Who can terminate a real estate contract?

The termination option paragraph of the Texas purchase contract provides the Buyer, and only the Buyer, with an opportunity to create an “option period,” during which the Buyer has the unrestricted right to terminate the contract.   When such an option is purchased, the following must apply:

  • Monetary consideration must be paid to the Seller
  • Time is of the essence with regard to the termination option
  • The right is unrestricted – the buyer may terminate for any reason

In virtually every transaction, buyers opt to purchase the termination option.  A typical option period in The Woodlands may be 10 days with $100 consideration paid directly to the Seller at the time the contract is signed and executed.  The fee paid for the termination option is not refundable.

During the option period is the recommended time to have any and all home and property inspections performed.  This allows the Buyer to determine and assess the soundness and condition of the home during the same period of time that they also have the unrestricted right to terminate the contract.

Inspection fees and costs are paid directly to the inspector at the time of service, so be sure to factor-in these up-front expenses when determining a buying budget. Costs usually vary by inspector and differ based on the inspectors’ background and certifications.  For example, some are licensed engineers and are qualified to perform foundation inspections.  Some common inspections and cost estimates in The Woodlands area are:

  • Structural and mechanical home inspection:  $375 – $650
  • Pool inspection:  $75 – $125
  • Pest and termite inspection:  $75 – $100
  • HVAC inspection:  $125 – $175 per unit

If the Buyer determines, as a result of inspections, that there are repairs needed to the home, then it is best to negotiate any requested repairs with the Seller before the termination option period comes to an end.

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