TODAY'S EXPLAINER: Termination Option
The Termination Option is a clause in a TREC (Texas Real Estate Commission) form that allows a buyer to terminate a contract within a specific period, typically within a few days after the contract has been executed. This option is typically included in the contract to give the buyer an opportunity to review the property, obtain financing, and perform other due diligence before committing to the purchase.
If the buyer chooses to exercise the Termination Option, they must provide written notice to the seller within the specified period, along with the reason for terminating the contract. The notice should be sent by certified mail, return receipt requested, or another method that provides proof of delivery.
Upon receiving the notice, the seller must release the earnest money deposit to the buyer within a specified period, typically within ten days. The seller may also request a copy of any inspection reports or other information obtained by the buyer during the due diligence period.
It's important to note that the Termination Option is not automatic and must be explicitly included in the contract. The terms and conditions of the Termination Option can vary depending on the specific TREC form used and the negotiations between the buyer and seller.
Overall, the Termination Option provides an important protection for the buyer in the real estate transaction, allowing them to walk away from the deal if they uncover any issues or are unable to obtain financing, without forfeiting their earnest money deposit.
If the buyer chooses to exercise the Termination Option, they must provide written notice to the seller within the specified period, along with the reason for terminating the contract. The notice should be sent by certified mail, return receipt requested, or another method that provides proof of delivery.
Upon receiving the notice, the seller must release the earnest money deposit to the buyer within a specified period, typically within ten days. The seller may also request a copy of any inspection reports or other information obtained by the buyer during the due diligence period.
It's important to note that the Termination Option is not automatic and must be explicitly included in the contract. The terms and conditions of the Termination Option can vary depending on the specific TREC form used and the negotiations between the buyer and seller.
Overall, the Termination Option provides an important protection for the buyer in the real estate transaction, allowing them to walk away from the deal if they uncover any issues or are unable to obtain financing, without forfeiting their earnest money deposit.