My buyer client is on the eighth day of his 10-day termination-option period, and the seller still hasn’t turned on the utilities to allow the buyer to have the property inspected. The seller promised to have the utilities on next week, so my buyer just wants to extend the termination-option period another 10 days. Will the buyer have to pay another option fee even though the extension is because the seller breached the contract?

Yes. If the buyer in this situation chooses to request an extension of the termination-option period instead of exercising the default remedies available to him in the contract, then he must agree to offer something of value as consideration to the seller to ensure that the extension is legally enforceable. This is often done by paying an additional termination-option fee. 

Extensive case law in Texas suggests a termination-option period cannot be extended without an additional option fee, so a buyer should pay another option fee to reliably extend the option period.

It’s the last day of my buyer’s option period. The buyer and seller are still negotiating repairs and want to extend the option period. How do we do that?

Use TREC’s Amendment to the contract (TXR 1903, TREC 39-8) and fill in an amount acceptable to both parties in Paragraph 6. To ensure the extension of the option period is valid, be sure to include an amount the buyer has paid seller for the additional option fee. Leaving it blank or putting zero dollars may lead to an unenforceable amendment.

I know my buyer’s termination option ends on Thursday, but at what time?

The termination option ends at 5 p.m. local time to where the property is located. The Texas Real Estate Commission revised its contracts effective January 1, 2016, to implement this time deadline.

Can a buyer’s agent just mail the option check to the seller?

Yes, but remember that the buyer must pay the seller within three days after the effective date of the contract. Therefore, overnight delivery may be necessary to ensure that the buyer has an option period.

I represent a buyer who wants to make an offer on a home. If the buyer tenders a check for the option fee with the offer when I present the offer to the seller’s agent, has the option fee been tendered to the seller? And could the seller’s agent sign the receipt for the option fee on the last page of the contract?

Absent any statement by the seller’s agent that he does not have authority to accept the check for the option fee for the seller, the seller’s agent could accept the check for the option fee and, if the seller does accept and sign the offer, the seller’s agent could then sign the receipt for the option fee on behalf of the seller. The last page of the contract shows that either the seller or the listing broker could sign the option fee receipt. Buyers should always tender their option fees with their offers to ensure that the termination option becomes part of the binding contract, should the seller accept and sign the contract. The risk to the buyer who doesn’t timely tender the option fee is that the seller might sign and accept the offer, and the contract will not include an enforceable termination option. While the contract permits the buyer to pay the option fee within three days after the effective date of the contract, the safer practice is to tender the option fee with the buyer’s offer.

It’s the last day of my buyer’s option period. The buyer and seller are still negotiating repairs and want to extend the option period. How do we do that?

Use TREC’s Amendment to the contract (TAR 1903, TREC 39-8) and fill in an amount acceptable to both parties in Paragraph 6. There must be an amount included in Paragraph 6. For instance, putting “$0” in the blank may risk the extension being held unenforceable.