Can I back out of my contract? In the Texas Residential contracts, the answer is, "It Depends..."

Are you the Buyer or the Seller? The simple answer is that Buyers have ways out of the contract. Sellers do not have ways out of the contract.

Buyers have many ways they can terminate a residential real estate contract in Texas. I'll go over a few in a series of posts.

The Termination Option Period is very important. Many states have an instant "inspection period", but Texas does not. Don't get me wrong, in Texas, you can get inspections on any property whenever you want, but you can't just back out of a contract because of the inspections. You need a "Termination Option Period". This is a negotiated period of time, usually 5-10 days, for a negotiated amount of money, $100-200, for the buyer to purchase the "unrestricted right to terminate" the contract for any reason they want.

With their "unrestricted right to terminate", a buyer can back out because of the inspections, because the sun comes through a window the wrong way, because they decide the barking dogs next door are obnoxious, or because they woke up on the wrong side of the bed that morning and decided they didn't want the houe anymore.

They will retain their earnest money if they terminate during the time they negotiated. If they negotiated 7 days and they terminated on day 5, they lose the price it cost them for the period of time, and they lose the money they spent on inspections. They get their earnest money back.

If they negotiated 7 days, and decided to terminate the contract on day 10, they would not retain their earnest money as they're outside their time frame... except there are other ways out.  Come back and read more...

Disclosure Notice Period

**Are You Packed Yet?**

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Donna Harris, REALTOR®
RE/MAX Austin Skyline
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Copyright© 2012 By Donna Harris, All Rights Reserved. You may re-blog with links back to this post.
* Can I Back Out of My Contract? Texas and the Termination Option Period * was first published on donnahomesblog.com.

 

 
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13 Comments on Can I Back Out of My Contract? Texas and the Termination Option Period

MAY
31
590,749 Points 56 Featured Posts Outside Blog Called Shot Master

Hi Donna. I always recommend to my buyers to get that "Option Period" with every offer. Investors are the only ones that I have seen, who opt not get one because they normally want a quick close.
12:55pm • #1
229,889 Points 1 Featured Post Called Shot Master

Nice blog topic...I look forward to seeing how Texas might differ from Wyoming in the typical clauses you can use to kill a contract.
2:32pm • #2
942,022 Points 26 Featured Posts Outside Blog Attended Rain Camp

It is best to educate the buyer if they do need to back out of the contract-just lose earnest deposit.
3:31pm • #3
862,794 Points 174 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

It's always nice to have an exit if the purchase doesn't work out.  Buyers in CA has a 3-day right to cancel a contract for any reason.  They may have longer with financing or property condition contingencies.
5:04pm • #4
462,962 Points 2 Featured Posts Outside Blog

We use the inspection period as an out for our clients here. Trust me all my buyers ask about it prior to writing an offer.
5:53pm • #5
548,816 Points 9 Featured Posts Outside Blog Called Shot Master

Donna:

Interesting how different state are.  Bryan has already told you about how termination of contract works.  There is no termination option.  Inspections, financing and appraisal are all contingencies a buyer may elect to have in the contract.
6:21pm • #6
1,653,168 Points 134 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Donna, Information that anyone entering into a contract in Texas needs to know.
6:39pm • #8
867,011 Points 18 Featured Posts Localism Sponsor Attended Rain Camp Called Shot Master

Donna -- do you ever recommend that the seller get an inspection prior to putting the home on the market, so they can address any issues and control the cost of the fix? It seems this may be a good idea in TX given that this option can exercised by the buyer.
7:54pm • #10
1,126,396 Points 90 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Here where I am in PA we don't have such an option period...
9:36pm • #11
JUN
01
556,652 Points 31 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Hi Donna,

Another very instructive post.

Thanks for sharing

Phil
3:07am • #12
1,309,282 Points 96 Featured Posts Outside Blog Hit Router Attended Rain Camp Called Shot Master

Jerry, Same here, but it's still not often. Many investors still want to see what's going on and have an option.

Tim, They're coming...

Harry, It's not good to "just lose earnest money" if it's a sizeable amount.

Bryan, We only have a 3 day right for anything on a refi, but I think that's nationwide.

Robert, But do you have to purchase your inspection period, or is it automatic?

Evelyn, Appraisal contingencies are only automatic for FHA loans in Texas.

Judi, Yep!

Joan, Yes, I recommend it. Only one seller has ever done it. They don't mean too much as a buyer is still going to get their own as each inspector will find different things.

Erica, Maybe you could propose it?

Phil, Thanks!
7:04am • #13
569,544 Points 1 Featured Post Localism Sponsor Outside Blog

Hi Donna,  Paying to procure a legal right ?  Why should a buyer have to pay anything to have access to this option ?  Have a terrific weekend !
10:17am • #14
MAY
23
Hello there, I found your site via Google while searching for a related topic, your website came up, it looks great. I have bookmarked it in my google bookmarks.
Appliance repair Huntington Beach
10:17am • #25


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Donna Harris, REALTOR®, CDPE & ASP - Hill Country Austin Lakeway Homes

Donna Harris, REALTOR®, CDPE & ASP - Hill Country

Austin, TX

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Address: 7035 Bee Caves Rd #204, Austin, TX, 78746

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This blog is to help educate Buyers, Sellers and even other Realtors across the country.  Each market is different and the way Real Estate is done is different.  Austin Real Estate is completely different than Dallas, California and Florida and everywhere else in between.  Some times there will be other things besides real estate as I like to rant and rave as much as the next!!  Come back often!

Donna Harris, REALTOR® with RE/MAX
Donna Harris, REALTOR® with RE/MAX
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