Texas Real Estate Contract Guide
Texas uses standardized TREC (Texas Real Estate Commission) forms for most residential transactions. The unique option period, specific earnest money rules, and mandatory disclosure requirements make TX contracts different from any other state. Here’s everything you need to know.
TREC Standard Forms
Texas is one of the few states that mandates standardized contract forms promulgated by the Texas Real Estate Commission. Agents must use these forms — they cannot draft their own contract language.
TREC 1-4 Family Residential Contract (Resale)
The standard form for most residential transactions in Texas. Covers the purchase of existing 1-4 unit residential properties. This is the form you’ll use most often.
TREC New Home Contract (Incomplete Construction)
Used when the home is still being built. Includes provisions for construction timelines, specifications, and completion standards.
TREC New Home Contract (Completed Construction)
For newly built homes that are already finished but haven’t been previously occupied. Similar to the resale form but with builder-specific provisions.
TREC Farm and Ranch Contract
Covers rural properties with agricultural exemptions, water rights, and special considerations for livestock, fences, and minerals.
TAR Residential Lease
Published by the Texas Association of Realtors (not TREC-promulgated). Used for residential leases and lease-purchase agreements.
TX Deadline Rules
Texas counts deadlines using calendar days, not business days, unless the contract specifically states otherwise. When a deadline falls on a Saturday, Sunday, or federal holiday, it is NOT automatically extended to the next business day — unlike many other states. This catches out-of-state agents regularly.
Calendar days, not business days
All deadlines in TREC contracts run on calendar days. A 10-day option period means exactly 10 calendar days, including weekends and holidays.
Option period starts on the effective date
The option period begins the day after the effective date (the date both parties have signed). If the effective date is Monday, day 1 is Tuesday.
5 PM default deadline
Unless otherwise specified, all deadlines expire at 5:00 PM local time on the deadline date. Missing this by even an hour can cost your client their rights.
Title commitment delivery
Seller must deliver a title commitment within 20 days after the title company receives the contract. Buyer then has a set number of days to object.
Closing date is a firm deadline
Unlike some states where closing dates are treated as targets, Texas treats the closing date as a binding obligation. Failure to close on time is a default.
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TX Contingency Rules
Texas uses a unique option period instead of the traditional inspection contingency found in most states. This is the single biggest difference between TX contracts and contracts in other states.
Option Period (Unrestricted Right to Terminate)
The buyer pays a non-refundable option fee (typically $100–$500) for a set number of days (usually 7–10) during which they can terminate the contract for ANY reason and get their earnest money back. This replaces the traditional inspection contingency. The option fee goes to the seller regardless.
Financing Contingency
Built into the standard TREC form. If the buyer cannot obtain financing approval within the specified number of days, they can terminate and receive their earnest money back. The buyer must apply for financing promptly and furnish all required information.
Appraisal Contingency
If the property does not appraise at or above the purchase price, the buyer can terminate unless they agree to cover the difference. Texas contracts allow buyers to waive this — common in competitive markets.
Title Contingency
Buyer has the right to object to title exceptions shown in the title commitment. If the seller cannot cure the objections, the buyer can terminate. This is built into the standard TREC form.
Property Condition Contingency
Covered primarily by the option period. Buyer can also negotiate specific repair items after inspections, typically through an amendment to the contract.
For a complete overview of how contingencies work, see our guide: Real Estate Contract Contingencies Explained.
TX Disclosure Requirements
Texas has extensive mandatory disclosure requirements. The seller’s disclosure notice is one of the most detailed in the country, covering structural, environmental, and condition issues.
Seller’s Disclosure Notice (TAR 1406)
Mandatory for most residential sales. Covers structural condition, water damage, foundation issues, roof condition, plumbing, electrical, HVAC, and environmental hazards.
Lead-Based Paint Disclosure
Required for all homes built before 1978. Federal requirement, but Texas agents must use the specific Texas form.
MUD/PID Disclosure
Required if the property is in a Municipal Utility District or Public Improvement District. Affects property taxes and utility rates significantly.
Property Tax Disclosure
Texas has no state income tax, so property taxes are notably high. Agents must ensure buyers understand the actual tax burden, which can change after purchase due to reassessment.
HOA Disclosure
If the property is in an HOA, the seller must provide the HOA’s resale certificate, current financials, and governing documents. Buyer has a 3-day review period for subdivision information.
Flood Zone Disclosure
Particularly important in Houston, Austin, and coastal areas. Sellers must disclose known flooding history and whether the property is in a FEMA flood zone.
TX Earnest Money Rules
Texas has specific rules about earnest money that differ from most states. The earnest money deposit is a critical part of every Texas real estate transaction.
Typical amount
Usually 1% to 2% of the purchase price, though there’s no legal minimum. In competitive markets, 2-3% is common to strengthen the offer.
Deposit deadline
Must be deposited within 3 days of the effective date unless the contract specifies otherwise. Late deposit is a default.
Held by title company
In Texas, earnest money is almost always held by the title company (escrow agent), not the listing broker. The title company is named in the contract.
Release requires written agreement
Neither party can unilaterally collect the earnest money after a dispute. Both parties must sign a release, or the dispute goes to mediation per the contract.
Option period termination
If the buyer terminates during the option period, they get their earnest money back (minus the non-refundable option fee). After the option period expires, earnest money may be at risk.
Learn more about common pitfalls: Earnest Money Clause Mistakes (And How to Fix Them Fast).
Texas-Specific Rules
Beyond the standard contract provisions, Texas has several unique rules that agents from other states frequently miss.
No attorney review period
Unlike IL, NJ, and NY, Texas does not have a standard attorney review period. Once both parties sign, the contract is binding (subject to the option period).
Mineral rights matter
In Texas, mineral rights can be separated from surface rights. The standard TREC contract includes a section on mineral rights. Failure to address this properly can cost your client significant value, especially in West Texas and the Permian Basin area.
Survey requirements
The contract specifies whether an existing survey will be used or a new one obtained. In Texas, survey issues (encroachments, easements, boundary disputes) are common and must be resolved before closing.
Texas property code requirements
The Texas Property Code governs many aspects of residential transactions that aren’t in the contract itself — including cure periods for contract breaches and rules for specific performance claims.
Homestead protections
Texas has some of the strongest homestead protections in the country. The homestead exemption affects property taxes, liens, and what creditors can and cannot do. This can impact title issues and closing.
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