Most sellers in Boerne and Fair Oaks Ranch sign a Texas real estate contract having read it partially, skimmed key sections, or relied entirely on their agent's verbal summary. That approach works fine most of the time, and then it does not, usually at the worst possible moment in the transaction. A Texas real estate contract is a legally binding document that governs what happens to your money, your property, and your timeline from the moment both parties sign through the day the deed records. Understanding what you are signing before you sign it is not a legal exercise. It is a financial one. This guide walks through the sections that matter most for sellers in Boerne's luxury market and explains what each one actually means in plain language.
The Texas Real Estate Contract: What Document You Are Actually Looking At
Most residential transactions in Texas use one of the standard contract forms promulgated by the Texas Real Estate Commission, most commonly the One to Four Family Residential Contract (Resale), which is the form used for the majority of existing home sales in Boerne and Fair Oaks Ranch. This form is approved by TREC and used statewide, which means its structure is consistent across transactions even as the specific terms negotiated within it vary.
The contract is typically accompanied by several addenda that modify or supplement its standard terms: a Third Party Financing Addendum if the buyer is obtaining a loan, a Seller's Disclosure Notice detailing known property conditions, and potentially addenda covering HOA information, property survey, or specific property conditions. Understanding that the contract is a package of documents rather than a single form helps sellers approach it more systematically.
What follows covers the sections of the base contract and its primary addenda that carry the most financial significance for sellers.
What contract form is used for residential home sales in Texas?
Most residential home sales in Texas use the One to Four Family Residential Contract (Resale) promulgated by the Texas Real Estate Commission, commonly known as the TREC contract. This standardized form is used statewide and is typically accompanied by addenda including a Third Party Financing Addendum, a Seller's Disclosure Notice, and community-specific addenda covering HOA requirements and property conditions. The contract package as a whole governs the transaction from execution through closing.
Section 1: Parties and Property Description
The opening section identifies the buyer and seller by legal name and describes the property being transferred. For sellers in Boerne and Fair Oaks Ranch, this section warrants careful review because the legal description of the property must match the deed and title records exactly.
In communities like Cordillera Ranch or Fair Oaks Ranch where properties sometimes straddle county lines or involve easements, outbuildings, or acreage with specific legal descriptions, a discrepancy between the contract description and the deed can create title issues that delay or complicate closing. Confirm that the property description matches your deed before signing, and flag any discrepancies to the title company immediately.
Also confirm that all sellers of record are listed as parties to the contract. If the property is held in a trust, an LLC, or jointly with another party, all required signatories need to be identified and available to sign at closing. Discovering that a required party cannot sign at the last moment is a preventable complication that has derailed closings in this market.
What should a seller check in the parties and property description section of a Texas contract?
Sellers should verify that all sellers of record are correctly identified, that the legal property description matches the existing deed exactly, and that any outbuildings, easements, or acreage included in the sale are clearly reflected. In communities like Cordillera Ranch and Fair Oaks Ranch where properties may straddle county lines or involve complex legal descriptions, this verification is particularly important and should be confirmed with the title company before signing.
Section 2: Sales Price and Financing Terms
The sales price section establishes the agreed purchase price, the amount of earnest money, and how the buyer intends to finance the transaction. Each of these has direct implications for the seller.
The earnest money amount is negotiated and stated here. For luxury transactions in Boerne above $700,000, earnest money typically ranges from 1% to 2% of the purchase price, though this is negotiable and higher earnest money amounts signal stronger buyer commitment. The contract specifies which title company holds the earnest money and the deadline by which it must be delivered, typically three business days from contract execution.
The financing terms section, which is supplemented by the Third Party Financing Addendum if the buyer is obtaining a loan, establishes the loan amount, loan type, interest rate ceiling, and the deadline by which the buyer must receive loan approval. These terms matter for sellers because they define the conditions under which the buyer can terminate the contract with earnest money returned versus the conditions under which the seller may have grounds to retain it.
Cash buyers are identified here as well, and a cash transaction carries meaningfully different risk and timeline characteristics than a financed one. Sellers should confirm that a buyer representing themselves as a cash buyer has provided proof of funds before the contract is executed, not after.
What should a seller look for in the sales price and financing section of a Texas contract?
Sellers should confirm the agreed purchase price, the earnest money amount and delivery deadline, the title company holding escrow, and the buyer's stated financing method. For financed transactions, the Third Party Financing Addendum establishes the loan approval deadline and the conditions under which the buyer can terminate and recover earnest money. Cash buyers should provide proof of funds before contract execution, and sellers should confirm this documentation is in hand before signing.
Section 3: The Option Period and Option Fee
The option period section is one of the most financially significant provisions in the entire contract, and it is one that sellers sometimes underestimate until they are inside it.
This section establishes two distinct numbers: the option fee and the option period length. The option fee is a small, separate payment, negotiated between the parties and typically ranging from a few hundred to a few thousand dollars for luxury transactions, paid directly to the seller within three business days of contract execution. This fee is non-refundable. In exchange, the buyer receives the unrestricted right to terminate the contract for any reason during the option period without forfeiting their earnest money.
The option period length is negotiated separately and is stated in days from the date of contract execution. For resale luxury homes in Boerne, option periods typically run 7 to 10 days, though buyers with complex inspection needs on acreage properties, well or septic systems, or specialty structures may request longer windows. A longer option period extends the buyer's termination right, which works against the seller's certainty of close.
Sellers should evaluate both the option fee amount and the option period length as negotiable variables. A higher option fee compensates the seller for the extended termination right the buyer holds during this window. A shorter option period reduces the window during which the buyer can walk away freely.
What is the option period in a Texas real estate contract and why does it matter for sellers?
The option period in a Texas real estate contract is a negotiated window, typically 7 to 10 days, during which the buyer can terminate the contract for any reason by forfeiting a separate, non-refundable option fee paid directly to the seller. The buyer's earnest money remains protected during this period. Sellers should negotiate both the option fee amount and the option period length carefully, as a longer period extends the buyer's termination right and a higher fee compensates the seller for granting that right.
Section 4: Termination and Default Provisions
Understanding what happens when either party fails to perform under the contract is essential for sellers, and this section is one where many sellers discover they have less protection than they assumed.
If the buyer defaults after the option period has expired and all contingencies have been satisfied, the seller's primary remedy under the standard TREC contract is to retain the earnest money as liquidated damages, or alternatively to pursue specific performance or other legal remedies. Retaining earnest money is the more practical path in most situations and is what most sellers elect to pursue when a buyer fails to close without a contractual basis for termination.
If the seller defaults, the buyer typically has the right to pursue specific performance, which means a court could compel the seller to complete the transaction. This is a meaningful constraint on sellers who change their minds after signing a contract, and it is why the decision to accept an offer should be made with full commitment rather than as a starting position in an ongoing negotiation.
The default provisions also interact with the financing contingency. If the buyer cannot secure financing within the approved deadline established in the Third Party Financing Addendum and has followed the required notification process, they can typically terminate and recover their earnest money. If they fail to follow that process correctly, the earnest money may not be protected in the same way.
What happens if a buyer backs out of a Texas real estate contract after the option period?
If a buyer backs out of a Texas real estate contract after the option period has expired without a valid contractual basis for termination, the seller typically has the right to retain the earnest money as liquidated damages. The seller may also pursue specific performance or other legal remedies depending on the circumstances, though retaining earnest money is the most common and practical outcome in these situations. Sellers should confirm the earnest money amount and delivery with the title company at contract execution to ensure it is in escrow before proceeding.
Section 5: Property Condition and Inclusions
This section establishes what is included in the sale and the baseline condition representations the seller is making. It is where sellers in Texas bear the most ongoing legal responsibility.
The contract identifies fixtures and improvements included in the sale, and sellers should review this list carefully before signing. Items that are permanently attached to the property, such as built-in appliances, window treatments, and lighting fixtures, are typically included unless specifically excluded. Items the seller intends to remove should be explicitly excluded in the contract before signing, not verbally discussed with the buyer's agent.
The Seller's Disclosure Notice, which accompanies the contract as a required addendum under Texas law, is a separate but related document where sellers are required to disclose known material defects, previous repairs, and conditions affecting the property. Texas requires sellers to complete this disclosure accurately and in good faith. Omissions or misrepresentations on the Seller's Disclosure Notice create liability that survives closing, meaning a buyer who discovers a condition that should have been disclosed can pursue legal action after the transaction is complete.
Sellers in Boerne who have completed a pre-listing inspection are in a stronger position on this front because they have documented the property's condition before listing, addressed known issues proactively, and have a clear record of what was known and when. This documentation reduces liability exposure on the Seller's Disclosure Notice and supports a transparent transaction process.
What is a Seller's Disclosure Notice in Texas and what must sellers disclose?
A Seller's Disclosure Notice is a required document under Texas law in which the seller discloses known material defects, previous repairs, flooding history, environmental conditions, and other facts affecting the property. Sellers must complete this disclosure accurately and in good faith, as omissions or misrepresentations can create legal liability that survives closing. Completing a pre-listing inspection before listing gives sellers a documented, current picture of the property's condition that supports accurate disclosure and reduces liability exposure.
Section 6: Closing Date, Possession, and Prorations
The closing date section establishes the target date by which the transaction must close, and sellers should understand both the significance of this date and the flexibility that does or does not exist around it.
The closing date is negotiated and stated in the contract. If either party cannot close by this date, an extension must be agreed upon in writing by both parties. If the buyer fails to close by the agreed date without the seller's consent, the seller may have grounds to terminate the contract and retain the earnest money, though this situation is best navigated with guidance from the listing agent and, in some cases, a real estate attorney.
Possession of the property is also established in this section. Texas contracts typically call for possession to transfer at closing and funding, meaning the seller vacates and the buyer takes possession on the same day the transaction closes. Sellers who need additional time in the property after closing can negotiate a post-closing occupancy agreement, often called a leaseback, which gives the seller a defined period to remain in the home after the buyer has technically taken ownership. These arrangements carry specific legal and insurance implications that both parties should understand before agreeing to them.
Property taxes are prorated between buyer and seller based on the closing date, with the seller responsible for taxes accrued through the closing day and the buyer responsible from closing forward. In Texas, property taxes are paid in arrears, which means the proration at closing is typically a credit from the seller to the buyer based on estimated taxes for the current year.
How are property taxes handled at closing in a Texas home sale?
Property taxes in Texas are paid in arrears and are prorated at closing based on the closing date. The seller is responsible for taxes accrued through closing day and typically provides a credit to the buyer based on an estimate of the current year's taxes, calculated using the prior year's tax rate. Buyers assume responsibility for taxes from closing forward. The specific proration amount is reflected in the closing disclosure and is calculated by the title company.
Section 7: The Third Party Financing Addendum
For financed transactions, this addendum is one of the most consequential documents in the contract package and the one most commonly misunderstood by sellers.
The addendum establishes the loan amount, loan type, interest rate ceiling, and the financing approval deadline. It also defines the specific process the buyer must follow if they cannot obtain financing, including notification requirements that must be met for the earnest money to be protected.
The financing approval deadline is the date by which the buyer must receive written loan approval from their lender. If the buyer cannot obtain approval by this deadline and follows the correct notification process, they can typically terminate the contract and recover their earnest money. This deadline is a critical milestone for sellers because it establishes the point at which financing uncertainty is supposed to be resolved.
Sellers should note that the financing approval deadline is typically different from and earlier than the closing date, which means there is a window between financing approval and closing during which the transaction is moving toward close without the same termination protection the buyer had during the option period.
What is the financing approval deadline in a Texas real estate contract?
The financing approval deadline in a Texas real estate contract is the date by which the buyer must receive written loan approval from their lender, as established in the Third Party Financing Addendum. If the buyer cannot obtain financing by this deadline and follows the required notification process, they can typically terminate the contract and recover their earnest money. This deadline is separate from and typically earlier than the closing date, and it represents the point at which the seller gains greater certainty that the financing variable has been resolved.
Frequently Asked Questions: Reading a Texas Real Estate Contract
Can a seller make changes to a TREC contract after it has been signed?
Either party can propose modifications to a signed Texas real estate contract through a written amendment that must be signed by both parties to be effective. Unilateral changes to a signed contract are not legally binding. Common post-execution amendments include changes to the closing date, repair agreements following the option period inspection, and price adjustments resulting from an appraisal gap negotiation. All amendments should be documented in writing and signed before either party acts on the proposed change.
What happens to the earnest money if the sale falls through in Texas?
The outcome for earnest money when a Texas transaction falls through depends on which party had a valid contractual basis for termination. If the buyer terminates within the option period, they forfeit the option fee but recover the earnest money. If the buyer terminates under a valid financing or other contingency, they typically recover the earnest money. If the buyer defaults after all contingencies have been satisfied, the seller typically retains the earnest money as liquidated damages. Disputed earnest money situations are resolved between the parties or, if they cannot agree, through the title company's interpleader process or legal action.
Does a seller have to accept a buyer's repair requests in Texas?
A seller in Texas is not legally required to accept a buyer's repair requests following the option period inspection. The seller can agree to all requested repairs, agree to some and decline others, offer a closing credit in lieu of repairs, or decline all requests entirely. If the parties cannot reach agreement on repairs and the buyer is still within the option period, the buyer retains the right to terminate the contract and recover their earnest money. If the option period has expired when the repair negotiation occurs, the buyer's options are more limited and the seller's position is stronger.
What is the difference between the option fee and the earnest money in Texas?
The option fee is a small, separate, non-refundable payment made directly to the seller in exchange for the buyer's unrestricted right to terminate the contract during the option period. The earnest money is a larger deposit held in escrow by the title company that is applied toward the purchase at closing or subject to specific contractual provisions if the transaction does not close. The option fee is typically a few hundred to a few thousand dollars. The earnest money is typically 1% to 2% of the purchase price on luxury transactions in Boerne.
Should a seller have an attorney review a Texas real estate contract?
Texas does not require a real estate attorney to be involved in a residential closing, and the standardized TREC contract forms are designed to be understood and executed without legal representation in most transactions. However, sellers with unusual property situations, complex ownership structures such as trusts or LLCs, disputed property conditions, or concerns about specific contract terms may benefit from having a real estate attorney review the contract before signing. When in doubt about a specific provision, consulting an attorney is a reasonable and relatively low-cost step that can prevent more expensive problems after execution.
If you are preparing to sell in Boerne or Fair Oaks Ranch and want an agent who walks you through every document before you sign and advocates for your interests through every stage of the transaction, contact Alexis Weigand Real Estate. Call 210.987.8801.
