In Texas real estate transactions, the “option period” is sometimes called an inspection period. The most important thing to know is that buyer has an unrestricted right to cancel the sales contract for any reason during this specific time period. The buyer will pay an “option fee” to the seller for an agreed amount of time. During this “option period” the seller cannot enter into another contract. During this time period, the buyer will typically hire an inspector to inspect the property. Before the option period expires, the buyer may request that the seller amend the original contract to include any repair items that are discovered during this time period. The seller may or may not agree to the new terms of the contract. If the buyer and seller agree to amend the contract, the the option fee is credited back to the buyer at closing and the transaction moves forward. If the buyer and cannot come to an agreement, the buyer may cancel the contract and get his earnest money refunded. However, the option fee will stay with the seller.
The buyer must pay a fee for this time period to be valid. The buyer has 3 days from the executed date of the contract to pay the seller for this fee. Sellers would like this period to be a short as possible and the buyers would like this time period to be as long as possible. Generally, the option period is between 5 to 10 days.
1. Buyer must pay a fee to the seller within 3 days after the contract is executed.
2. Buyer has an unrestricted right to cancel the contract during this time frame.
3. Seller cannot cancel contract during the option period.