The Texas One to Four Family Residential Contract: What Buyers and Sellers Should Read Before Signing

This article provides general educational information about the Texas residential sales contract and the buying and selling process. It is not legal advice, and it is not a substitute for reading the actual contract, addenda, and disclosures in your transaction. Consult a licensed Texas real estate broker or a licensed Texas attorney for guidance specific to your deal.

The One to Four Family Residential Contract (Resale) is the standard contract behind most resale home purchases in Boerne, Fair Oaks Ranch, San Antonio, and across the Texas Hill Country. It is the form promulgated by the Texas Real Estate Commission, and as of July 1, 2026 the current edition is Form 20-19 [1][2]. Nearly every negotiated sale of a single-family home, duplex, triplex, or fourplex runs on this document, so the practical question for buyers and sellers is not whether the contract is used, but what each of its paragraphs actually means. This guide walks through the clauses that decide a deal: earnest money, the option period and option fee, financing, title and survey timing, closing, and the remedies that apply when a transaction falls apart [2][3].

A note on sourcing before the details. The contract mechanics below come from the Texas Real Estate Commission's own form and its associated addenda, plus the industry guides and market sources cited at the end, all checked in October 2026 [1][4][5]. Earnest money, option periods, and option fees are negotiated amounts rather than fixed legal figures, so the typical ranges in this article are market practice rather than rule [4][5][6][7]. The form itself is the authority for your specific transaction, and TREC publishes the current edition on its website [1].

What the One to Four Family Residential Contract is, and is not

The contract is the state-promulgated agreement used for the resale of one to four family residential properties: single-family homes, duplexes, triplexes, and fourplexes [1][2]. It is the TREC form most Hill Country buyers and sellers sign, but it is not the only real estate contract in Texas, and using the right one matters [2].

The form is not used for new construction sold directly by a builder, whose own construction contracts govern those sales; it is not used for condominiums and townhomes, which have their own TREC forms and property regimes; and it is not used for farm, ranch, and raw land transactions, which run on the TREC Farm and Ranch Contract or the Unimproved Property Contract [2]. For a Hill Country buyer that distinction matters more than in most markets, because a home on several acres in Boerne can be documented either way depending on whether it sells as a residential property or as a farm and ranch property, and the two contracts carry different provisions. If you are buying acreage, confirm which form is being used, and why, before you sign [2].

How the contract becomes effective, and why the dates matter

The Effective Date is the date the last party signs the contract, and it is day zero for almost every deadline that follows [3][4]. Everything in the contract runs from that date: the delivery of earnest money, the start of the option period, the delivery of the title commitment, and the financing approval deadline [3][4]. The contract sets these deadlines in calendar days, and when a deadline falls on a Saturday, Sunday, or legal holiday, it extends to the next business day [3][4].

This is where most confusion starts. A contract signed on a Monday can have an option period that ends on a date that looks short on the calendar, because the days are counted in calendar days from the Effective Date rather than business days [3][9]. Mark the Effective Date on a calendar the day the contract is signed, and work backward from each deadline you care about, rather than assuming a weekday count [9].

Earnest money: the good-faith deposit, and when it is at risk

Paragraph 5 of the contract covers earnest money and the option fee [3]. Earnest money is the good-faith deposit the buyer delivers to the escrow agent, typically the title company, as proof the offer is serious. Under the contract the buyer delivers it within three days after the Effective Date, and the escrow agent holds it until closing [3][4].

How much earnest money is typical in Texas? The amount is negotiated, and market practice generally runs 1 to 3 percent of the sales price [4][6][7]. On a $600,000 Boerne contract, 1 percent is $6,000 and 3 percent is $18,000. On a Fair Oaks Ranch contract in the $700,000s, the same percentages land between roughly $7,000 and $21,000. The size of the deposit is a signal of seriousness, and in a competitive market a stronger deposit can matter as much as a higher offer price [4][6][7].

Earnest money is refundable when a transaction fails for a valid reason: the buyer terminates during the option period, the financing contingency is not satisfied in time, the seller cannot cure a title objection, or a party defaults in a way the contract protects. It is at risk when the buyer defaults without a valid termination right, which is where Paragraph 15 comes in later in this guide [3][8].

The option period: your exit, your inspection window

The option period is the negotiated number of days during which the buyer can terminate the contract for any reason, or for no stated reason at all [5][9]. Typical option periods run 7 to 10 days, with 7 days the most common starting point, and the period is counted in calendar days beginning the day after the Effective Date [4][5][9].

If the buyer terminates within the option period, the earnest money is refunded and the option fee stays with the seller, which is exactly what the fee is for: it buys the right to walk away [5]. If the transaction closes, the option fee is typically credited toward the sales price [3][5].

The option period is when the due diligence happens. This is the window for the home inspection, the title commitment review, the survey, repair estimates, and the checks that matter most on Hill Country property, including well logs on acreage and aerobic septic system records. The site's Hill Country inspection guide lists what out-of-state buyers specifically miss, and the option period guide covers the timing in detail. A few hundred dollars of option fee is the cheapest insurance a buyer will pay in the entire transaction [5][9].

Financing: Paragraphs 3 and 4, and the Third Party Financing Addendum

Paragraph 3 breaks the purchase price into the cash portion plus the sum of all financing, and Paragraph 4 sets the financing contingency terms [3]. The financing itself is described in one of three addenda: the Third Party Financing Addendum, which is the standard bank-loan contingency; the Loan Assumption Addendum; or the Seller Financing Addendum [3].

The Third Party Financing Addendum is where the buyer's protection actually lives. It states the loan type, the loan amount, the interest rate, and the date by which the lender must approve the loan, and it sets what happens if approval does not arrive in time [3]. A buyer who reads nothing else in the financing package should read the approval deadline, because that date decides whether a delay in underwriting can put the earnest money at risk [3][14].

Financing and the option period are separate clocks that run in parallel, and mixing them up is a common mistake. The option period is the buyer's exit for any reason; the financing addendum is the buyer's exit specifically when loan approval does not happen in time [3][4]. Both matter, neither replaces the other, and the pre-approval guide explains the document package lenders want before a buyer ever signs a contract.

Title, survey, and the 20-day clock

Paragraph 6 handles the title policy, the survey, and the title commitment [3]. Under the contract the seller furnishes the title commitment and its exception documents, and the title company generally has 20 days from receipt of the executed contract to deliver the commitment [3][7][10]. The buyer reviews what the title company found and must object in writing to title defects, exceptions, and encumbrances by the earlier of the closing date or the stated number of days after receiving the commitment, exception documents, and survey [3].

If the buyer objects in time, the seller must cure the timely objections within 15 days of receiving them, with the closing date extended as needed, and if the seller cannot cure them the buyer may terminate [3]. This is why the title commitment deserves attention during the option period rather than the week of closing, and the site's title insurance guide walks through the four schedules and the minerals, easements, liens, and survey lines Hill Country buyers should check.

Under Paragraph 6 the seller also furnishes an existing or new survey prepared by a registered professional land surveyor acceptable to the title company and the lender [3]. On Hill Country acreage the survey is where boundary conflicts, encroachments, and access questions surface, including the recorded and unrecorded ranch roads covered in the site's easements and access guide, and a current survey is the reliable way to remove the standard survey exception from the owner's policy [3][10]. The site's survey fraud guide explains how to verify a survey before relying on it.

Closing, possession, and prorations

Beyond the deadlines, the contract fixes the closing date, the possession date, and how the ongoing costs of the property are divided between the parties [3]. Texas property taxes are assessed and paid in arrears, so the contract states how taxes are prorated between buyer and seller based on the closing date, and HOA assessments are handled the same way. Possession is commonly at closing, but it can be a later agreed date, including a short leaseback when a seller needs time after the closing table [3][14].

The site's closing costs guide lays out which fees land on which side of the settlement statement, and the seller's disclosure notice guide covers the document most sellers complete before the contract is ever signed.

What happens when a deal falls apart

Paragraph 15 sets the default remedies [3]. If the buyer defaults, the seller may terminate the contract and keep the earnest money as liquidated damages, or the seller may seek specific performance, a court order compelling the sale to be completed [3][8]. If the seller defaults, the buyer may terminate and recover the earnest money, or seek specific performance and other legal relief [3][8].

In practice, specific performance is the exception rather than the rule: it requires a lawsuit, and most failed transactions end with a negotiated release of earnest money and both parties moving on [8]. What matters for planning is that the clause is what makes the deposit enforceable. A buyer who walks away without a valid termination right is giving the seller a claim to the earnest money, and a seller who fails to close without a valid reason is giving the buyer a claim for specific performance [3][8].

What this looks like on a Hill Country purchase

The market context makes the contract concrete. Boerne's median sale price sat near $628,000 in the most recent San Antonio Board of Realtors reporting for Kendall County, with individual sources reporting higher or lower depending on methodology, and Fair Oaks Ranch's median close price ran about $740,000 in mid-2026 reporting [11][12][13]. On contracts in those ranges, earnest money in the 1 to 3 percent band lands in the low five figures, the option fee is a few hundred dollars, and a financed closing typically schedules out 30 to 45 days from contract to closing, with cash purchases able to close in about two weeks [4][6][14][15].

For a Boerne or Fair Oaks Ranch buyer, that schedule is compressed by the due diligence list. In 30 to 45 days the buyer has to complete the inspection, the title and survey review, the well and septic checks on acreage, the financing approval, and the final walkthrough, all gated by the deadlines in the contract [14][15]. The sellers who handle these purchases smoothly are the ones who read the contract before signing, not at the table, and the buyers who avoid surprises are the ones who treat the option period as the working window it is [2][5].

Common mistakes buyers and sellers make

• •Skipping the option period to save a few hundred dollars. The option fee is the smallest line in the transaction, and it is the only one that buys an unconditional exit. Removing it to look more competitive usually removes the inspection window that protects the buyer [5][9].
• •Assuming the option fee is refundable. It is not. The fee is the seller's once the contract is signed, and that is the entire point of it [5].
• •Confusing the option period with the financing deadline. They are separate clocks with separate consequences. The option period is an unconditional exit; the financing addendum is a conditional one tied to loan approval [3][4].
• •Waiting until closing week to read the title commitment. The objection and cure deadlines pass long before the closing date, and a buyer who finds a problem late has fewer options [3][10].
• •Not checking which contract form applies on acreage. A five-acre tract can be documented as residential or as farm and ranch, and the two contracts carry different terms [2].
• •Treating the contract as a formality. It is a binding, enforceable agreement with liquidated damages and specific performance behind it. The deadlines are real, and so are the remedies [3][8].

Frequently asked questions

Is earnest money refundable in Texas?

Earnest money is refundable when the transaction ends for a valid reason: termination during the option period, a financing contingency that is not satisfied in time, a title objection the seller cannot cure, or a default by the seller [3][8]. It is at risk when the buyer defaults without a valid termination right [3][8].

What is the difference between earnest money and the option fee?

Earnest money is the refundable good-faith deposit applied toward the purchase price at closing. The option fee is a separate, non-refundable payment to the seller that buys the buyer the right to terminate for any reason during the option period [3][4][5].

How long is a typical option period in Texas?

Option periods typically run 7 to 10 days, with 7 days the most common starting point. The period is counted in calendar days beginning the day after the Effective Date [4][5][9].

What happens if the buyer cannot get financing?

If the buyer cannot obtain loan approval by the deadline in the Third Party Financing Addendum, the financing contingency lets the buyer terminate and recover the earnest money, provided the addendum's requirements were met [3][14]. The key is the approval deadline in the addendum, which is why buyers should confirm it matches their lender's realistic timeline [3][14].

What happens if the seller cannot fix a title issue?

The buyer objects within the stated deadline, and the seller has 15 days to cure the timely objections. If the seller cannot cure them, the buyer may terminate the contract [3][10].

Do buyers and sellers need a lawyer to sign this contract in Texas?

No. Texas does not require a lawyer to buy or sell residential real estate, and most transactions close with the parties represented by licensed real estate agents. Buyers and sellers may hire a Texas real estate attorney to review the contract and addenda, which can be worthwhile on complex deals such as acreage, probate, or leasebacks [1][2].

The bottom line

The One to Four Family Residential Contract is a binding, state-promulgated document, and most Hill Country home sales run on it. The clauses that decide the outcome are the Effective Date, the earnest money and option fee in Paragraph 5, the financing addenda in Paragraphs 3 and 4, the title and survey clock in Paragraph 6, and the default remedies in Paragraph 15 [3]. Buyers should treat the option period as the working window for inspection, title, survey, and well and septic checks, and both sides should confirm the financing and closing deadlines against reality before signing [2][3][5]. The contract is the framework; reading it is what keeps a Hill Country deal from being decided by a deadline nobody tracked [2][9].

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Sources

1. Texas Real Estate Commission, One to Four Family Residential Contract (Resale). The current edition of the promulgated form (Form 20-19, effective July 1, 2026) and the forms it is used for. trec.texas.gov
2. LegalClarity, "TREC 1-4 Family Residential Contract Explained." The scope of the form and the contracts used for other property types. legalclarity.org
3. TREC One to Four Family Residential Contract (Resale) Form 20-16. The paragraph structure including Paragraph 5 (earnest money and option fee), Paragraphs 3 and 4 (financing), Paragraph 6 (title and survey), and Paragraph 15 (default remedies). trec.texas.gov
4. Freedom RE, "Earnest Money in Texas: Rules, Deadlines & Amounts." Typical earnest money amounts, the three-day delivery deadline, and the refund rules. freedom-res.com
5. Freedom RE, "Option Period in Texas: How It Works, When It Ends." The option fee, the calendar-day count, and what happens on termination. freedom-res.com
6. Redfin, "How Much Is Earnest Money in Texas?" Typical earnest money as a percentage of the sales price. redfin.com
7. Texas Real Estate Research Center (Texas A&M), "Option Period Basics." The purpose of the option period and the typical fee. trerc.tamu.edu
8. Keller Firm, "What Happens to Your Earnest Money When a Seller Breaches Contract in Texas." The default remedies under the standard contract and how earnest money is handled. kellerfirm.com
9. LegalClarity, "How to Calculate the Option Period in Texas." Calendar-day counting from the Effective Date. legalclarity.org
10. Freedom RE, "TREC One to Four Family Residential Contract (20-19): Paragraph Guide." Paragraph-by-paragraph guidance on title, survey, and the commitment clock. freedom-res.com
11. Weigand Real Estate, "2026 Boerne TX Housing Market Update." Boerne median sale price context and market methodology. weigandrealestate.com
12. Kuper Sotheby's, "Fair Oaks Ranch, Boerne Market Update." Fair Oaks Ranch median close price for mid-2026. marketupdates.sothebysrealty.com
13. Community Impact, "Median home prices increase year over year in Boerne, Fair Oaks Ranch." Kendall County median price reporting and the range across sources. communityimpact.com
14. LRG Realty, "Closing Timeline After Offer Acceptance in Texas." Typical 30 to 45 day financed closings and faster cash timelines. lrgrealty.com
15. Neuhaus Realty, "Complete Guide to Closing on a Home in Texas." The closing schedule, prorations, and the financed purchase timeline. neuhausre.com

The facts above were checked on October 27, 2026 against the Texas Real Estate Commission's form and forms library, the industry guides cited, and the market sources listed. Contract forms, deadlines, and market figures change, so confirm anything time-sensitive with the current TREC form and your own transaction documents.

Last verified: October 27, 2026