Recent changes to the One to Four Family Residential Contract (Resale) Contract (TAR 1601, TREC 20-14) provide more-specific requirements regarding earnest money. Now, buyers have three days after the effective date to deliver the initial amount of earnest money to the escrow agent. Previously, the paragraph stated that earnest money should be deposited “upon execution of this contract” but did not specify a time period.
The paragraph also now includes the statement that time is of the essence, so if the earnest-money deadline is not met, the seller can terminate the contract or exercise the seller’s remedies under Paragraph 15 relating to buyer default. (Note: The Texas Real Estate Commission is considering a new form sellers can use to terminate a contract in a situation like this. TREC could adopt the form at its May meeting.)
Unlike other deadlines in the contract, this deadline is extended if the last day to deliver the money is a Saturday, Sunday, or legal holiday. Other time-based performance requirements in the contract rely on calendar days.