Years ago the real estate contracts for pre-owned homes were described as caveat emptor or buyer beware. They have been revised by the Texas Real Estate Commission's Broker/Lawyer committee over the years to offer quite a bit more protection for the home buyer. One of the biggest caveats is in paragraph 23, the Termination Option. Also, known as the "option period" this paragraph when executed properly allows the buyer the unrestricted right to terminate the contract with a full refund of their earnest money. To take advantage of this option, the buyer must pay some "nominal fee" (usually $50 or $100) to the seller within two days of the effective date of the contract and specify the length of time (usually 5 to 10 days) they wish to have for due diligence. I say due diligence because it's during this time that a buyer will perform inspections on the property, visit with neighbors and/or schools, negotiate repairs etc. In actuality, no specific performance is required on the buyer's part for the right to terminate. The only cost to the buyer is the option fee itself and any cost they've incurred performing due diligence. The buyer can proceed with the purchase by ending the option period early through an amendment or just letting it expire. Upon expiration the property status is changed to "contract pending" and the next phases of the closing process begin.
Because of the option period and a number of other buyer protection clauses including financing, survey approval, HOA Subdivision information and seller's disclosure, the contract pending rider has become almost extinct. With a typical 30 day close, by the time the buyer protection clauses are all expired, the house has closed and funded.
You can read the contract itself and more at trec.state.tx.us or ask your Realtor for more information.
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1 comments:
Julie one thing to add: in this day and age many employers are relocating their employees and new hires using relocation services. Relo companies have an addendum that strikes much of what is in the TREC contract, including the right to an option period. Their addendum also takes away the right to mediation outlined in the contract. Our real estate agent had no experience dealing with relo companies, and as a result we were somewhat disadvantaged during the negotiation process, even in this buyers' market. We close next month with no major harm done, but in hindsight we probably would have made a few decisions differently had we been informed of the differences between purchasing a house from a relo company and purchasing a house from an individual.
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