Contracts
In Texas, what happens to earnest money if the buyer terminates under the option period (before the option expires)?
AThe seller retains all earnest money
BThe buyer recovers the earnest money but forfeits the option fee✓ Correct
CBoth earnest money and option fee are refunded to the buyer
DEarnest money is split between buyer and seller
Explanation
Under the TREC One to Four Family contract, if the buyer exercises the right to terminate during the option period, the earnest money is returned to the buyer, but the option fee is non-refundable and is retained by the seller as compensation for taking the property off the market during the option period.
Related Texas Contracts Questions
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