The contracts promulgated by the Texas Real Estate Commission provide the buyer with the choice to negotiate an option to terminate for any or no reason and have their earnest money refunded if the opt to terminate.
If negotiated and the buyer performs, the buyer can terminate for any or no reason.
To have this right certain things must take place.
First the buyer need to pay something for this right (the option fee), and secondly there must be a negotiated number of days (the option period) to terminate.
Secondly the option fee must be paid within 3 days after the effective date of the contract.
Lastly if the buyer elects to terminate they must give written notice by 5:00 pm (local time where the property is located) by the date specified.
If the buyer fails on any of these three requirements they give up their right to terminate.
If the buyer does meet these requirements and elect to terminate the earnest money will be refunded; however, the will lose the option fee they have paid.
If the buyer elects not to terminate they can negioate if the option will or will not be credited to the sales price at closing.
This paragraph also includes a time is of the essence clause which means buyer must perform within the time lines stated above.
The termination option gives the buyer time to get the property inspected, check on insurance and do their due diligence.
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