You are under contract to purchase a home and you paid a fee for a 10-day option period. What does this mean to you? To prevent a default on your end, it is crucial to understand what the option period is and when it ends.
The Option Period
The option period is your unrestricted right to terminate the contract during the agreed-upon period of time. It is the time in which you make your final, binding decision to purchase or not purchase the home. If you terminate within your option period, the fee you paid is non-refundable. On the other hand, if you move forward with the purchase, the option fee will credited to you at closing if this was agreed to during the negotiation of the contract.
Option Period Deadline
In Texas, the option period fee must be delivered to the seller within 3 business days of the executed contract. And the option period ends on the effective date at 5 p.m. local time where the property is located. If your effective option period date is January 22 and you have a 10-day option period, the option period will end on February 1 at 5 p.m. If you terminate the contract after the option period ends, you will be in default and will have to release the earnest money to the seller as liquidated damages.
During the Option Period
The option period is not a time to procrastinate, as the days tend to go by quickly. During the first day of the option period, you should schedule a professional home inspection to allow time to address any repairs if needed. If you need to have a structural engineer take a look at the foundation, or a roofing company inspect the roof, schedule these appointments as soon as possible. You want to allow yourself sufficient time to address and negotiate any needed repairs with the seller.
Extending the Option Period
The option period can be extended for an additional non-refundable fee by submitting an amendment to the contract to the seller. The amount of the additional fee is negotiable, and the extension must be agreed to by both parties before the original option period expires.
Use a Realtor
A real estate professional will help you understand the contractual elements in a real estate transaction, and help you stay on top of important deadlines.