Whats an Option Period in Texas
What is an Option Period in TX Real Estate
If you’ve bought real estate in Texas before, you're probably familiar with an “option period” clause. The option period allows buyers a negotiated amount of days, usually 7 to 10 days, during which a buyer can fully evaluate the condition of the property. If the buyer finds unacceptable conditions during the option period, the buyer can possibly renegotiate the sales price, request repairs by seller or if no agreement can be made, the buyer has the right to terminate the contract. The buyer pays for the right to have an option period and this is a nonrefundable fee paid to the seller. Option fees are negotiable and on single family homes usualy range between $100 to $300.
During the option period the buyer can terminate the contract for any reason without risking the loss of their earnest money. If a buyer should choose to terminate the contract during the option period the seller gets to keep the option fee money and the buyer is refunded their earnest money. The option fee money is usually a credit back to the buyer at closing.
The buyer must pay the option fee to the seller within two days of the effective date of the contract. If the buyer fails to pay the seller the option fee within this two day period the buyer will lose the termination option and the buyer shall not have the unrestricted right to terminate the contract.
The option period is based on calendar days, not business days and it begins on the next full business day after the date on the executed contract. An executed contract is one where all parties have signed, initialed & money has been exchanged. As of January 2016 the option period time ends at 5 p.m. on the final day of the period.
***This post is not a substitute for the advice of an attorney.***