The Texas option period: the option fee and the right to end the contract
On the TREC resale contract, the option period is a number of days after the Effective Date in which the buyer has an unrestricted right to end the contract. The buyer has that right only with an option fee that the contract states and that the buyer delivers on time. This page covers when the option fee is due, the deadline to end the contract, how the days are counted, and what happens to the option fee and the earnest money. It also names the other rights to end the contract that a buyer can have, so you do not confuse them with the option period. Every fact comes from a TREC form or TREC's website, and links to its source.
Every fact links to its source. Checked Oct 2, 2026
The Effective Date and how days are counted
On the TREC resale contract, TREC No. 20-19, the Effective Date is the date of final acceptance, and the broker fills it in. (Source: TREC)
TREC says a period in a TREC contract starts on the day after the Effective Date (the final execution date), and each day is a calendar day. (Source: TREC)
Delivering the option fee
The buyer delivers the option fee and the earnest money to the escrow agent named in Paragraph 5A within 3 days after the Effective Date, payable to the escrow agent, separately or in one payment. When the last day is a Saturday, Sunday, or Legal Holiday, the time runs to the end of the next day that is not. (Source: TREC)
If no option fee amount is stated, or the buyer delivers the option fee late, the buyer has no unrestricted right to end the contract. Time is of the essence for Paragraph 5. (Source: TREC)
If the buyer does not deliver the earnest money on time, the seller may end the contract, use its default remedies, or both, by notice given before the buyer delivers it. (Source: TREC)
Ending the contract in the option period
The Option Period is the number of days after the Effective Date that the parties write in Paragraph 5B. During it, 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. (Source: TREC)
When the buyer ends the contract on time, the seller keeps the option fee, and the buyer gets the earnest money back. (Source: TREC)
By Paragraph 5A(4), the buyer authorizes the escrow agent to release the option fee to the seller at any time, without further notice to or consent from the buyer, and the option fee is credited to the sales price at closing. If the buyer ends the contract in the option period, the option fee is not refunded, and the escrow agent releases to the seller any option fee it still holds. (Source: TREC)
When the contract ends, either party or the escrow agent may send a release of the earnest money for the parties to sign. If only one party makes a written demand, and the escrow agent receives no written objection from the other party within 15 days, the escrow agent may pay the party that made the demand, less unpaid expenses. (Source: TREC)
TREC's contracts page lists the Notice of Buyer's Termination of Contract, TREC No. 38-8, with an effective date of April 1, 2025. (Source: TREC)
Other rights to end the contract
Paragraph 7B of the contract states whether the buyer has the Seller's Disclosure Notice. When the buyer does not, the seller delivers it within the days written in. If it never arrives, the buyer may end the contract at any time before closing. If it arrives, the buyer may end the contract for any reason within 7 days after receipt or before closing, whichever is first. The earnest money is refunded in each case. Paragraph 7I gives the same terms for the Seller's Water Disclosure about groundwater and surface water rights, unless the parties check 7I(3), which states why the seller need not deliver it. (Source: TREC)
For a property with mandatory membership in a property owners association (not a condominium), the Addendum for Property Subject to Mandatory Membership in a Property Owners Association, TREC No. 36-11, defines the Subdivision Information as the restrictions, bylaws, and rules, and a resale certificate. When the seller delivers it or the buyer obtains it, the buyer may end the contract within 3 days after receipt or before closing, whichever is first, and the earnest money is refunded. If the seller must deliver it and does not, the buyer, as its sole remedy, may end the contract at any time before closing. (Source: TREC)
When the Third Party Financing Addendum, TREC No. 40-11, makes the contract subject to Buyer Approval 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, the parties check whether the buyer waives this right for that loan. (Source: TREC)
Not on this page
The option fee, the option period, and the other blanks of a given deal: read the contract itself.
The loan amount, the Buyer Approval days, and the appraisal choice in a given deal: read the contract and its addenda.
A condo resale: TREC's Residential Condominium Contract (Resale), TREC No. 30-18, has its own terms. Read it.
Who is entitled to disputed earnest money in a given deal: the contract itself and an attorney.
Whether the buyer can end the contract in a given case, and whether a lender's statement supports it: an attorney.
