Texas Option Period Explained for Hays County Buyers

If you are buying a home in Hays County, the option period is the most important few days of your contract. It is a window in which you can walk away for any reason, and the earnest money comes back to you, but the option fee does not. This post walks through what the standard Texas contract says so you know what you are agreeing to before you sign.

Key takeaways

• The option period is a number of days, written into your contract, during which you have the "unrestricted right to terminate."
• You pay a separate option fee for that right. If you terminate in time, the fee is not refunded, but any earnest money is.
• The option fee and earnest money are due within 3 days after the Effective Date. Miss the option fee deadline and you lose the right to terminate under that paragraph.
• Notice must be given by 5:00 p.m. local time on the last day, and the contract says time is of the essence.
• The number of days and the dollar amount are blanks in the form. They are negotiated, and I will not tell you what is typical, because it changes deal by deal.

Where this comes from

Almost every resale in our area, whether it is in Kyle, Buda, San Marcos or Dripping Springs, is written on the One to Four Family Residential Contract (Resale) promulgated by the Texas Real Estate Commission. Everything below comes from the current version, TREC form 20-19, which is marked 05-04-2026 and replaces form 20-18. I am quoting the form, not giving legal advice. If you have a legal question about your own contract, a Texas real estate attorney is the right person to ask.

What the option period actually is

Paragraph 5 of the form is titled "Earnest Money and Termination Option." In Paragraph 5B, the seller grants the buyer "the unrestricted right to terminate this contract by giving notice of termination to Seller" within a number of days after the Effective Date. That number of days is a blank that the buyer and seller fill in.

The key word is unrestricted. You do not need to find a defect, order an inspection or give a reason. Inspections are what most buyers use the time for, and the contract expressly keeps your inspection rights and your ability to ask for repairs separate from the option period (Paragraph 7D says accepting a property "As Is" does not stop you from inspecting, negotiating repairs in an amendment, or terminating during the option period, if any).

The money: option fee versus earnest money

These are two different things, and buyers mix them up all the time.

• Option fee. This is what you pay the seller for the termination right. Under Paragraph 5A(4), the escrow agent may release it to the seller without further notice to you. If you terminate within the option period, Paragraph 5B says the option fee "will not be refunded." If you go on to close, Paragraph 5A(4) says the option fee "will be credited to the Sales Price at closing."
• Earnest money. This is your good-faith deposit held by the escrow agent. If you give notice of termination within the option period, Paragraph 5B says any earnest money "will be refunded to Buyer."

Both are due within 3 days after the Effective Date under Paragraph 5A. If the last day lands on a Saturday, Sunday or legal holiday, Paragraph 5A(2) pushes it to the next day that is not one.

Deadlines that catch people

The option fee has to arrive on time

Paragraph 5D is blunt. If no dollar amount is stated for the option fee, or if you fail to deliver it on time, you "shall not have the unrestricted right to terminate this contract under this paragraph 5." That is the right you were counting on. If you are traveling or your wire is delayed, tell me early so we can plan the delivery.

The termination notice has a clock

Paragraph 5B requires notice "by 5:00 p.m. (local time where the Property is located) by the date specified." Paragraph 5E adds that "time is of the essence" and strict compliance is required. If your inspection report arrives late on the last day, you do not have the evening to think about it.

Earnest money is late too

Paragraph 5C says that if you fail to deliver the earnest money on time, the seller may terminate or pursue remedies by giving you notice before you deliver it. Deliver both amounts together and confirm with the title company that they arrived.

How buyers in Hays County use the option period

Every property is different, and I am not going to tell you the right length of time for yours. What I can tell you is how buyers commonly put the days to work:

1. Schedule the inspection on day one. Inspectors and any specialists you need, such as foundation, roof, HVAC, plumbing or septic on acreage, have their own schedules. The more days you have left after the report, the more room you have to decide.
2. Read the report with me the same day. We sort items into safety issues, big-ticket items and routine maintenance, and decide what to ask for.
3. Check the seller's disclosure. Paragraph 7B has check boxes for whether you have received the Seller's Disclosure Notice. If it has not been delivered, the form gives you separate termination rights, so we confirm which box applies in your contract.
4. Negotiate repairs in writing. The form refers to negotiating repairs or treatments "in a subsequent amendment," so we put anything agreed in writing.
5. Know your lender's timeline. Your loan has its own deadlines, and the appraisal is not the same thing as an inspection. Dustin is the licensed mortgage loan originator on our team, and he can walk you through lender timing separately from what I do on the real estate side.

If you are a seller

Sellers should expect a buyer to use the option period. I cannot promise any outcome, but knowing the process helps you plan. During the option period the buyer can terminate and the deal may come back on the market. Ask your agent how the option period interacts with your own plans, especially if you are buying and selling at the same time.

What this means locally

Hays County has a mix of new construction, resale in established neighborhoods and acreage with wells and septic. The option period is the same form language in all of them, but what you do with the time differs. A newer home in Kyle may call for a different set of inspections than a Hill Country property on acreage. This post covers the resale form only, so if you are buying new construction, ask me which contract applies before you assume this paragraph does.

If you are earlier in the process, our home buyer guide and first-time home buyers page cover the steps before an offer, and the buy page explains how we work with buyers.

Call or text me before you write an offer

If you are thinking about making an offer, I would rather talk through the option period, the fee, the deadlines and your inspection plan before the contract is signed than after. Call or text me at 512-820-3084, or reach us through our contact page.

Sources

• Texas Real Estate Commission, One to Four Family Residential Contract (Resale), TREC No. 20-19