Ch. 04 · Contracts
Earnest money and the option period
Where your deposit sits, how much is typical on a new build, and what the option period does and does not do for a Texas buyer.
Earnest money is the good-faith deposit that tells the builder you are serious, and in Texas it is held by a neutral third party, typically the title company, not by the builder. This chapter covers how much to expect, who controls the money, and what the option period does and does not do for a new construction buyer.
Who holds your earnest money
Under Texas practice, earnest money goes to an escrow agent, usually a title company, within the days set by the contract (three days is the default in the standard TREC resale contract). The escrow agent cannot release the deposit to either side without an agreement or a court order. At closing, the deposit is credited toward your down payment and closing costs.
How much earnest money on a new build
On resale homes, earnest money in Texas commonly runs 1 to 3 percent of the price. New construction is different: builder contracts often require 1 to 5 percent, and many structure it in stages, an initial deposit at signing, then a larger amount at slab, framing, or pre-closing milestones. The staging matters, because the deposit schedule determines what you have at risk at each point in the build.
The option period, and why new builds usually do not have one
The option period is a negotiated window, commonly 3 to 10 days, in which a TREC resale buyer can terminate for any reason and get the earnest money back, losing only the option fee (typically $100 to $500, credited at closing). Builder purchase agreements are drafted differently and usually trade that unrestricted termination window for a limited set of deadlines (chapter 5). That difference is the single most common surprise for first-time new construction buyers in Texas.
What happens if you back out
Within an option period, you walk with your earnest money intact and lose only the option fee. After the option period, or under a builder contract with no option window, terminating without a contractual reason can mean the builder keeps your deposit as liquidated damages. Your leverage is the contract's own deadlines: financing contingencies, inspection deadlines, and completion-date protections. Know which ones you actually have before you sign.
Sources
Material factual claims in this chapter link to the sources below. Market figures are reported conditions, not guarantees; verify current offers in writing.
Written by
Theresa De La Rosa
Broker, Covenant Heritage Realty, LLC · TX #807294 · 18+ years in Texas and Florida real estate.
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