Texas resale contracts give the buyer a feature that surprises people moving here from other states. For a fee paid to the seller, the buyer buys a window of time to walk away for any reason at all. Inspection results, an insurance quote, a change of heart, or a better house down the street all qualify. The buyer does not have to justify the decision.
That right is called the option, the window is the option period, and the price is the option fee. Both the length of the period and the size of the fee are blanks in the contract that the parties negotiate. This article leaves both numbers to the contract, because neither has a standard value.
The Texas Real Estate Research Center at Texas A&M has a clear explanation of how the option works in the promulgated one-to-four family contract. Much of what follows draws on it. Source: Texas Real Estate Research Center, Option Period Basics.
The option fee is the consideration that creates the buyer's unrestricted right to terminate. Under contract law, a right to cancel for any reason needs to be paid for, and the fee is that payment.
The research center explains the consequences. If the buyer never pays the fee, or pays it late and the seller declines to accept it, the buyer has no unrestricted right to terminate. The research center notes that if a seller accepts a late fee, the period still ends on the date the contract originally set. Under the current form, a buyer who fails to deliver the fee on time does not have the unrestricted right to terminate, so any acceptance of a late fee belongs in a signed amendment. Paying late does not stretch the clock.
The fee goes to the seller. Under the current form it is delivered to the escrow agent on the same timeline as the earnest money. If the sale closes, the contract credits the option fee toward the sales price. If the buyer terminates, the seller keeps it. That is the bargain: the seller is paid for holding the house while the buyer investigates.
The research center describes three counting rules:
The center's example: with an effective date of November 1 and a ten-day option period, the option ends at 5 p.m. on November 11.
For a Fort Worth house, local time is Central time. A buyer in another time zone should count by the property's clock. Two common mistakes cost buyers the right: counting only business days, and counting the effective date as day one. Both make the buyer think there is one more day than there really is.
Termination under the option requires written notice to the seller before the deadline. TREC publishes a notice form for this purpose, and the agents typically handle delivery. No reason is needed, and including one does not change the outcome.
When the buyer terminates properly and on time, the contract returns the earnest money to the buyer. The option fee stays with the seller. The release of the earnest money still runs through the escrow agent's process, so the buyer should keep a copy of the delivered notice and the time it was sent.
After 5 p.m. on the last day, the unrestricted right is gone. A buyer who wants out the next morning has to rely on another contract right, such as a financing or appraisal addendum, under that addendum's own terms. Without one, leaving is a default, and the contract's default remedies apply to the earnest money.
The option belongs to the buyer. The seller has no matching right to walk away during the option period.
The option period is the buyer's time to learn everything that could change the decision. In practice that means:
The lender's appraisal often comes later, and a lender's repair conditions usually arrive after the option has ended. The option is the buyer's own deadline for the buyer's own questions.
A buyer who finds a problem can ask the seller for a repair, a credit, or a lower price. Those requests are offers to amend the contract. The seller can accept, counter, or refuse.
The buyer's leverage is the right to leave. A seller who refuses may still prefer that outcome to losing the buyer, or may decide another buyer is waiting. Either way, the negotiation has to finish before 5 p.m. on the last option day if the buyer wants to keep the ability to terminate. An agreement reached after the deadline still works as an amendment, but the buyer has given up the leverage by then.
Fictional example: take a buyer who learns on day four that the foundation needs work. They can ask for a repair or a price change. The seller can decline. The buyer can terminate before 5 p.m. on the last option day and recover the earnest money, with the option fee staying with the seller. If the buyer waits until the next morning, the unrestricted right has expired, and any exit must come from a different contract right or be treated as a default.
Sometimes the parties need more time, for example when a specialist inspection cannot be scheduled before the deadline. Extending the option is legally a new option, and a new option needs new consideration.
The research center notes that Texas case law expects the additional consideration to be real value, more than a token amount, and that the amendment fee is paid to the seller instead of being held as earnest money. The extension should be signed as an amendment before the original period ends. An informal "the seller said it was fine" offers no protection if the relationship sours.
The option period and the loan run on separate tracks. The lender is building the file, ordering the appraisal, and clearing conditions on its own schedule. The option ends on the contract's schedule. Neither waits for the other.
That is why the option period is a good time to settle the loan questions a buyer can answer early:
If the contract includes a third party financing addendum, that addendum has its own timeline and its own conditions for termination tied to loan approval. It is a separate right from the option, with its own deadline and its own rules for the earnest money.
The option fee and the earnest money serve different purposes. The fee is the price of the right to walk. The earnest money is the deposit that comes back when the buyer walks correctly.
The lender's repair list arrives later than the option deadline in most files, and it covers only what the appraiser and the program require. The buyer's own inspection, during the option, is where condition decisions belong.
The signed contract controls. The research center's article is dated September 2, 2022, and describes the promulgated form as it stood then. If TREC has revised the paragraph since, use the contract in the file.
A few things make the option period easier:
We checked the current TREC One to Four Family Residential Contract (Resale), form 20-19 (TREC 20-19). Paragraph 5 now reads, in summary:
The notice of termination is TREC form 38-8. The financing contingency is a separate addendum, TREC form 40-11, with its own deadline.
During the option period, the loan steps that matter most are the ones that can change your decision: a current Loan Estimate, an insurance quote on the address and any program property concerns. See cash to close for the full closing figure, and the title company's role for who holds the option fee.
If you are about to write an offer in Fort Worth and want your loan questions answered before the option clock starts, I can line them up with you now. Book a call, or start an application.
Links checked Oct 21, 2026.
About the author: McKade Lively, NMLS 2704474, American Pacific Mortgage Corporation dba True North Home Loans, NMLS 1850.
Equal Housing Opportunity.
Last reviewed: Oct 2026