What is the option period when buying a home in Texas?

How it works

In the TREC One to Four Family Residential Contract (Resale), the seller grants the buyer "the unrestricted right to terminate this contract by giving notice of termination to Seller within" a number of days after the Effective Date. That number of days is a blank in the form: it is negotiated, not fixed by the contract.

The form checked for this guide is TREC 20-19, effective 07/01/2026. TREC updates its forms, so read the version you are actually signing.

What happens to the money

• If the buyer gives notice of termination within the option period, the option fee is not refunded and goes to the seller.
• In that case, any earnest money is refunded to the buyer.
• Amounts the escrow agent receives are applied first to the option fee, then to the earnest money, then to any additional earnest money.

The deadlines that matter

• Earnest money and the option fee are due within 3 days after the Effective Date, delivered to the escrow agent named in the contract.
• If the last day to deliver them falls on a Saturday, Sunday or legal holiday, delivery is extended to the end of the next day that is not one.
• Notice of termination under the option must be given by 5:00 p.m., local time where the property is located, on the date specified.
• If no option fee amount is stated, or the buyer does not deliver it on time, the buyer does not have the unrestricted right to terminate under this paragraph.
• The contract says time is of the essence and strict compliance is required.

What to settle before you sign

Because the days and the fee are blanks, both are negotiated. Ask what the amounts are, who the escrow agent is, and exactly which date and time the option period ends.

Frequently asked questions

Is the option fee refundable?

Not if the buyer terminates within the option period: the option fee is not refunded and is released to the seller. Any earnest money is refunded to the buyer.

Do I need a reason to terminate during the option period?

No. The contract gives the buyer the "unrestricted right" to terminate within the option period.

What if I do not pay the option fee on time?

Then the buyer does not have the unrestricted right to terminate under the option paragraph.

How long is the option period?

The contract leaves the number of days blank; it is whatever the buyer and seller agree to.

Sources

1. TREC: One to Four Family Residential Contract (Resale), form 20-19Form number and effective date; paragraph 5 (earnest money and termination option): delivery within 3 days, option period, option fee treatment, 5:00 p.m. notice deadline, failure to deliver, time of the essence.
2. TREC form 20-19 (PDF)The contract text quoted in this guide.

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