How Do I Get Out Of This?: The Numerous Outs in the Texas Residential Sales Contract

When buying a home in Texas you will typically have to put down a certain amount of money for earnest deposit. This amount is typically around 1% of the purchase price. It shows your seriousness to the seller of the home. As a buyer, there isn't much need to worry since this amount is very often refundable. There are over 30 ways to get out of the contract while still getting your earnest deposit back. Some of these are specific circumstances while others are very open. Not every contract contains every one of these ways to get out. This article will discuss provisions based upon the Texas One to Four Family Residential Contract but there are similar provisions in the other contracts such as the Condominium contract, New Home contracts and Unimproved Land contract. 

Termination Option

The biggest and most well known of these is the option period. The buyer typically pays a non refundable fee to the sellers for an option to terminate. This period can be just a few days to over a week. With this option the buyer can terminate for any reason or even no reason and still get their earnest money back. Buyers typically use this time to complete inspections and negotiate repairs but it isn't just for that. Check out our article that goes in depth on this important provision. 

Title Commitment

Paragraphs 6 B & D give the buyer outs in certain circumstances. 6 B says that if the title commitment hasn't been delivered 3 days before closing, the buyer can terminate the contract. 6 D on the other hand, allows the buyer to get out if they have issues with the title commitment or survey. If the seller is unable to provide a clear title then the buyer has the right to walk away. But the contract also gives the seller time to cure any defect.

There is also the ability to specify certain things the buyer wants to do to the property. The objections must be specified upfront. An example of this would be if the buyer wanted to put a swimming pool in the backyard. If their agent put this into the contract in 6 D and later they received the survey and discovered there was a gas pipeline running through the center of the backyard that blocked their ability to put in a swimming pool they would be able to terminate. Another example would be if the buyer wanted to operate a business out of their home. If they put this into 6 D and they later learned that zoning or deed restrictions would prohibit this then they would be able to get out. So if there are specific things you want to do with the property, make sure your agent is aware so they can put this into the contract. 

Seller's Disclosure

If the seller provided the seller's disclosure before you made your offer then this one will not be a part of the contract. If the seller is required to provide one and they haven't done so then Paragraph 7 B 2 specifies the timeframe for this to be provided. It is a blank so the number of days for it to be delivered is negotiable. However, the buyer can terminate at any time until they get this disclosure and, once they have it, the buyer can terminate for 7 days after receiving it. If the seller doesn't provide it in time, the buyer can cancel at any time up until closing. This is almost like having an additional option period except that it doesn't cost the buyer anything. 


There are a couple provisions in the third party financing addendum that allow the buyer to get out of the contract. Paragraph 2 A gives the buyer a certain number of days to get buyer approval from their lender. This is a blank so the number of days is negotiable but is typically two to three weeks. When using this provision you need to get a letter from the lender stating that you were denied.

The addendum also has a provision for property approval. This has a deadline of 3 days before closing. Property approval includes things such as appraisal, insurability, and condition. The appraisal part of this contingency may be waived by the buyer with the use of Addendum Concerning Right to Terminate Due to Lender's Appraisal. Although government backed loans do not allow this waiver. Depending on how that addendum is used it might make the buyer's right to terminate stronger.

Lead Paint

If the home is built before 1978, the buyer might be given a time frame to inspect for lead paint and terminate if any is found. This ability to inspect is negotiable however so buyers don't always have this out.


If the property is located in a HOA or POA then the seller will be required to deliver copies of the rules, regulations, covenants along with the resale certificate showing what dues are owed and if there are any outstanding violations and fines. The buyer can terminate the contract until 3 days after receiving these documents. This provision is very open. It doesn't require the citing of any specific issues so as with the seller's disclosure it is like another option period. 


There are additional outs relating to leases associated with the property. There are numerous types of leases that could be a part of this. Mineral leases, landlord/tenant leases, solar leases, propane leases or others. The contract and various addendums require these leases to be delivered to the buyer and once received the buyer has time to review the leases and terminate if they so desire. The deadlines vary depending on the type of lease.

Sale of Other Property By Buyer

If the buyer needs to sell another home in order to buy this one, they might make the purchase contingent on that sale completing in order to buy the new home. If using this addendum the house enters what is called "kick out" status. This means that the home will continue to be marketed and if another buyer makes an offer the first contract could be kicked out. This first buyer will have the option of being kicked out or they can waive this contingency which requires the buyer to put down additional earnest money. This could be risky so make sure you weigh the pro and cons with your REALTOR® before doing so. 

Seller Outs

The Texas contract is not near as nice to the sellers. It seems the state has taken a buyer protection status. There is not much that sellers can do to get out and none of them allow the seller to keep the earnest money unless the buyer does not meet on of their conditions. The only way that is specifically spelled out is that if the buyer doesn't deliver the earnest money within 3 days the seller has the right to terminate and go find another buyer. In this instance there is no earnest money to be kept by the seller since it was never delivered. 

In Conclusion

These are the most prominent of the ways that a buyer can get out. Most of the others are very specific things such as if the house burns down or if it is a short sale. As stated before, not every contract will have every out but they will usually have many outs. If you need an agent to help you buy a home, make sure they understand all these parts of the contract. Here at BlackJack Realty, we would love to be your agent. Please feel free to contact us.

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