Texas Option Period Rules: Complete Reference

The full rule, in one paragraph

Under TREC Form 20-17 Paragraph 5B, the buyer pays an option fee for the right to terminate the contract for any reason during the option period. The option period:

• Begins on the Effective Date of the contract (¶ 8: the date the last party signs and delivery occurs).
• Runs for the negotiated number of calendar days — typically 5 to 14 in Texas residential transactions.
• Ends at 5:00 PM local time on the final day.
• Does NOT roll over for weekends or holidays. ¶ 5B explicitly carves itself out of ¶ 23's rollover rule.

How time is counted

Calendar days, with the Effective Date as day zero.

• Effective Date Monday May 4, 7-day option → ends Monday May 11 at 5:00 PM. (Day 1 is Tuesday May 5; Day 7 is Monday May 11.)
• Effective Date Friday May 1, 5-day option → ends Wednesday May 6 at 5:00 PM. (Weekend included in the count; no rollover applies.)
• Effective Date Monday Dec 22, 5-day option → ends Saturday Dec 27 at 5:00 PM. Yes, even though Dec 25 is Christmas. ¶ 5B does not roll.

What the buyer can do during the option period

The buyer can terminate the contract for any reason — or no reason. To do so:

1. Deliver written notice of termination (typically TREC Form 38-8, Notice of Buyer's Termination of Contract) to the seller before 5:00 PM on the option-expiry day.
2. Email is generally acceptable under Texas e-sign law, but check the contract's notice paragraph and confirm receipt.
3. The escrow agent refunds the earnest money to the buyer per the contract's terms.
4. The seller keeps the option fee (it's non-refundable consideration for the option right itself).

What ends with the option period

When 5:00 PM passes on the option-expiry day without termination:

• The buyer's right to terminate without cause is extinguished.
• The buyer can still terminate, but only per the cause-based provisions in the contract — financing failure (TPFA 40-11), unresolved title objections (¶ 6D), uncured inspection items the seller agreed to address.
• Repair amendments must be executed (signed by both parties) before the option expires. A signed buyer + unsigned seller amendment at 4:55 PM on option-expiry day is not an executed amendment.

The most common ways agents lose the option right

1. Counting business days instead of calendar days. ¶ 5B is calendar days. Weekends are included.
2. Applying ¶ 23 rollover. Don't. ¶ 5B is the carve-out.
3. Verbal extensions. Texas courts won't enforce them. Only a written amendment (TREC Form 39-9) executed before the original option expires extends the option.
4. Late notice delivery. 5:00 PM means 5:00 PM. If your client emails the termination at 5:02 PM, the option right is gone.
5. Wrong time zone. 5:00 PM is local to the property. For a property in El Paso (Mountain Time), that's 6:00 PM Central — relevant if you're a Dallas-based agent.
6. Treating Effective Date as day 1. It's day zero. A 7-day option starting on May 1 ends May 8, not May 7.

Texas-specific corners

What if the option period ends on a federal holiday?

It still expires that day at 5:00 PM. ¶ 5B does not roll. If you anticipate this on a deal, negotiate a longer option or pre-deliver inspections before the holiday.

What if the seller is unreachable on the option-expiry day?

Notice must be delivered per the contract's notice provisions. If the contract specifies email, email it — and copy the listing agent. If it specifies fax (rare in 2026), confirm fax receipt. Document everything.

Can the buyer recover the option fee?

Generally no. The option fee is non-refundable consideration for the option right itself. ¶ 5A has a checkbox for crediting the option fee toward the sales price at closing — if checked and the deal closes, the fee credits. If the deal terminates during the option, the seller keeps it.

How AI helps with the option period

The math is unforgiving and the consequences are absolute, which makes the option period a perfect candidate for automated tracking. Dossie computes the option-period expiry date and time from the executed contract, applies the (non-)rollover rules correctly, and surfaces it as the most-urgent deadline in every active dossier — with a warning if it lands on a weekend or holiday so you can pre-warn the buyer.