)
Florida: the inspection period
On the Florida Realtors and Florida Bar "AS IS" Residential Contract For Sale And Purchase (FloridaRealtors/FloridaBar-ASIS-7x), the Inspection Period is the days written in, or 15 days after the Effective Date when left blank. In the buyer's sole discretion, the buyer may end the contract by written notice before the period ends and get the Deposit back. The buyer pays for the inspections and repairs any damage they cause. A buyer who does not end the contract accepts the property's physical condition and any code violations, and is responsible for the repairs the buyer's lender requires. (Source: Florida Realtors)
The standard Residential Contract For Sale And Purchase (FloridaRealtors/FloridaBar-7x) has the same deposit and financing terms as the "AS IS" form, and the same Inspection Period of 15 days when left blank. On it, the seller repairs within three limits: a General Repair Limit, a WDO Repair Limit, and a Permit Limit, each 1.5% of the purchase price when left blank. A buyer who does not deliver the written notice or report within the Inspection Period waives the seller's duty to repair those items. (Source: Florida Realtors)
On the "AS IS" form, time is of the essence, and periods are counted in calendar days where the property is located. A period that ends on a Saturday, a Sunday, or a national legal public holiday extends to the next day that is not one. This does not apply to the time for acceptance or to the Effective Date. (Source: Florida Realtors)
On the "AS IS" form, the parties check either a cash purchase with no financing contingency, or a contract that depends on Loan Approval within the Loan Approval Period: the days written in, or 30 days after the Effective Date when left blank. The buyer applies for the loan within the days written in, or 5 days after the Effective Date when left blank, and uses good faith and diligent effort to get Loan Approval. A failure to use that effort is a default. (Source: Florida Realtors)
On that form, before the Loan Approval Period ends, the buyer gives written notice of Loan Approval or, without Loan Approval, written notice that the buyer is satisfied with its ability to get Loan Approval and close. A buyer who cannot get Loan Approval within the period, or cannot meet its terms in time, after good faith and diligent effort, may end the contract by written notice before the period ends and, when not in default, gets the Deposit back. When the buyer gives neither notice in time, the buyer goes forward as though the box for a cash transaction with no financing contingency had been checked as of the Effective Date. The seller may then end the contract by written notice within 3 days after the period ends and, when the buyer is not in default, the buyer gets the Deposit back. (Source: Florida Realtors)
On that form, the appraisal condition is only that the lender gets an appraisal or other valuation that lets it make the loan, when the lender requires one. When the buyer gave, in time, either the notice of Loan Approval or the notice that the buyer is satisfied with its ability to get Loan Approval, and then does not close, the Deposit is paid to the seller, unless the failure to close is due to the seller's default or the seller's inability to satisfy the contract's other contingencies, or to property-related conditions of the Loan Approval that were not met and that the contract does not waive. The appraised value is not such a condition. In those cases the buyer gets the Deposit back. The form lists a separate Appraisal Contingency rider (Rider F) and an FHA/VA Financing rider (Rider E). (Source: Florida Realtors)
California: late disclosures, the deposit, and the federal lead-based paint inspection
If the seller delivers the Transfer Disclosure Statement (TDS), or a material amendment to it, after the execution of an offer to purchase, the buyer may terminate the offer by written notice to the seller or the seller's agent. The buyer has 3 days after delivery in person, or 5 days after delivery by mail or, when the parties agreed to deal electronically, by electronic record. That period starts when Sections I and II of the TDS, and Section III when the seller has an agent, are completed and delivered to the buyer or the buyer's agent. (Source: California Legislative Information)
The buyer has the same right for the natural hazard disclosure statement: if it, or a material amendment, is delivered after the execution of an offer, the buyer has 3 days after delivery in person, or 5 days after delivery by mail or, when the parties agreed to deal electronically, by electronic record, to terminate the offer by written notice to the seller or the seller's agent. (Source: California Legislative Information)
Under the federal lead rules, before a buyer is bound under a contract to buy housing built before 1978, the seller gives the buyer 10 days to have a lead-based paint inspection or risk assessment, unless the parties agree in writing on another period. The buyer may waive it in writing. The federal rules except housing for the elderly or persons with disabilities and 0-bedroom units, unless a child under 6 lives or is expected to live there. (Source: EPA)
For a property of 1 to 4 units where the buyer will live in one unit, the buyer and the seller must make sure escrow funds go back to the person who deposited them, or to the person the contract entitles, when the purchase does not close by the contract's closing date or an extension. A party who does not sign the escrow holder's release within 30 days after the other party's written demand is liable for the funds not held for a good faith dispute, damages of 3 times those funds (at least $100 and no more than $1,000), and reasonable attorney's fees. There is no such liability when a party holds the funds to resolve a good faith dispute. Signing the escrow holder's release, or taking the released funds, does not cancel the purchase contract unless the document says so. (Source: California Legislative Information)
For a home of up to 4 units that the buyer, when the contract is made, intends to live in, a clause that lets the seller keep the buyer's payment as liquidated damages when the buyer fails to complete the purchase is valid only to the extent the buyer actually paid it by cash or check, and only if it meets Civil Code 1677 and 1678. An amount actually paid of 3% of the purchase price or less is valid unless the buyer shows it is unreasonable as liquidated damages. An amount above 3% is invalid unless the party who wants to keep the clause shows it is reasonable. (Source: California Legislative Information)
New York: the mortgage contingency and the down payment
On the New York City Bar residential contract of sale form, the parties fill in the days to the commitment date. The mortgage commitment must come from an institutional lender, and a commitment that depends on an appraisal counts only once the appraisal is approved. (Source: New York City Bar)
On that form, with no commitment by the commitment date, the buyer may cancel by notice within 5 business days after that date. Once a commitment is issued, the buyer is bound even if the lender later fails to fund. (Source: New York City Bar)
On that form, the seller's attorney is the escrowee: that attorney holds the down payment and pays it to the seller at closing, and in a dispute holds it until the parties agree or a court decides. (Source: New York City Bar)
A New York licensee may fill in only the non-legal terms of a simple fill-in-the-blanks form (names, dates, property, price), and each party's attorney must approve the contract. A licensee must not give legal advice, discourage a party from using an attorney, or charge a separate fee to prepare the contract. (Source: New York Department of State)
Georgia: the earnest money, and the federal FHA appraisal clause
GREC's InfoBase answers that earnest money is not essential to create a binding contract, and that whether to obtain earnest money, and how much, is a policy decision of the broker, influenced by the parties. (Source: GREC)
GREC's InfoBase answers that who holds the earnest money is set by the parties' negotiation, as the sales contract states, and that a broker disburses earnest money a party demands according to the sales contract and the procedures in Rule 520-1-.08(3). A salesperson may not give earnest money back to the buyer unless the broker specifically directs it, because the decision on whom to pay and when rests only with the broker. (Source: GREC)
Under GREC Rule 520-1-.08(3), a broker who disburses trust funds contrary to the contract that created the escrow, or who fails to disburse them as that contract says, is considered to have demonstrated incompetence. The Commission deems a broker to have properly accounted for trust funds when the broker disburses them: on rejection of an offer; on withdrawal of an offer not yet accepted; at the closing; on a written agreement, separate from the contract, signed by all parties with an interest in the funds; on the filing of an interpleader action in a court of competent jurisdiction; on a court order; or on a reasonable interpretation of the contract that directed the deposit. (Source: Georgia Rules and Regulations)
Under GREC Rule 520-1-.08(3)(c) and (e), a broker does not disburse on those grounds until the broker has reasonable assurance that the financial institution has credited the funds to the trust account. When a broker makes a disbursal that not all parties to the contract expressly agree to, the broker must immediately notify all parties in writing. All refunds of earnest money are paid by check or credited at the closing. (Source: Georgia Rules and Regulations)
For an FHA-insured loan, the federal HUD Handbook 4000.1 (last revised August 12, 2026) says that if the borrower does not receive form HUD-92800.5B, Conditional Commitment Direct Endorsement Statement of Appraised Value, before signing the sales contract, the contract must be amended before closing to include HUD's amendatory clause. The clause says the purchaser is not obligated to complete the purchase, or to forfeit earnest money, unless the purchaser receives a written statement of an appraised value of not less than the stated amount, and that the purchaser may proceed whatever the appraised value. The mortgagee inserts the actual sales price, and an increase in the price requires a revised clause. The clause is not required for some sales, for example HUD REO sales, FHA 203(k) loans, sales by a government agency, Fannie Mae, Freddie Mac, or a mortgagee disposing of REO, foreclosure sales, and sales to a borrower who will not occupy the home. (Source: HUD)
Arizona: the inspection period
On the Arizona Association of REALTORS® (AAR) Residential Resale Real Estate Purchase Contract (RPC), Contract acceptance occurs on the date the signed contract, and any counter offer, is delivered to and received by the appropriate broker. Every day is a calendar day, from 12:00 a.m. to 11:59 p.m. The day of the act or event that starts a period is not counted, and the last day is counted. Time is of the essence. (Source: Arizona REALTORS)
RPC Section 6a sets the Inspection Period at 10 days after Contract acceptance, unless the parties write in another number. During it, at the buyer's expense, the buyer does all desired physical, environmental, and other inspections. The contract says that square footage, wood-destroying organisms or insects, homeowner's insurance, and a sewer connection must be investigated during the Inspection Period when they are material to the buyer, and that the buyer determines flood hazard designations and the cost of flood insurance during it. The buyer gives the seller and the brokers copies of all inspection reports at no cost. (Source: Arizona REALTORS)
Under RPC Sections 6i and 6j, before the Inspection Period ends, the buyer delivers one signed notice of all items disapproved (AAR's BINSR form is available for this) and elects either to cancel immediately, with the earnest money released to the buyer, or to give the seller an opportunity to correct the items. The seller responds in writing within 5 days, or the days written in; no response is a refusal. If the seller does not agree to correct an item, the buyer may cancel within 5 days after the seller's response or after the response time ends, whichever occurs first, with the earnest money released to the buyer; if not, the buyer closes without those items. A cancellation notice that does not specify the items disapproved stays in effect, but the seller may send a cure notice, and a buyer who does not cure within 3 days is in breach and the seller is entitled to the earnest money. Verbal discussions do not extend these periods, and a buyer who gives no notice in time is deemed to proceed without correction. (Source: Arizona REALTORS)
Under RPC Section 2b, the buyer's obligation to complete the sale depends on loan approval without Prior to Document (PTD) conditions no later than 3 days before the Close of Escrow (COE) Date, for the loan described in the AAR Loan Status Update (LSU) or the AAR Pre-Qualification Form, whichever is delivered later. By then the buyer either signs all loan documents, or delivers to the seller or the escrow company notice of loan approval without PTD conditions and the dates the buyer received the Closing Disclosures, or delivers notice that it cannot get loan approval without PTD conditions. Under Section 8i, an act due 3 days before the COE Date is due 3 full days before (for a Friday COE Date, by 11:59 p.m. on Monday). Under Section 2c, if the buyer, after diligent and good-faith effort, cannot get loan approval without PTD conditions and delivers notice of that no later than 3 days before the COE Date, the contract is cancelled and the buyer gets the earnest money back. If the buyer does not deliver the notice, the seller may send a cure notice; a buyer who delivers the notice before the Cure Period ends still gets the earnest money back, and otherwise the seller is entitled to it on the buyer's breach. Prepaid items paid separately from the earnest money are not refundable. (Source: Arizona REALTORS)
Under RPC Section 2l, the sale depends on an appraisal acceptable to the lender for at least the purchase price. If the property does not appraise for the purchase price in any appraisal the lender requires, the buyer has 5 days after notice of the appraised value to cancel and get the earnest money back; if not, the appraisal contingency is waived, unless federal law prohibits that. (Source: Arizona REALTORS)
Under RPC Section 7b, on the buyer's breach the seller may accept the earnest money as its sole right to damages, and must do so when the breach comes from the buyer's failure to deliver the Section 2b loan notice, or from the buyer's inability to get the loan because the buyer waived the appraisal contingency. An unfulfilled contingency is not a breach. (Source: Arizona REALTORS)
Colorado: the inspection termination and objection deadlines
On the Colorado Real Estate Commission's Contract to Buy and Sell Real Estate (Residential) (CBS1), with a mandatory use date of January 1, 2026, the parties write the date or deadline for each event in the Dates and Deadlines table (§ 3.1). A deadline left blank or completed with "N/A" or "Deleted" does not apply, and the provision that contains it is deleted (§ 3.2). Under § 3.3, a day ends at 11:59 p.m. Mountain Time. If the parties write a Time of Day Deadline, every Objection, Resolution, Examination, and Termination Deadline ends at that time on its date. In a period of days with no stated end date, the first day is not counted and the last day is counted. The parties check whether a deadline that falls on a Saturday, a Sunday, or a federal or Colorado holiday moves to the next day; if they check neither box, it does not move. Under § 20, time is of the essence for all dates and deadlines. (Source: Colorado Division of Real Estate)
Under CBS1 § 10.3, the buyer, acting in good faith, may have the Property, the Inclusions, and Leased Items inspected at the buyer's expense. If the physical condition, the services or systems, a proposed or existing transportation project, or any activity, odor, or noise is unsatisfactory in the buyer's sole subjective discretion, the buyer may either give written notice by the Inspection Termination Deadline that the contract is terminated, or deliver by the Inspection Objection Deadline a written description of the conditions the seller must correct (an Inspection Objection). The right to terminate under § 10.3.1 ends when the buyer delivers an Inspection Objection. Under § 10.4, the buyer pays for all inspections and for any damage they cause, does not let liens attach, and indemnifies the seller; this survives termination. Under § 10.5, the buyer may terminate by the Property Insurance Termination Deadline based on the availability, terms, or premium of property insurance. (Source: Colorado Division of Real Estate)
Under CBS1 § 10.3.3, if the seller receives an Inspection Objection by the Inspection Objection Deadline and the parties do not agree in writing to a settlement by the Inspection Resolution Deadline, the contract terminates on the Inspection Resolution Deadline, unless the seller receives the buyer's written withdrawal of the objection by then. Under § 24.1, a termination is effective when the other party receives a written Notice to Terminate by the deadline. If it does not arrive by the deadline, the party with the right accepts the matter as satisfactory and waives that right, and a Notice to Terminate delivered after the deadline does not terminate the contract. (Source: Colorado Division of Real Estate)
Under CBS1 § 5.2.1, the contract is conditional, for the buyer's sole benefit, on the buyer's satisfaction with the New Loan's payments, interest rate, conditions, costs, and other terms, in the buyer's sole subjective discretion, and the buyer may terminate by the New Loan Terms Deadline if they are not satisfactory. Under § 5.2.2, the contract is also conditional on the buyer's satisfaction with the availability of the New Loan, based on the lender's review and underwriting, and the buyer may terminate by the New Loan Availability Deadline. The buyer may not terminate for New Loan Availability when the reason is the New Loan Terms, the Appraised Value, the Lender Property Requirements, insurability, or a sale conditional on the buyer's own property. If the seller is not in default and does not receive the buyer's written Notice to Terminate in time, the buyer's Earnest Money becomes nonrefundable, except as the contract provides otherwise (for example, for appraisal, title, or survey). (Source: Colorado Division of Real Estate)
Under CBS1 § 6.2.1, which applies to a Conventional or Other loan and to a cash purchase, the buyer has the right to get an Appraisal. If the Appraised Value is less than the Purchase Price, or the buyer has not received the Appraisal by the Appraisal Deadline, the buyer may, by the Appraisal Objection Deadline, either give a Notice to Terminate or deliver an Appraisal Objection with a copy of the Appraisal or a lender's written notice that confirms the Appraised Value is less than the Purchase Price. After an Appraisal Objection, if the parties do not agree in writing to a settlement by the Appraisal Resolution Deadline, the contract terminates on that deadline, unless the seller receives the buyer's written withdrawal of the objection by then. The Appraisal deadlines do not apply to FHA-insured or VA-guaranteed loans when those boxes are checked in § 4.5.3. (Source: Colorado Division of Real Estate)
Under CBS1 § 24.2, when the contract terminates, all Earnest Money is returned to the buyer in a timely manner, and the parties are relieved of their obligations, subject to §§ 10.4 and 21. Under § 4.3.2, except in an Earnest Money dispute under § 23, if it has not been returned after a Notice to Terminate, the seller signs and delivers written mutual instructions (for example, the Earnest Money Release form) within three days after receiving them. A seller who does not is in default, unless the seller is entitled to the Earnest Money because of a buyer default. The buyer has the same three days when the seller is entitled to it. (Source: Colorado Division of Real Estate)
Not on this page
Texas: the option fee, the Option Period, and the other days of a given deal: read the contract itself.
Texas: the terms of TREC's other addenda, including the Addendum for Sale of Other Property by Buyer, TREC No. 10-6: read each form on TREC's site.
Florida: the terms of the Appraisal Contingency rider, the FHA/VA Financing rider, and a contract on another form: read the contract itself.
Florida: any right a condo or HOA buyer has after getting the association's documents: this page does not cover it. Ask your broker.
New York: an inspection period, and what happens to the down payment when the buyer cancels for no mortgage commitment: Reddy has no reviewed fact. Ask the buyer's attorney.
Georgia: a Georgia statute or GREC rule on financing contingencies or appraisal gaps, and VA appraisal terms: Reddy has no reviewed rule. Read the contract and its exhibits.
Arizona: whether a lender condition is a PTD condition: ask the buyer's lender.
Colorado: a sale conditional on the buyer's own home, water rights, mineral rights, a new survey or ILC, and due diligence documents: read the contract itself.
A contract that depends on the sale of the buyer's own home, in Florida, California, New York, Georgia, and Arizona: Reddy has no reviewed fact.
Other rights a buyer may have to end the contract, beyond the option or inspection period, the loan, and the appraisal: this page does not give them. Read the contract itself.
The seller's own rights to end the contract: this page gives the buyer's rights, and names a seller's right only where the buyer's right includes it. Read the contract itself.
Whether the buyer may end the contract in a given case, and who gets disputed earnest money: ask an attorney.
