SECTION 23 – TERMINATION OPTION

23. TERMINATION OPTION: For nominal consideration, the receipt of which is hereby acknowledged by Seller, and Buyer’s agreement to pay Seller $______ (Option Fee) within 3 days after the effective date of this contract, Seller grants Buyer the unrestricted right to terminate this contract by giving notice of termination to Seller within ___ days after the effective date of this contract (Option Period). Notices under this paragraph must be given by 5:00 p.m. (local time where the Property is located) by the date specified. If no dollar amount is stated as the Option Fee or if Buyer fails to pay the Option Fee to Seller within the time prescribed, this paragraph will not be a part of this contract and Buyer shall not have the unrestricted right to terminate this contract. If Buyer gives notice of termination within the time prescribed, the Option Fee will not be refunded; however, any earnest money will be refunded to Buyer. The Option Fee  will  will not be credited to the Sales Price at closing. Time is of the essence for this paragraph and strict compliance with the time for performance is required.

 

The option period affords the buyer the unrestricted right to terminate the contract for any reason. This allows them the time to inspect the property and negotiate any necessary repairs before committing to the purchase. The specifics of the option period, such as the duration and fee, can be negotiated between the buyer and seller. In Dallas-Fort Worth, it is common to request a 3-7 day option period for a $100-$500 fee. The option fee is paid directly to the seller and is typically credited back to the buyer at closing. 

During the option period, the buyer can conduct inspections to identify any issues or repairs needed. However, the seller is not obligated to perform these repairs, leading to potential negotiations between the parties. If an agreement cannot be reached during this period, the buyer can exercise their unrestricted right to terminate the contract, with the only consequence being the loss of the option fee. The earnest money is not at risk if the termination occurs within the option period. 

The option period is crucial for protecting the buyer's interests in a real estate transaction. It allows for a time frame to conduct inspections and negotiate repairs, mitigating the risk of buyer's remorse. It is recommended that buyers always secure an agreed-upon option period when purchasing a home to ensure they have a way to terminate!