Option Period

The option period provides buyers with a legal safety net, allowing them to schedule property inspections, negotiate repair costs, or withdraw from the purchase transaction altogether without risking their earnest money.

Texas-Specific Nuance & Citation

Under TREC Promulgated One to Four Family Residential Contract Section 5, the option fee must be delivered to the escrow agent (or seller) within 3 days after the contract’s effective date. The option period strictly terminates at 5:00 PM local time on the last day of the option period.

The Trap

The “5:00 PM on the last day” rule is a major trap on the Texas state exam. A buyer who delivers a notice of termination at 5:01 PM on the final day of the option period has defaulted and loses their unrestricted right to terminate.

Worked Example

A buyer secures a 7-day option period on a Houston property. On the 7th day, the inspector finds severe foundation damage. The buyer decides to terminate and their agent delivers the signed TREC “Notice of Buyer’s Termination of Contract” at 4:30 PM. The termination is valid, and the buyer is entitled to a full refund of their earnest money.