What is an Option Period?

An "Option Period" is a provisional period found on page 7 of the Texas Earnest Money Contract that allows the buyer to have a certain number of days to "option out" of the contract and only lose the "Option Fee" but not the earnest money. The Option Fee is typically $10 per day of the option period, so 10 days would cost the buyer $100. There is no set fee or number of days for the option period, however the custom in Texas is usually 7 days for $70 or 10 days for $100. During the Option Period, the buyer has the inspections done to find out what, if anything, is wrong with the home. Although home inspections are not required by and many lenders to not require one either, it is very rare that a buyer would not have a general home inspection and/or termite inspection done by a licensed inspector. 

Once the inspections are complete, the buyer will receive a copy of the reports from the inspector(s). If there are major issues that need to be addressed, it is common for the buyer's agent to prepare an amendment requesting the seller to repair the specific items addressed in the amendment. The seller is under no legal obligation to make the repairs, however, if the seller refuses to make the required repairs or re-negotiate the contract, the buyer may "execute the option" and terminate the contract and receive his earnest money back before the Option Period expires (The seller would be able to keep the option fee).  In most cases, the buyer's agent will ask the buyer to be "reasonable" with their repair requests since some of the items may be very minor or grandfathered code issues that may not need to be fixed. Both the buyer and seller should be "reasonable" when it comes to dealing with repairs and repair amendments.

Dave@SanJacRealEstate.com     (713) 894-9436 Phone     (281) 476-6533 Fax

The information contained on this page and website was written and produced by Dave Turnquist and is the sole property of San Jac Real Estate. No unauthorized reproduction or use of this information is permitted without the expressed written consent of Dave Turnquist, Broker/Owner of San Jac Real Estate