Extending the Termination Option in Texas Real Estate Contracts
When one of the parties needs more Option time than originally anticipated, the parties can mutually agree to an extension of the Option Period. Read more about the Termination Option here.
The TREC Amendment to Contract
When using TREC contract forms, the TREC Amendment (form 39-10, as of this writing) is how the parties agree to extend the Option Period. Paragraph (7) says “Buyer has paid Seller an additional Option Fee of $_____ for an extension of the unrestricted right to terminate the contract on or before 5:00pm on _______,20__. This additional Option Fee [ ] will [ ] will not be credited to the Sales Price.”
Extension vs. New Option Period
Texas case law indicates that options in contracts are not actually extended. Rather, the original option ends and a new Option Period begins if the parties agree in writing and if new consideration has been tendered.
“Buyer has paid Seller”
The Amendment states that the Buyer has already paid the Seller for the new Option Period, so it needs to be delivered to the Seller or Listing Broker ASAP if it hasn’t already. Failure to timely deliver the additional Option Fee may render the extension invalid. There is no provision on the Amendment form which addresses a delivery within 3 days, like the original Option Period in Paragraph 5. The paragraph has been written in a way to make it clear that additional money is required (rather than reading “no fee” or providing a checkbox for “no fee required”). Electronic payments are acceptable, if the parties agree, but any processing fees must be added to the amount sent by the Buyer to ensure that the Seller receives the full amount required under the Amendment.
Documenting Receipt of the Additional Option Fee
As of this post’s publication, there is not a space on the TREC forms for a Seller or Listing Broker to acknowledge receipt of the Additional Option Fee. At Paragon, we’ve made a helpful form for that, but any reliable written documentation will work – a text or email confirmation from the Seller or Listing Broker/Agent, confirmation of electronic delivery from Buyer to Seller, etc.
No Commingling!
A broker or agent who receives an electronic payment (Venmo, Paypal, CashApp, Zelle, etc.) for their Seller would be guilty of commingling and/or trust account violations, even if the money is only in their account briefly before being transferred to their Seller. If there is money belonging to the agent or broker in that account, then it’s commingling. Even if no personal or business funds are in that account, a broker can only receive money belonging to others into the broker’s Trust or Escrow Account; a sales agent is forbidden to have their own Trust or Escrow Account.
How Much is Enough?
The parties must decide how much money is sufficient consideration for the Option. In a hot market when the Buyer has been dragging their feet, the Seller may want hundreds or thousands. In a more normal or balanced market, especially if the Seller needs more time, the amount may be very small if the parties agree. Remember that the parties can’t agree to $0.00 or the Option fails.
Credited to the Sales Price?
The parties must choose whether the Additional Option Fee will be credited toward the Sales Price at closing. Remember that option fees are never refundable, only creditable at closing.
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Bart Stockton is Associate Broker (TX & OK) and Chief of Operations for Paragon. An educator at heart, Bart writes and instructs continuing education courses focusing primarily on the topics of contracts, law, ethics, and risk reduction. He has been using em dashes since well before the robots were taught how to write. Nothing in this post shall constitute legal advice; consult a skilled real estate attorney. ©2025 Bart Stockton Real Estate Education. All rights reserved. Used by permission.
