The Option Period in a Texas Home Purchase

Texas gives a buyer something most states do not: a short, paid window to walk away from a signed contract for any reason and get the earnest money back. Here is how the termination option in the TREC contract works in 2026, what Houston buyers typically negotiate, and how to use the days well.

What the option period is

Paragraph 5B of the TREC One to Four Family Residential Contract (Resale), form 20-19 as of July 1, 2026, is titled Termination Option. In exchange for nominal consideration and the buyer's agreement to pay an option fee within the time required, the seller grants the buyer the unrestricted right to terminate the contract by giving notice of termination within the number of days written in the blank after the Effective Date. That span is the Option Period. "Unrestricted" is the key word: the buyer does not need a reason. If the buyer terminates in time, the option fee is not refunded (the escrow agent releases it to the seller) and the earnest money is refunded to the buyer.

Older contracts carried this language in paragraph 23. TREC moved it into paragraph 5 in 2021, combined it with the earnest money rules, and made the credit of the option fee automatic. If you read an article that still refers to paragraph 23 or to delivering the option fee to the seller, it is describing a form that is no longer in use.

Paragraph 5, step by step

Provision What it says What it means for you
5A, delivery Within 3 days after the Effective Date the buyer must deliver the earnest money and the option fee to the escrow agent (the title company). They may be paid separately or combined in one payment. Wire or deliver both to the title company right away; a late option fee kills the option. If day 3 falls on a Saturday, Sunday or legal holiday, delivery extends to the next business day.
5A(3) and (4), application and credit Money received is applied first to the option fee, then to the earnest money. The buyer authorizes the escrow agent to release the option fee to the seller at any time, and "the option fee will be credited to the Sales Price at closing." If you close, the fee costs you nothing; it comes off the price. If you terminate, the seller keeps it as the price of your right to walk.
5B, termination option Unrestricted right to terminate by notice within the stated days after the Effective Date. Notices must be given by 5:00 p.m. local time where the property is located, by the date specified. Count calendar days starting the day after the Effective Date. Day 10 ends at 5 p.m., even if it is a Sunday; the weekend extension in 5A applies to delivering money, not to the termination notice.
5C, late earnest money If the buyer fails to deliver the earnest money on time, the seller may terminate or pursue remedies under paragraph 15, or both, by notice before the buyer delivers it. Earnest money is as time-sensitive as the fee.
5D, no fee, no option If no dollar amount is stated as the option fee, or the buyer does not deliver it within the time required, the buyer has no unrestricted right to terminate. A contract with a blank option fee is a contract with no option period.
5E, time Time is of the essence; strict compliance with the time for performance is required. Courts and title companies hold both sides to the dates.

The Effective Date is the date of final acceptance, filled in by the broker when the last party signs and the other side is notified. Every option period deadline counts from that date, so confirm it on page one before you count days.

What Houston buyers typically negotiate

The length and the fee are both blanks, so both are negotiated. In our transactions a 7 to 10 day option period is the norm. Buyers competing in a multiple-offer situation often shorten it to 5 days; buyers of older homes, homes with pools, or homes where a foundation engineer or a sewer scope is needed ask for 10 to 14. The option fee is commonly a few hundred dollars; some agents use roughly a tenth of a percent of the price as a rule of thumb. Because the fee is credited at closing, a larger fee is an inexpensive way to make an offer more attractive without giving up the right to inspect. Waiving the option entirely is a serious step that we rarely recommend in Houston, where foundations, drainage and flood history need to be checked.

What to inspect in the window

Paragraph 7A gives the buyer access at reasonable times, lets the buyer hire inspectors licensed by TREC or otherwise permitted by law, requires the seller to keep utilities on, and says hydrostatic testing of the plumbing must be separately authorized by the seller in writing. Book the general inspection for day one or two so there is time for follow-up specialists.

Inspection or check Why it matters in Houston Timing
General inspection by a TREC-licensed inspector Structure, roof, electrical, plumbing, HVAC, appliances, drainage, attic and crawl spaces on the standard TREC report form. Day 1 to 3
Wood-destroying insect (termite) inspection Subterranean termites are common in the Gulf Coast climate; some lenders require the report. With the general inspection
Sewer camera scope Older Inner Loop homes often have cast iron or clay drain lines; breaks under the slab are expensive. Day 2 to 5
Foundation engineer Houston clay soils move. If the inspector flags slopes, cracks or prior repairs, a licensed engineer's letter settles the question. Day 3 to 7
Pool, spa, sprinkler, well or septic Specialty systems outside a general inspector's scope. Day 2 to 6
Insurance quotes Roof age and prior claims drive both the premium and whether a carrier will write the policy; quotes for the same house can differ by thousands a year. Day 1 to 5
Flood, survey, title, HOA and MUD review FEMA map and elevation data, the seller's flood disclosures, the existing survey and T-47.1, the title commitment, HOA documents and the MUD or PID notice. Some of these have their own contract deadlines. Throughout

How negotiation works inside the window

The option period is also the repair negotiation period. Once the reports are in, the buyer sends an amendment to the contract asking for some mix of repairs, a price reduction or a seller credit toward closing costs (credits are capped by the loan program). The seller can accept, counter or refuse. The buyer's leverage is simple: the right to terminate before the deadline, and both sides know it.

  • Ask for what matters. Safety, water intrusion, structure and major systems. A list of thirty cosmetic items weakens the request and irritates the seller.
  • Bring numbers. A contractor's estimate attached to the amendment is persuasive; a vague "fix the roof" is not.
  • Credits often beat repairs. A seller rushing a repair before closing picks the cheapest vendor. With a credit you choose the contractor after closing. When repairs are agreed, the contract requires them to be completed before closing by licensed persons, with permits where required, and you should re-inspect at the walk-through.
  • "As Is" does not bar negotiation. Paragraph 7D says accepting the property as is does not keep the buyer from inspecting, negotiating repairs or treatments in an amendment, or terminating during the option period.
  • Keep the deadline in view. If the seller has not agreed by the afternoon of the last day, you either terminate, extend in writing, or proceed without the repairs. A verbal promise does not extend anything.

How to end or extend the option period

To terminate, deliver TREC's Notice of Buyer's Termination of Contract (form 38-8) to the seller or the listing agent by 5 p.m. local time on the last day, and keep proof of delivery. Both sides then sign a release so the title company can refund the earnest money. The seller keeps the option fee.

To extend, both parties sign an amendment before the period expires, stating the new end date. Sellers often ask for an additional option fee for the extra days. Common reasons are a specialist who could not come out in time, a repair bid that has not arrived, or an insurance question still open.

To proceed, do nothing; the option simply expires and the contract continues under its other terms.

After the option period

Once the option expires, a buyer can terminate only with a right the contract gives for a specific reason: the financing approval period in the Third Party Financing Addendum, a title or survey objection the seller does not cure under paragraph 6D, a seller's disclosure notice delivered late (7 days to terminate after receiving it under paragraph 7B), a MUD or PID notice that was not given before the contract, HOA documents under the property owners association addendum, or the seller's failure to complete agreed repairs. Walking away without one of those rights puts the earnest money at risk, so treat the last day of the option period as the real decision date.

The 2026 written buyer agreement

Since January 1, 2026, Texas Occupations Code Section 1101.563 requires a license holder to have a written agreement with a prospective buyer before showing any residential property, or before presenting an offer if no property will be shown. A showing-only agreement is allowed; it must be non-exclusive, cannot run more than 14 days, and the agent may not give opinions or advice. Advice during the option period, which is where most of the value in a buyer's agent sits, requires a full representation agreement that states the services, the termination date, whether it is exclusive, the compensation and how it is determined, and the conspicuous disclosure that broker compensation is not set by law and is fully negotiable.

Questions Houston buyers ask about the option period

How long is the option period in Texas?

It is negotiated and written into paragraph 5B of the TREC contract, so there is no fixed length. In Houston 7 to 10 days is typical; buyers competing against other offers often agree to 5, and buyers of older homes or homes that need a foundation engineer or sewer scope ask for 10 to 14. The days are calendar days counted from the day after the Effective Date, and the period ends at 5 p.m. local time on the last day.

How much is the option fee, and do I get it back?

The fee is negotiated; a few hundred dollars is common in Houston. It is delivered with the earnest money to the title company within 3 days after the Effective Date. If you close, the fee is credited to the sales price, so it costs you nothing. If you terminate during the option period, the seller keeps the fee and your earnest money is refunded. If no fee is stated or it is paid late, you have no option period at all.

Can I terminate for any reason during the option period?

Yes. The contract calls it an unrestricted right to terminate, so you do not need to give a reason or prove a defect. You must deliver written notice of termination, normally on TREC's Notice of Buyer's Termination of Contract form, by 5 p.m. local time on the last day of the period. Your earnest money is then refunded and the seller keeps the option fee.

What happens if I miss the option period deadline?

The option expires and the contract continues. You can still terminate later only for a reason the contract allows, such as a financing denial within the financing approval period, an uncured title objection, a late seller's disclosure notice or a missing MUD notice. Terminating without one of those rights risks your earnest money, so if a repair negotiation is still open on the last day, sign a written extension before 5 p.m.

Does the Texas option period include weekends?

Yes. The option period is counted in calendar days and ends at 5 p.m. local time on the last day even if that day is a Saturday, Sunday or holiday. The weekend extension in paragraph 5A applies only to delivering the earnest money and option fee, not to the termination notice. Plan inspections and the repair request so you are not making the decision on a Sunday afternoon.

Can the seller back out during the option period?

No. The termination option belongs to the buyer. The seller is bound by the contract from the Effective Date and can only accept other offers as back-up contracts. The seller's protections are the option fee, which is kept if the buyer terminates, and the right to refuse repair requests, which puts the decision back on the buyer.

Do I need a written agreement with my agent before touring homes in Texas?

Yes, since January 1, 2026. Texas Occupations Code Section 1101.563 requires a written agreement before a license holder shows you residential property or presents an offer for you. A non-exclusive showing-only agreement limited to 14 days is allowed, but an agent working under one may not give advice. For the option period, where you need advice on inspections, repairs and whether to terminate, you need a full representation agreement.

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About this page. Compean Group is a licensed Texas real estate brokerage. Typical option period lengths and fees are drawn from our Houston transactions, not from a published statistic, and every term is negotiable. This is general information, not legal advice; the contract you sign and your attorney control.

Updated October 29, 2026.