Texas does an unusual thing in its standard home contract. For a fee, the seller sells the buyer the right to cancel for any reason during a short window. Everything about that window is negotiable, and everything about it is a deadline. This guide walks through the clause as written in the TREC form, with the exact mechanics, and then through how we use the days. Nothing here is legal advice; the clause itself is quoted from the form so you can read it with your own agent or attorney.
Where the clause lives
Most Texas resales use the One to Four Family Residential Contract (Resale), TREC form 20-19, the version effective July 1, 2026, which the Texas Real Estate Commission calls its most frequently used contract form (TREC, form 20-19). Paragraph 5 is titled "Earnest Money and Termination Option." The option period is what Paragraph 5B calls the Termination Option. TREC's own consumer answer is short: the termination option is a negotiable contract term, but if you pay the seller an agreed option fee, you have the unrestricted right to terminate the contract for any reason if you give written notice to the seller during the option period (TREC, buyer FAQ).
What Paragraph 5 says
The form sets out the mechanics in order (TREC form 20-19, Paragraph 5):
- Delivery. Within 3 days after the effective date, the buyer must deliver both the earnest money and the option fee to the escrow agent, usually the title company, payable to the escrow agent. They may be paid separately or in one payment. If the third day falls on a Saturday, Sunday or legal holiday, the deadline moves to the next business day.
- Order of application. Whatever the escrow agent receives is applied first to the option fee, then to the earnest money.
- Who keeps the fee. The buyer authorizes the escrow agent to release the option fee to the seller at any time. The option fee is credited to the sales price at closing.
- The option itself. For the fee, the seller grants the buyer the unrestricted right to terminate by giving notice within the number of days written in the blank, counted from the effective date. Notice must be given by 5:00 p.m. local time on the last day.
- If you terminate. The option fee is not refunded and goes to the seller; the earnest money is refunded to the buyer.
- If you miss the delivery. If no option fee is stated, or the buyer fails to deliver it within the 3 days, the buyer does not have the unrestricted right to terminate. If the earnest money is late, the seller may terminate the contract before it arrives.
- Time. "Time is of the essence for this paragraph and strict compliance with the time for performance is required."
The Texas Real Estate Research Center at Texas A&M summarizes the trade in one line: the buyer pays the seller an option fee for the unrestricted right to terminate the contract within the option period, and the option fee is never refundable (TRERC, Option Period Basics).
How long, and how much
The form leaves both blanks empty on purpose. TRERC's guidance is that the parties can agree on any amount, but it should not be a token amount (TRERC). In practice the number of days and the fee move with the market and the property. A competitive spring listing in Rockwall may see short periods and larger fees; a waterfront home with a seawall, a dock and a sublease to verify justifies more days; a new build on a builder's own contract may have no option period at all. We do not publish a "typical" fee because we cannot source one, and because the right number depends on what you need the days for.
What the days are for
Paragraph 7A of the same form gives the buyer the right to have the property inspected by inspectors licensed by TREC, and requires the seller to keep utilities on. Paragraph 7D says that agreeing to take the property "as is" does not stop the buyer from inspecting, negotiating repairs in an amendment, or terminating during the option period (TREC form 20-19, Paragraph 7). So the option period is the inspection period in practice, even though the contract never uses that phrase. TREC puts it plainly: a buyer can use the option period to perform an inspection of the property and negotiate an amendment to the contract for any necessary repairs (TREC FAQ).
A workable sequence for a ten-day option period:
- Day 1: deliver the option fee and earnest money to the title company and get a receipt. Do not let this slip to day 3.
- Days 1 to 2: book the general inspection, and any specialists it will trigger: foundation, roof, pool, septic, termite, sewer scope on older homes.
- Days 3 to 5: inspections happen. Attend the general one.
- Days 5 to 7: get repair quotes for the findings that matter. Decide what you will ask for and what you will absorb.
- Days 7 to 9: negotiate an amendment. The seller may fix, credit, reduce the price or refuse.
- Day 10 by 5:00 p.m.: either you have a signed amendment, you proceed as is, or your agent delivers written notice of termination.
If a seller stalls on the amendment, the deadline does not move. Ask for an extension of the option period in writing, and expect to pay an additional fee for it, before 5:00 p.m. on the last day. A verbal "we're close" is not an extension.
Common mistakes
- Delivering the fee late, which forfeits the right to terminate even if the money arrives on day 4.
- Counting days from the day the contract was signed rather than the effective date written on the last page.
- Assuming the seller's disclosure notice replaces an inspection. It does not, and Paragraph 7B has its own separate termination right if the notice arrives late.
- Terminating by text message. The notice must be written and delivered the way the contract specifies.
- Waiting on the lender's appraisal, which has its own addendum and its own timeline, and is not what the option period is for.
How this plays for sellers
If you are the seller, the option period is the window in which your deal is least certain. Pricing accurately keeps buyers from using inspections to renegotiate a price they already thought was high; a pre-listing inspection surfaces the findings before a buyer's inspector does. Our seller's guide covers both, and a valuation from the team is where the pricing conversation starts.
The buyer's guide walks through the rest of the contract, and the glossary defines earnest money, effective date and the other terms the form uses. When you are ready to write an offer in Rockwall County, talk to the team about how many days you will need.