The option period in Texas is a short window, set in your purchase contract, when you can walk away from a home for any reason. Under the standard resale contract from the Texas Real Estate Commission (TREC), you pay a negotiated option fee for that right. If you end the contract on time, you keep your earnest money and the seller keeps the option fee.
Here’s how it works on a resale home anywhere in the Houston area, from Katy and Cypress to Sugar Land and the Heights. This is general information, not legal advice.
Illustration: Choosin’ Texas Living
Which contract this covers
TREC’s One to Four Family Residential Contract (Resale), form 20-19, took effect July 1, 2026. TREC calls it “the most frequently used contract form.” It’s for resales of one- to four-unit homes, not condos, builder new homes or farm and ranch property. Paragraph numbers below refer to the 20-19 contract (PDF).
Option fee vs. earnest money
Paragraph 5A says that within 3 days after the Effective Date, the buyer delivers both the earnest money and the option fee to the escrow agent named in the contract. They can be paid separately or in one payment. The Effective Date is the date of final acceptance, written in on the signature page.
The two payments do different jobs:
- Option fee. It buys the termination right. Under paragraph 5A(4), the escrow agent can release it to the seller at any time without asking you first. If you close, it’s credited to the sales price.
- Earnest money. It’s delivered to the same escrow agent. If you terminate during the option period, paragraph 5B says it’s refunded to you.
The contract doesn’t set a fee amount or a number of days. Both are blanks you and the seller negotiate. TREC’s FAQ calls the termination option “a negotiable contract term,” and you aren’t required to have one.
The deadlines, and how days count
Paragraph 5B gives the buyer “the unrestricted right to terminate this contract by giving notice of termination to Seller” within the number of days written in the blank after the Effective Date. That window is the Option Period. Notices under this paragraph must be given “by 5:00 p.m. (local time where the Property is located)” on the last day. For a Houston-area home, that’s 5 p.m. Central.
TREC’s FAQ explains how days are counted: day one is the day after the Effective Date, and every day counts as a calendar day. Say your contract is fully signed on a Monday and you negotiated 7 days (an example, not a standard). Day one is Tuesday, so your deadline is 5 p.m. the following Monday. Your 3-day deadline to deliver the fee and earnest money would be Thursday.
If the last day to deliver the earnest money or option fee falls on a Saturday, Sunday or Legal Holiday, paragraph 5A(2) extends it to the end of the next day that isn’t one. “Legal Holiday” is a defined term in 20-19 that points to a list in the Texas Government Code. It includes Veterans Day, Thanksgiving and the Friday after it, and Christmas Day, but not Dec. 24 or Dec. 26. Paragraph 5B, the option period itself, doesn’t include that extension language. Confirm your exact end date with your agent the day you go under contract.
Two lines in paragraph 5 make these dates strict:
- Paragraph 5D: if no option fee amount is written in, or you don’t deliver it on time, you “shall not have the unrestricted right to terminate.”
- Paragraph 5E: “Time is of the essence for this paragraph and strict compliance with the time for performance is required.”
How to terminate
Under paragraph 21, notices must be in writing. They take effect when mailed, hand-delivered, sent by overnight courier, or sent electronically to the other party or their agent. TREC publishes a Notice of Buyer’s Termination of Contract, form 38-8. Its first box is for terminating under “the unrestricted right of Buyer to terminate the contract under Paragraph 5.” Make sure it goes out well before 5 p.m.
Using the option period on a Houston-area home
TREC’s FAQ says 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.” Paragraph 7A lets you hire inspectors licensed by TREC, and you can look up a license on TREC’s license search.
The Consumer Financial Protection Bureau suggests you schedule a home inspection as soon as possible and attend it if you can. With only a few days, book the inspector right after you sign.
TREC’s standard Property Inspection Report (REI 7-6) groups findings into sections. A few to read closely on a typical Houston-area brick home:
- Foundations, and grading and drainage. Look at how the inspector describes the slab and how water moves away from the house.
- Roof covering, and roof structures and attics. Read notes on the shingles, signs of past leaks, and attic ventilation.
- Heating, ventilation and air conditioning. If the air handler sits in the attic, check what the report says about the drain pan and condensate line.
- Electrical service entrance and panels, plus plumbing and the water heater.
The form calls an inspection “a visual survey,” and inspectors aren’t required to identify every potential hazard. If a foundation, roof or HVAC note needs a closer look, you may want a specialist out before your deadline.
Many buyers also use the window to get insurance quotes, review HOA documents and read the Seller’s Disclosure Notice. Our guide to closing costs in Texas can help you check the numbers while you decide.
Asking for repairs, or more time
If the inspection turns up issues, you can negotiate. Repairs, credits or a price change get written into TREC’s Amendment to Contract, form 39-11. The seller doesn’t have to agree. If you can’t reach a deal, you can still terminate before the deadline.
Need more time? Item 7 of the amendment covers an additional option fee for an extension, to “5:00 p.m.” on a new date, and a box says whether that extra fee will or won’t be credited to the sales price. Until both sides sign it, your original deadline stands.
If you’re the seller
The option fee is what the buyer pays for the unrestricted right to terminate during the option period. Under paragraph 5B, you keep it if the buyer terminates on time, and the earnest money goes back to the buyer. If the fee isn’t written in or delivered on time, the buyer doesn’t get that right (paragraph 5D). For how the option period fits into a sale, see our listing timeline for sellers.
FAQ
Is the option fee refundable in Texas?
Not if you terminate during the option period. Paragraph 5B of TREC 20-19 says the option fee “will not be refunded” and the earnest money “will be refunded to Buyer.” If you close, paragraph 5A(4) credits the option fee to the sales price (TREC 20-19).
How long is the option period in Texas?
There’s no set length. Paragraph 5B leaves a blank for the number of days, and TREC calls the option “a negotiable contract term” (TREC FAQ).
Can the option period be extended?
Yes, if both sides sign an amendment. TREC’s Amendment to Contract (39-11), item 7, covers an additional option fee for an extension to 5:00 p.m. on a new date (TREC 39-11).
What happens if the option fee is late?
Under paragraph 5D, if the fee isn’t delivered within the 3 days in paragraph 5A, or no amount was written in, the buyer doesn’t get the unrestricted right to terminate (TREC 20-19).
Does Texas have a 3-day cooling-off period for home purchases?
No. TREC’s FAQ says there is “no automatic three-day or 72 hour cooling off period.” Your rights to terminate are the ones written into your contract (TREC FAQ).
Before you sign
This article is general information about TREC’s standard forms, not legal advice. TREC’s contract itself says, “TREC rules prohibit real estate brokers and sales agents from giving legal advice.” Read your own contract, ask your agent how your dates fall, and talk with a Texas real estate attorney about your specific situation.
Buying in the Houston area? Our buyer page explains how we work, and our Houston-area neighborhood guides cover places like Katy. Call (281) 724-3966 or contact us to talk through your option period.
