Texas Real Estate Contracts Basics 101

Buying or selling a home in Texas? Before anyone hands over keys or deposits, there needs to be a signed real estate contract. This legally binding document protects both the buyer and the seller and outlines every detail of the deal. Whether you're a first-time homebuyer or listing your property, knowing the basics of Texas real estate contracts helps you avoid common mistakes and delays.

Texas is a non-disclosure state, which means property sale prices aren’t publicly available. Because of this, what’s on the contract matters even more. In this guide, we’ll walk through the most common contract forms, what each section means, and how to stay on top of the process.

Understanding the Promulgated Forms

In Texas, most residential real estate contracts use standard forms provided by the Texas Real Estate Commission (TREC). These are called "promulgated forms," and they’re required by law in most transactions handled by licensed real estate agents.

The most commonly used contracts include:

• One to Four Family Residential Contract (Resale): Used for single-family homes (not condos or new builds)

• Residential Condominium Contract: Used for condo sales

• Farm and Ranch Contract: Used when the property includes agricultural elements

These forms ensure consistent language and protect both parties. They cover everything from financing and deadlines to inspections and repairs.

Why it matters: Using the wrong form or outdated versions can result in unenforceable terms or delays. Always use current forms provided by TREC or your broker.

Essential Elements of a Texas Real Estate Contract

For a contract to be valid in Texas, it must include:

• Offer and Acceptance: Both sides must agree to the terms in writing

• Legal Purpose: The contract must involve a lawful transaction

• Competent Parties: All parties signing must be over 18 and mentally capable

• Consideration: Typically the purchase price or something of value

• Written Agreement: All details must be in writing and signed

Here’s a tip: Verbal promises or text message agreements won’t hold up in court. Get everything in writing, preferably on the appropriate contract or addendum.

Key Sections You’ll See in the Contract

Sales Price and Financing Terms

This section breaks down how much the buyer is offering and how they plan to pay—cash or through financing. If financing is involved, the Third Party Financing Addendum will also be required. It lays out loan approval terms and timelines.

Lenders often want to see contingencies in place. If the buyer can’t get approved in time, the deal could fall through—unless an extension is filed before the deadline.

Option Period and Earnest Money

Two separate fees, two different purposes:

• Earnest money: A good faith deposit held by the title company. Typically 1% of the sales price.

• Option fee: Paid for the right to terminate the contract within a specific period (usually 5-10 days).

During the option period, buyers can inspect the property and negotiate repairs. If they walk away, they lose the option fee but usually get the earnest money back.

You can often negotiate a longer option period or a lower fee, especially in a buyer’s market.

Property Condition and Repairs

Homes in Texas are usually sold "as-is," but that doesn’t mean buyers can’t request repairs. After inspection, buyers can submit a Repair Amendment. Sellers don’t have to agree, but negotiations are common. Clarify who will do the work and by when.

Ask for licensed professionals to complete repairs. Include specific timelines in writing.

Title Policy and Survey

This part covers who will pay for the title insurance and whether a new survey is required. These decisions affect closing costs and timelines. Always review the Title Commitment when it comes in to avoid surprises.

In areas like Greater Heights or Garden Oaks, boundary lines and encroachments are common issues. The survey helps clarify what you're really buying.

Closing and Possession

This spells out when closing will occur and when the buyer can take possession. Sometimes sellers request a temporary leaseback. That needs to be written into the contract using the Seller’s Temporary Residential Lease Addendum.

Plan ahead: Insurance coverage may shift during a leaseback. Consult your agent or insurance provider.

Common Addenda and When to Use Them

Real estate contracts often include addenda that provide more detail or handle unique situations. Here are the most common ones:

• Third Party Financing Addendum: Used if the buyer is getting a loan

• HOA Addendum: Required if the home is part of a property owners association

• Lead-Based Paint Disclosure: Mandatory for homes built before 1978

• Non-Realty Items Addendum: Used if the seller is including personal property (like a fridge or washer)

• Temporary Residential Lease: For seller or buyer occupancy before/after closing

• Backup Contract Addendum: Used when the property is under contract but backup offers are being accepted

• Sale of Other Property by Buyer Addendum: When the buyer needs to sell their current home first

Each addendum becomes part of the legal agreement once signed. Always review their terms carefully.

Deadlines and Important Dates to Track

Each contract is filled with specific deadlines. Missing one could put the deal at risk. The most critical ones include:

• Option Period End Date: When inspections and repair requests must be completed

• Loan Approval Deadline: If the buyer’s financing falls through after this date, they may lose earnest money

• Title Commitment Due Date: Buyer must receive this in time to review title exceptions

• Survey Deadline: If a new survey is needed, it must be ordered and delivered in time

• Closing Date: The big day. Missing this could delay possession or void the contract

Pro tip: Add all critical dates to a shared Google Calendar with alerts. It’s an easy way to avoid last-minute stress.

What Happens After the Contract Is Signed?

Here’s what typically follows:

1. Escrow Opens: Title company receives earnest money

2. Inspection Period Begins: Schedule inspections right away

3. Negotiations: Repairs and concessions are worked out

4. Appraisal & Loan Processing: Lender orders an appraisal

5. Title Review: Title company issues a title commitment

6. Insurance Set-Up: Homeowner’s insurance must be secured

7. Utilities Transfer: Schedule activation for move-in date

8. Final Walkthrough: Buyer verifies condition of property

9. Closing Day: Funds are transferred, documents signed, keys handed off

Stay organized: Have your agent provide a closing checklist.

How to Avoid Contract Mistakes

• Don’t skip reading the contract. Even if you have an agent.

• Ask questions about anything unclear

• Clarify what stays and what goes in writing

• Be aware of default consequences if either party doesn’t perform

• Use a checklist to track required documents and dates

Case in point: A seller in Meyerland listed a custom fridge in the listing photos but didn’t include it in the Non-Realty Items Addendum. The buyer expected it. Cue last-minute drama at closing. Always clarify what's staying.

When You Should Talk to an Attorney

Texas agents are trained to fill in the blanks on promulgated forms—but we can’t give legal advice. You should talk to a real estate attorney if:

• You’re going through a divorce or estate sale

• Seller financing is involved

• The buyer or seller is a trust, LLC, or foreign entity

• There are complex leasebacks or land issues

• The property involves mineral rights or shared access

Attorneys can also help interpret title exceptions or easements that show up in the title commitment.

FAQs About Texas Real Estate Contracts

What’s the difference between an executed and effective contract?
Executed means all parties have signed. Effective means all parties have signed and the contract has been delivered with the effective date filled in.

Can I change the contract after it's signed?
Yes, through a written amendment signed by all parties.

What if I want out of the contract?
Buyers can typically terminate during the option period. Sellers may face penalties for walking away without cause.

Who chooses the title company?
It’s negotiable, but often chosen by the buyer if they’re paying for the title policy.

Do both parties need a real estate agent?
No, but it helps. Having your own representation ensures someone is looking out for your interests.

Conclusion: Don’t Just Sign. Understand What You’re Signing.

A Texas real estate contract is more than paperwork. It’s the roadmap to closing. Knowing what each section means helps you stay protected, plan ahead, and avoid disputes.

Whether you’re buying your first home or selling your fifth, a good agent can walk you through every step. Questions about your contract? Want help making sense of all the terms?

Reach out to Raquel Refuerzo. I’m here to help make your next move a confident one.

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