Key points
- The option period in the TREC residential contract gives the buyer an unrestricted right to terminate, but only if the option fee is timely delivered and termination notice is given before the deadline.
- Earnest money generally can’t be released by the title company without both parties’ signed release or a court order.
- Contract deadlines are strict. Texas courts generally enforce them as written, and the TREC form makes time of the essence for the option period.
- Owner-financed residential deals and contracts for deed carry special statutory requirements under Property Code ch. 5.
What we do for buyers and sellers
- Draft and review contracts, addenda and special provisions;
- Negotiate commercial purchase and sale agreements and letters of intent;
- Advise on option periods, financing contingencies, title objections and survey issues;
- Structure seller-financed, wraparound and “subject-to” transactions with required disclosures;
- Resolve earnest money disputes; and
- Litigate defaults, including specific performance, damages, fraud and nondisclosure claims.
TREC contract provisions that cause the most disputes
| Provision | Common problem |
|---|---|
| Earnest money and option fee | Late delivery that voids the buyer’s termination option. |
| Third Party Financing Addendum | Missed buyer-approval deadlines and disputes over whether financing was “obtained.” |
| Title commitment and survey objections | Objections not made in time, or a seller’s failure to cure. |
| Property condition and repairs | Disagreement over agreed repairs and “as is” language. |
| Seller’s disclosure notice | Late or inaccurate disclosure under Property Code § 5.008. |
| Default | Choosing between specific performance, damages and earnest money. |
| Escrow and earnest money release | One party refuses to sign a release. |
Earnest money disputes
When a deal falls apart, both parties often claim the earnest money. Under the TREC form, the escrow agent generally won’t release it without a release signed by both parties or a court order. The form also provides that a party who wrongfully fails or refuses to sign a release within 7 days after receiving a request may be liable to the other party for damages, the earnest money, reasonable attorney’s fees and costs. A clear, well-supported demand resolves most of these disputes quickly. When it doesn’t, the title company may interplead the funds into court.
Deal falling apart, or a deadline about to pass?
Send us the contract and addenda. We’ll tell you where you stand and what notice to send today. Book a discovery call or call (346) 363-0334.
Commercial purchase agreements
Commercial contracts are negotiated from scratch or from Texas REALTORS® commercial forms, and the important protections must be bargained for. We focus on due diligence scope and termination rights, earnest money hard dates, representations and warranties and how long they survive closing, estoppel and lease conditions, assignment rights for 1031 or entity transfers, and remedies on default. See commercial real estate.
Owner financing and contracts for deed
Seller-financed sales can make deals possible, but Texas regulates them closely. Executory contracts for residential property, such as contracts for deed and lease-purchase agreements longer than 180 days, are subject to detailed disclosure, recording and annual statement requirements under Property Code ch. 5, subchapter D, and violations can carry serious consequences. Most residential owner financing is better structured as a deed with a promissory note and deed of trust, with consideration of state and federal lending rules. Conveying property subject to an existing lien also requires specific notices under Property Code § 5.016.