Option Period in Texas: How It Works and How Buyers Lose It

By Stacy Burgin

08/20/2020

The option period in Texas is the short window after your offer is accepted when you can walk away from the contract for any reason. You pay the seller a small option fee for that right, and you use the days to inspect the house, get repair bids and decide whether this is still the home you want. It is one of the best protections a Texas buyer has, and it is also where buyers most often lose money by missing a deadline.

We walk buyers through it on every contract in Fulshear, Katy and the rest of Fort Bend. This post replaces a 2020 version that was written for an older contract form. The basics have not changed much, but one detail has: where the option fee goes.

What the option period in Texas actually is

Most Texas resale purchases are written on the One to Four Family Residential Contract (Resale) promulgated by the Texas Real Estate Commission. Paragraph 5 of that form covers earnest money and the termination option. In exchange for the option fee, the buyer gets the unrestricted right to terminate the contract by giving notice within the number of days written into the contract.

Unrestricted means exactly that. You do not need a reason. A bad inspection, a cost you did not expect, a change of heart: any of them works, as long as your notice goes out on time.

On the MLS, a home in this stage often shows as “option pending.” That tells other buyers the house is under contract but the buyer can still walk.

Where the option fee goes now

This is the part the old version of this post got wrong for today’s contracts. Under the current TREC resale form, the buyer delivers both the earnest money and the option fee to the escrow agent, usually the title company, within 3 days after the effective date. The seller can then receive the option fee from the escrow agent without further notice to the buyer.

If the third day falls on a weekend or legal holiday, the deadline moves to the next business day. The contract also says time is of the essence for this paragraph, which means strict compliance with the deadline is required.

You can read the language yourself in the TREC resale contract form. The current version, TREC form 20-19, took effect July 1, 2026. Your agent should be working from the version in effect on your contract date.

How long the option period in Texas usually runs

There is no standard length in the form. The number of days is a blank that buyer and seller negotiate, and so is the fee. In a competitive situation, a buyer may offer a shorter option period or a larger fee to make the offer stronger. On a home that has been sitting, a buyer can usually ask for more time.

What we look at when we set the number with a buyer:

• How quickly a licensed inspector can get out to the house
• Whether you will want specialists after the general inspection, like a roofer, foundation engineer, or HVAC or septic contractor
• Whether the house is on acreage with a well, a septic system or outbuildings that take longer to check
• How fast you can get repair bids if something big turns up

Short is fine if your inspector is booked and you know what you are looking for. Too short, and you end up deciding with half the information.

Counting the days and the 5:00 p.m. rule

The option period in Texas runs from the effective date written on the contract, the date of final acceptance. Do not count it yourself from memory. Ask your agent to write down the exact last day as soon as the contract is effective.

The time matters as much as the date. The TREC form says notices under this paragraph must be given by 5:00 p.m. local time where the property is located. A termination notice sent at 6:15 p.m. on the last day is late. We aim to have every decision made and every notice sent well before that afternoon.

What happens to the money if you walk

• You terminate on time: the option fee is not refunded and goes to the seller. Your earnest money is refunded.
• You close: the option fee is credited to the sales price, and the earnest money is applied toward your down payment and closing costs.
• You miss the 5:00 p.m. deadline: the unrestricted right to terminate is gone, and your earnest money is on the line if you back out for a reason the contract does not cover.

Our post on how the home inspection contingency fits into the option period in Texas goes deeper on the inspection side.

How a buyer can lose the option period

The option period in Texas is easy to lose before it even starts. Under the TREC form, if no dollar amount is filled in for the option fee, or the buyer does not deliver it within the time required, the buyer does not have the unrestricted right to terminate under that paragraph.

In practice, that means three things to get right in the first days:

• Make sure the option fee and the number of days are filled in before you sign
• Know which title company is the escrow agent and how they accept money
• Deliver the option fee and earnest money within 3 days and get a receipt

Wire fraud targets these first payments. Get the title company’s instructions directly and confirm them by phone at a number you looked up yourself.

Using the option period well

The days go fast. A good order of operations:

1. Book the general inspection the day the contract is signed.
2. Read the report the day you get it, and call your agent with questions.
3. Bring in specialists for anything the inspector flags but cannot diagnose.
4. Decide: accept the house as is, ask for repairs or a price change, or terminate.
5. If you negotiate, get any agreement signed in an amendment before the option period ends.

That last step catches people. A seller who says “sure, we will fix it” on the phone has agreed to nothing. If the option period runs out while you wait on a signature, you have lost your leverage and your free exit. Our home inspection checklist covers what the inspector looks at, and our guide to hiring a home inspector covers how to pick one.

Option period in Texas: when it is not the right tool

The option period is not a financing contingency. If your loan falls apart after the option period ends, the option period will not protect you. That is what a financing addendum is for, with its own deadlines.

It is also not a reason to skip the work before you write an offer. Look at the seller’s disclosure, the flood history and the neighborhood first. The option period is for confirming a decision, not starting one. If you are early in the process, our timeline on how long it takes to buy a house in Texas shows where it falls.

Questions to settle before you sign

• How many days do I realistically need for inspections and bids?
• What option fee makes sense for this house and this market?
• Which title company holds the money, and how do I pay them?
• What exact date and time does my option period in Texas end?

If you are getting ready to write an offer in Fulshear, Katy, Richmond or anywhere in Fort Bend, call Terra Point Realty at (713) 766-1697 and we will walk through the option period before you sign.

Written by Stacy Burgin, a real estate agent with Terra Point Realty serving Fulshear, Katy and the greater Houston area, with 300+ transactions and 130+ home sales closed. This post is general information, not legal advice. Please speak with an attorney for legal advice about a specific contract.