What Does An Option Period Mean?
What Does An Option Period Mean?
The option period is the specified number of days when the buyer has the right to have the property inspected. It’s the buyer’s unrestricted right to terminate the contract for any reason. The option period can be bought for a fee known as the option fee.
How long is the Option Period?
It’s negotiated between the buyer and seller. Typically, the option period is 7-10 calendar days.
How do you count the Option Period?
Paragraph 23, the Termination Option Paragraph uses the word within when describing the period, Day One of the option period is the day after the contract’s effective date. For example, if your client’s effective date is January 22 with a 10-day option period, the option period will end on February 1.
What Time Does The Option Period End?
The Texas Real Estate Commission (‘TREC”) clarified that a buyer must give notice to the seller by 5:00 p.m. (local time from where the property’s location) by the date specified Paragraph 23.
How much is Option Fee?
It’s negotiated between the buyer and seller. Typically, it depends on how many days the buyer will need for property inspections.
Is Option Fee refundable?
Option Fee(s) is paid directly to the seller and is only refundable at closing if agreed. In the 1-4 Contract, “The Option Fee ___ Will ___ will not be credited to the sales price at closing.”
Can The Buyer Lose The Right To Back Out During The Option Period?
All option fee(s) MUST be delivered to the seller within three (3) days after the contract’s effective date, or the buyer will lose the right to back out of the contract during the option period. For example, if your client’s effective date is March 1, the option fee must be delivered by 11:59 p.m. on March 4.
Can Option Money Be Delivered To Seller by Via Electronic Payment (i.e., Venmo, Paypal, Etc.)
Yes, only if the option payment is made unconditional and if you can provide proof. If you are out of town, this may be a good option.
What If My Option Fee Was Left, Blank?
If the dollar amount is left blank, this paragraph will not be considered part of the contract. The buyer loses the ability to have the unrestricted right to cancel.
Can Option Fee Money Be Delivered To The Title Company?
Option Fee Money delivered to the title company is a complicated question. Suppose the question is “can” I deliver the option money to the title company. In that case, the answer is “yes” — but that answer is not one without some liability for the buyer. The contract language does not provide for option money to be delivered to the title company. It requires delivery to the seller. Suppose a title company accepts option money from the buyer or agent. Then the title company sends it to the seller. This action may not complete the delivery of the option fee under the contract.
Texas National Title put this scenario to the legal test, delivery of option to the title company is not “strict compliance” with the contract. This scenario could be creating liability for themselves. Both TREC and the Texas Association of Realtors have highlighted that buyer’s agents are expected to deliver the option money to the seller or seller’s agent.
If you are considering giving option money to the title company. In this case, we suggest talking this over with your agent or broker before taking that action.
What Could Happen If I Do Not Deliver The Option Fee Correctly?
It is our opinion that if the option fee is not properly delivered as the terms of the contract state. Could wind up causing the buyer not having an option period under the contract.
Disclaimer
**Terra Point Realty, LLC is not giving legal advice. The views are strictly an opinion. Please speak with an attorney for any legal advice.**