Yes, but there is an important distinction between terminating a contract under a contractual or statutory right and simply deciding you no longer want to buy the property. Once a seller accepts an offer, the buyer generally has a binding contract, and the buyer’s ability to walk away without being in default depends on the specific contract, addenda and applicable law.
The examples below focus primarily on the TREC One to Four Family Residential Contract (Resale), Form 20-19, effective July 1, 2026. This is the TREC form commonly used for resale single-family homes, duplexes, triplexes and fourplexes. Other TREC contracts contain different provisions. And these are not the only possible avenues. The TREC contract and its addenda can contain additional, transaction-specific termination rights, several of which are discussed below.
Is there a cooling-off period once a Texas buyer signs?
No. The contract becomes binding as of the Effective Date, which starts most of the contract’s deadlines, so timing matters. The key question is not simply, “Can I change my mind?” It is: Does my contract give me a right to terminate, and can I exercise that right on time?
The most common ways a buyer can terminate:
1. The Option Period
The option period is usually the buyer’s broadest contractual exit. Under Paragraph 5B, the buyer has an unrestricted right to terminate during the negotiated Option Period by giving timely notice to the seller. The buyer does not have to identify a defect, financing problem or other reason. If the buyer properly terminates during the option period, the option fee is not refunded, but the earnest money is refunded. The option fee is credited to the sales price if the transaction closes.
There are two important catches. First, the option fee must be timely delivered. Under Paragraph 5D, failure to timely deliver the option fee within the three days Paragraph 5A allows eliminates the buyer’s unrestricted termination right under Paragraph 5. An extension works differently: TREC Form 39-11, the Amendment to Contract, gives no similar grace period. Item 7 has both parties sign a document stating the buyer has already paid the additional option fee — a representation made at the moment of signing, not a promise to pay within a few days after. A seller who signs before the money actually arrives is putting their name on a statement that may not be true. The safer course is for a seller to hold off signing the amendment until the additional fee is actually in hand.
Second, the deadline is strict. Paragraph 5B requires notice by 5:00 p.m. local time on the last day of the Option Period.
2. Financing Approval
If the contract includes the Third Party Financing Addendum, Form 40-11, the buyer may have additional termination rights. Under Paragraph 2A, if the contract is made subject to Buyer Approval and the buyer cannot obtain the required approval within the negotiated period, the buyer may terminate by providing the required notice and the lender’s written statement explaining the lender’s determination. Under Paragraph 2B, if the lender determines that the property does not satisfy the lender’s underwriting requirements, including issues involving appraisal, insurability or lender-required repairs, the buyer may terminate on or before the third day before closing, subject to the addendum’s requirements.
A buyer should not assume that simply becoming uncomfortable with the price or deciding not to obtain the loan creates a financing termination right. The actual financing addendum controls.
3. FHA or VA Appraisal Protections
FHA and VA financing have additional protections under Paragraph 4 of the Third Party Financing Addendum. Those provisions can allow the buyer to avoid being obligated to complete the purchase when the required appraisal protection has not been satisfied. Paragraph 2B requires the buyer to terminate on or before the 3rd day before closing; Paragraph 4’s FHA/VA provision carries no equivalent deadline.
4. A Separate Lender-Appraisal Termination Right
TREC Form 49-1, Addendum Concerning Right to Terminate Due to Lender’s Appraisal, can create an additional appraisal-based termination right in a conventional financing transaction. The addendum has three alternatives. Depending on which is selected, the buyer may waive the Paragraph 2B appraisal termination right, partially waive it, or receive an additional right to terminate if the appraisal falls below a specified amount and the buyer satisfies the addendum’s requirements. So a low appraisal does not automatically give every financed buyer a right to terminate. The actual addenda must be reviewed.
5. Lender-Required Repairs
This is an important right that buyers sometimes overlook.
Under Paragraph 7E of the current 20-19, if the parties do not agree who will pay for lender-required repairs or treatments, the contract terminates and the earnest money is refunded to the buyer. In addition, if the cost of lender-required repairs and treatments exceeds 5% of the Sales Price, the buyer may terminate and receive the earnest money back. This is different from simply finding expensive problems during an inspection. An inspection finding does not, by itself, create a new right to terminate after the Option Period has expired.
6. Seller’s Disclosure Notice
Under Paragraph 7B(2), if the buyer has not received the Seller’s Disclosure Notice and the seller fails to deliver it within the contractual period, the buyer may terminate before closing and receive the earnest money back. If the seller delivers the disclosure late, the buyer may terminate for any reason within seven days after receiving it or before closing, whichever occurs first.
7. Seller’s Water Disclosure
The current 20-19 also contains a separate provision for the Seller’s Disclosure About Groundwater and Surface Water Rights. Under Paragraph 7I, if the buyer has not received the required Water Disclosure and the seller fails to deliver it, the buyer may terminate before closing and receive the earnest money back. If it is delivered, the buyer may terminate for any reason within seven days after receipt or before closing, whichever occurs first. This is a contractual TREC provision. It should not be confused with the Seller’s Disclosure Notice under Property Code §5.008.
8. Title Commitment
Under Paragraph 6B, the seller must provide the title commitment and required exception documents within the contractual deadline. If those documents are not delivered within the applicable period, including the contract’s automatic extension, the buyer may terminate and receive the earnest money back.
9. Title and Survey Objections
Under Paragraph 6D, the buyer may timely object to certain title or survey matters. The seller generally has a 15-day Cure Period to address timely objections. If the objections are not cured, the buyer has five days after the end of the Cure Period to either terminate and receive the earnest money back or waive the objections. This is why buyers should not ignore the title commitment or survey simply because they are satisfied with the physical condition of the property.
10. HOA Information
If the property is subject to mandatory membership in a property owners association, the HOA Addendum, TREC Form 36-11, can create several termination rights. Depending on the option selected in Paragraph A, the buyer may have a right to terminate after receiving the subdivision information, or a right to terminate if the information is not timely delivered. Separately, Paragraph B gives the buyer a right to terminate before closing, with the earnest money refunded, if the subdivision information provided was not true or a material adverse change in it occurs before closing, this right applies regardless of which Paragraph A option was selected.
11. Casualty Loss
Under Paragraph 14, if the property is damaged or destroyed by fire or another casualty after the Effective Date and the seller cannot restore it by closing because of factors beyond the seller’s control, the buyer may terminate and receive the earnest money back. The buyer may instead have the option to extend the transaction or accept the damaged property under the terms specified in the contract.
12. Other Contractual and Addendum Rights
These are not the only termination provisions. Depending on the transaction, additional rights may arise under addenda concerning:
- sale of another property by the buyer;
- environmental conditions, threatened or endangered species, or wetlands;
- residential leases;
- fixture leases;
- natural resource leases;
- loan assumptions; and
- short sales.
For example, the current TREC Environmental Assessment Addendum allows a buyer to terminate within the negotiated period if a qualifying environmental report adversely affects the use of the property. The Addendum for Sale of Other Property by Buyer can provide for automatic termination if the buyer’s property does not sell and the contingency is not satisfied or waived by the specified date. The Residential Leases Addendum and Fixture Leases Addendum can also provide termination rights when required lease documents are not timely delivered or certain representations remain untrue.
A buyer should therefore review the entire contract and every addendum attached to it, not just the Option Period. If you want a complete list of the termination rights applicable to your particular contract, contact Prominus. We can identify the relevant provisions and deadlines rather than assuming the standard Option Period is the buyer’s only exit.
What if the buyer has no termination right left?
This is where the distinction between termination and default becomes critical.
Under Paragraph 15, if the buyer fails to comply with the contract, the seller may elect to enforce specific performance or other legal remedies, or terminate the contract and receive the earnest money as liquidated damages. The seller makes that election. A buyer cannot simply say, “I’ll give you the earnest money, so I’m out,” and assume the transaction is automatically over. The parties can, however, agree in writing to terminate the contract. Under Paragraph 22, the contract generally cannot be changed except by written agreement.
What happens to the earnest money?
Termination and release of earnest money are related but separate issues. Under Paragraph 18, the TREC contract provides a procedure for demanding and releasing earnest money after termination. If the other party objects, the escrow agent generally does not decide which party is legally entitled to the funds. That means a buyer should not assume that sending a termination notice automatically puts the earnest money in the buyer’s account.
How should a buyer terminate correctly?
First, identify the specific termination provision being used. Second, determine the exact deadline. Third, deliver written notice in the manner required by the contract.
Paragraph 21 requires contractual notices to be in writing and specifies the permitted methods of delivery. TREC also promulgates Form 38-8, Notice of Buyer’s Termination of Contract, which is the mandatory TREC form for a buyer’s termination notice when applicable. Keep proof that the notice was timely delivered, and separately address the release of the earnest money.
Bottom Line
A Texas buyer does not have a general right to change their mind after signing a real estate contract. But neither does signing a contract mean that the buyer has no way out. The Option Period is only one of several potential termination rights. Financing, appraisal, lender-required repairs, seller disclosures, water disclosures, title, survey, HOA information, casualty loss and various TREC addenda can create additional rights depending on the transaction.
This article is provided for general informational purposes and does not constitute legal advice. Termination rights and default remedies depend on the specific contract, addenda and facts of each transaction. Parties should consult qualified legal counsel regarding a particular transaction or dispute.
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