The option period in Texas is a negotiated stretch of days — usually 5 to 10 — at the start of a contract during which the buyer can terminate for any reason and walk away with their earnest money. The buyer pays a separate, non-refundable option fee for that right. It ends at 5:00 PM local time on the last day, weekends included, and it is the single most important deadline in the first week of a Texas transaction.
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▼We coordinate hundreds of Texas closings a year, and the option period is the first date we calculate on every new file. Everything about the early transaction — inspections, repair amendments, termination rights — hangs on that one window.
Where the Option Period Lives in the TREC Contract
The termination option is Paragraph 5 of the TREC 1-4 Family Residential Contract (Resale), sharing space with earnest money. That’s not an accident — the two are delivered together and work together.
The parties negotiate two blanks: the option fee amount and the number of days. There’s no legal minimum or maximum for either. On the files we manage, 7 days and $200 are the most common combination, with 5-10 days and $100-$500 covering the vast majority of transactions.
The option period starts the day after the effective date — the date the last party signs or initials the final contract. Day 1 is the first full day after execution. Miscounting the start date is one of the most common option period mistakes we see, and it can put a termination notice a day late.
Option Fee vs. Earnest Money: Two Payments, Two Jobs
These get confused constantly, including by experienced agents. Here’s the current breakdown under the TREC contract:
| Option Fee | Earnest Money | |
|---|---|---|
| Typical amount | $100-$500 | 1% of purchase price |
| Delivered to | Escrow agent (title company), with the earnest money | Escrow agent (title company) |
| Deadline | Within 3 days after the effective date | Within 3 days after the effective date |
| Refundable? | No — seller keeps it either way | Yes, if buyer terminates during the option period |
| If the deal closes | Credited to the sales price | Credited to the buyer at closing |
One detail worth calling out: since the 2021 contract revisions, the option fee is delivered to the escrow agent along with the earnest money — one payment stop, one deadline. Older articles and older habits still say “pay the option fee directly to the seller,” and that’s no longer how the form works. The title company receipts both and the option fee is credited to the seller through closing.
If the buyer fails to deliver the option fee within the 3-day window, the consequence is severe: no unrestricted right to terminate. The buyer is still under contract, but the escape hatch never opened. This is why we confirm receipt of both payments with the title company on day 1 or 2 of every file — not day 3.
The 5:00 PM Rule
The option period ends at 5:00 PM local time where the property is located on the last day of the period. Not midnight. Not close of business. 5:00 PM.
Weekends and holidays count. If day 7 of a 7-day option period lands on a Sunday, the option period ends Sunday at 5:00 PM. The extension-to-next-business-day rule that applies to delivering the option fee and earnest money does not apply to the option period’s end.
What Happens During the Option Period
This window exists so the buyer can do their homework with a guaranteed exit. On a typical file:
- Days 1-3 — inspections get scheduled and completed. General inspection first, then any specialists (foundation, HVAC, pool) the general inspector flags.
- Days 3-5 — the buyer’s agent reviews findings with the buyer and, if the buyer wants repairs or concessions, negotiates an amendment with the listing agent.
- Final days — either an amendment gets signed, the buyer proceeds as-is, or a termination notice is delivered.
Repair negotiations happen through the agents via a TREC amendment. From the coordination side, we track whether an amendment is being negotiated as the deadline approaches — because an unsigned amendment at 4:45 PM on the last day forces a decision: terminate, extend, or proceed without it.
Extensions are common and simple. The parties can amend the contract to extend the option period, usually for an additional fee. What matters is that the amendment is fully executed before the current option period expires. An extension signed after expiration is extending a right that no longer exists.
After the Option Period Expires
At 5:01 PM on the last day, the buyer’s position changes completely. The earnest money goes from freely refundable to at-risk. The buyer can still terminate under specific contractual rights — the financing contingency, title objections, seller default — but the “any reason at all” window is closed.
We wrote a full breakdown of those scenarios in Is Earnest Money Refundable?, and the mechanics of the deposit itself in Earnest Money in Texas.
For sellers, option period expiration is the milestone that means the deal is likely real. Showings stop mattering, backup offers get less attention, and everyone shifts focus to the closing process.
Who Tracks All of This?
On a busy agent’s desk, the option period is one deadline among dozens — and it’s the one with a hard 5:00 PM cutoff and real money attached. This is exactly the kind of date a transaction coordinator exists to track. We calculate it on day one, confirm the option fee and earnest money were receipted, watch the amendment traffic as expiration approaches, and make sure nothing about that deadline sneaks up on anyone.
We don’t advise buyers whether to terminate, and we don’t negotiate repairs — that’s the agent’s job and a licensed activity. We make sure the dates are right, the deliveries happened, and the paperwork is complete. If that would take a weight off your files, our contract-to-close service covers it, and our free Contract to Close Checklist shows every deadline we track.
Related Articles
- Earnest Money in Texas — How the deposit works under the TREC contract
- Is Earnest Money Refundable? — When buyers get their deposit back and when they don’t
- TREC 1-4 Family: Effective Date — The date every option period calculation starts from
- Texas Real Estate Closing Process — What happens from contract to keys
- What Happens When You Miss a Contract Deadline — The consequences, deadline by deadline
