It is important during this time to note which form you are using to ensure you handle delivery of the option fee correctly.

The Texas Real Estate Commission in November 2020 approved several changes to promulgated contract forms, which go into effect April 1. The most significant of those affect delivery of the termination option fee. Here are answers to commonly asked questions about the changes.

What changes are being made to delivery of the option fee?

TREC recently adopted changes to their residential contract forms with respect to the delivery of option fees. Under the revised forms, which become mandatory April 1, 2021, a buyer is required to deliver the option fee to the title company, not to the seller.

What is the deadline for delivery of the option fee to the title company under the revised forms?

The buyer must deliver the option fee to the title company within three days after the effective date of the contract.

May the buyer deliver the option fee together with the earnest money?

Yes. The option fee and earnest money may be paid separately or combined in a single payment. The amount delivered will be applied first to the option fee then to the earnest money.

Will the seller have to wait until closing to receive the option fee from the title company?

No. Under the revised forms, the buyer authorizes the escrow agent to release and deliver the option fee to the seller at any time without further notice to or consent from the buyer and releases the escrow agent from liability for delivery of the option fee to the seller. The option fee will be credited to the sales price at closing. Note, however, that any disbursement may be conditioned on the collection of good funds acceptable to the escrow agent. Title companies, which are regulated by the Texas Department of Insurance, must comply with good-funds rules before disbursing option fees.

Texas REALTORS® is working with all forms vendors, including zipForm, to ensure the forms are posted prior to April 1. Look for the updated forms in the vendors’ libraries and on

When am I required to use the updated versions of the TREC residential forms?

The updated versions may now be used on a voluntary basis. They are mandatory April 1, 2021.

Will title companies be ready to receive option fees?

The Texas Land Title Association is working with its members to ensure title companies are aware of the changes and prepared to receive delivery of the option fee.

Changes to the One to Four Family Residential Contract (Resale)

  • Paragraph 2C: The definition of Controls was updated to include both software and applications used to access and control accessories along with dedicated hardware solely used for the accessory.
  • Paragraph 4: This paragraph now contains lease information, including references to the new residential and fixture lease addenda as well as information on natural resource leases to which seller is a party.
  • Paragraph 5: The revised section combines payment of earnest money and termination option in a single provision and calls for payment of the termination option fee to the title agent.
  • Paragraph 10: A smart-devices section was added to clarify that those devices get transferred with the sale of the property.
  • Paragraph 21: The notice information changed to allow for more email addresses by updating Fax fields to read Email/Fax.
  • Paragraph 23: This paragraph was deleted to follow the changes to Paragraph 5.
  • The Broker Information page now contains additional space for team names.
  • Disclosure language at the bottom of the Broker Information page was updated regarding broker compensation. It now better explains—with examples—why another broker may be receiving compensation for the transaction.

Which other forms were updated?

Not every contract received the same update, so check TREC’s website for specifics.

1601 20-15 One to Four Family Residential Contract (Resale)
1603 23-16 New Home Contract (Incomplete Construction)
1604 24-16 New Home Contract (Completed Construction)
1605 30-14 Residential Condominium Contract (Resale)
1607 9-14 Unimproved Property Contract
1701 25-13 Farm and Ranch Contract
1902 38-7 Notice of Buyer’s Termination of Contract
1918 45-2 Short Sale Addendum
1922 36-9 Addendum for Property Subject to Mandatory Membership in a Property Owners Association
WATCH: TREC staff and other experts discussed these changes during the recent Texas REALTORS® Risk Reduction Forum. View this and all sessions from the Texas REALTORS® Winter Meeting at