What the option period is
Texas residential contracts promulgated by the Texas Real Estate Commission include a termination option: in exchange for a negotiated fee paid to the seller, the buyer has an unrestricted right to terminate the contract within a negotiated number of days. It is not an inspection contingency in the sense used in other states — the buyer does not need a reason, and does not need to prove a defect.
This guide describes the mechanics in general terms. The contract you sign controls, and its exact wording and current form should be reviewed with your agent or an attorney.
The option fee and earnest money
Two separate payments are usually made shortly after a contract is executed:
| Option fee | Earnest money | |
|---|---|---|
| Purpose | Buys the unrestricted right to terminate | Demonstrates good faith performance |
| Paid to | The seller, per the contract's delivery terms | The escrow agent, typically the title company |
| If the buyer terminates in the option period | Generally not refundable | Generally refundable under the contract terms |
| At closing | May be credited to the buyer if the contract says so | Applied to the buyer's funds |
Delivery of both payments is time-sensitive, and failing to deliver the option fee correctly can cost the termination right entirely. Keep proof of delivery.
Negotiating length and cost
Both the fee and the number of days are negotiable, and they trade against each other and against price. A longer period gives more room for inspections, specialist bids, HOA document review, and lender feedback; a shorter period and higher fee can make an offer more attractive to a seller weighing certainty.
- Ask how quickly inspectors are actually booking before choosing a length.
- Allow time for a second opinion or a contractor bid, not just the initial report.
- Consider whether HOA documents or a survey will arrive in time to be reviewed.
- Remember weekends and holidays consume days too.
When the clock starts and ends
The period is counted in days from the contract's effective date, and the deadline falls at a specific time of day stated in the contract. Confirm the effective date in writing with everyone involved — miscounting it is the single most common source of trouble. Put the exact expiration date and time in your calendar with a reminder at least a day earlier.
Sequencing the work inside it
- Day one: deliver the option fee and earnest money, and confirm receipt.
- Day one: schedule the general inspection and any specialist inspections.
- Day one: request HOA documents, the survey, and the title commitment.
- Early: attend the inspection if you can, and read the full report.
- Mid: obtain written bids for anything material before asking for a remedy.
- Mid: send any repair or price amendment with time left to negotiate.
- Before the deadline: decide to proceed, amend, or terminate — and act in writing.
Delivering termination notice
Termination requires notice delivered in the manner and by the deadline the contract specifies. A phone call is not notice. Use the written form, send it by the contractually permitted method, and retain confirmation of delivery. If you are close to a deadline and undecided, ask for a written extension rather than assuming flexibility.
What happens after it expires
Once the option period ends, the unrestricted right to terminate is gone. A buyer may still have rights under other contract provisions — for example those tied to financing approval, appraisal, or title objections — but those are narrower and have their own deadlines. Walking away outside a contractual right can put earnest money at risk.
What sellers should know
- The property is effectively off the market during the option period.
- Provide access promptly; delays compress the buyer's decision, not the deadline.
- Expect a possible repair or price amendment near the end of the period.
- Evaluate offers on the option terms as well as the price — a long option at a small fee is less certain than a shorter one.
- Nothing obligates a seller to accept a requested amendment.
Common mistakes
- Scheduling the inspection for the last available day.
- Assuming the effective date instead of confirming it.
- Delivering the option fee late or to the wrong party.
- Requesting repairs without a written bid to support the number.
- Communicating a termination decision verbally.
- Waiting on HOA documents that were never requested.
For the full purchase sequence, see the San Antonio homebuyer guide.