iTexas Realty Co. Blog: How to Miss Deadlines and Lose Your Texas Buyer's Money

Here in Texas, we use a contract clause called an "Option Period" when writing a residential re-sale contract.  It is a period of generally 5-10 days that a Buyer uses to perform their due diligence: Inspections crime stats, sex offender data base, questions regarding an adjacent vacant tract of land, etc.  The Buyer pays for this privilege and the amount is negotiated between the Buyer and Seller.  $100 would be a typical fee to purchase a 5 day Option Period on a $150,00 home.

The Option Period gives the Buyer an UNRESTRICTED right to cancel- that's right, UNRESTRICTED. 

The Buyer does not even have to give a reason.  Today, I had to call one of our Sellers and let them know that although we had been verbally advised, three days ago, that the prospective Buyer of their home would be canceling their contract to purchase; the Notice of Buyer's Termination of Contract had not been received and that the Buyer's Option Period had expired at 12:01am on May 29th.  My Sellers are familiar with all of the relevant dates as I had sent them a contract time-line.  Once the Option Period is completed, the property becomes a PENDING SALE.

Buyers and Sellers: Please remember that all agreements in Texas real estate MUST be in writing to be binding!

The situation is so disappointing as I had advised the Buyer's agent via text message on May 28th that we were still awaiting the Notice of Buyer's Termination of Contract and she responded that it would be there the following day - the final day of the Buyer's OPTION PERIOD.  Now, unless the Buyer can get a letter stating that they can no longer qualify for the loan, the Seller is likely to retain their Earnest Money

Please bear in mind that the Seller isn't running a scam to keep the Buyer's Earnest Money, the Seller is simply trying to get the house sold.  The Buyer has tied up the property for a time, potentially limiting other Buyers, as other Buyers may be reticent to write an offer when a contract is already in place. 

This morning, I posted the property as Pending (Pending Showing For Back Up, specifically), as it is a requirement of the San Antonio Board of Realtors Multiple Listing Service Rules for property status changes to be updated within 24 hours.  I am not happy to see the Buyer potentially lose their Earnest Money, but my legal obligation in this instance is to the Sellers and the Sellers' best interest.

It is the Buyer's agent's job to help the Buyer comply with contract deadlines that will affect the Buyer. Missing those deadlines can cost the Buyer money and worse, potentially expose that Buyer to a lawsuit for specific performance - the court-ordered purchase of a property that they already decided they didn't want.

It's a shame -and all over a simple, one page notice to the Seller.

--Sara