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Reference

TREC Contract Walkthrough

The Texas One-to-Four Family Residential Contract (Resale) (TREC 20-18) is 10 pages of fine print that controls every dollar and deadline in your transaction. Here's what each paragraph actually does - and where to negotiate.

1

Parties

Buyer and seller legal names exactly as they appear on ID/title. Add "and/or assigns" if you're investing through an LLC you'll form later.
2

Property

Legal description (Lot, Block, Subdivision) + street address + included/excluded items. This is where you list the refrigerator, washer, dryer, and TVs you expect to convey. If it's not written here, the seller can take it.
3

Sales Price

Cash down + financed amount = total. Make sure financed matches your pre-approval letter.
4

Leases

Discloses existing tenant leases, mineral leases, or fixture leases (security system, solar, propane tank). Read every lease carefully - solar leases especially can wreck financing.
5

Earnest Money + Option Fee

Two separate dollar amounts, two separate purposes. Earnest money (1% typical) is held at title and credits at closing. Option fee (often $300–$500) buys the option period.
6

Title Policy & Survey

Who pays for the title policy (negotiable; usually seller). Whether seller provides existing survey + T-47 or buyer orders a new one ($450–$700).
7

Property Condition

7.B = seller's disclosure required. 7.D = repairs negotiation (most TX deals leave this blank and use the Amendment after inspection). 7.G = home warranty.
8

Brokers' Fees

As of August 2024, buyer's broker compensation is documented here. Negotiable.
9

Closing

Date both parties target. Build in cushion - 30+ days from contract is typical for financed deals.
10

Possession

When you get keys. Almost always "upon funding." If seller leases back, use the Seller Temporary Residential Lease (TREC 15-6).
11

Special Provisions

Single most-misused paragraph. Only license-holder-approved boilerplate goes here, OR truly bespoke terms your attorney drafts. Concessions, repairs, warranties, and contingencies belong in the proper paragraph or addendum, not here.
12

Settlement & Other Expenses

12.A.(1)(b) is the seller concession line - the most important blank on the contract for buyers maximizing savings. Cap by loan type (see scripts).
13

Prorations

Tax, HOA, and rent prorated to closing date. Standard.
14

Casualty Loss

If the home is damaged before closing, seller restores or buyer can terminate.
15

Default

Remedies if either party breaches. Liquidated damages = earnest money to seller if you default without cause.
16

Mediation

Required before litigation. Cheap insurance.
17

Attorney's Fees

Loser pays in any litigation. Discourages frivolous disputes.
18

Escrow

Title company role, dispute resolution for earnest money.
19

Representations

Standard - seller affirms authority to sell, etc.
20

Federal Tax Requirements

FIRPTA - if seller is foreign, 15% withholding applies. Rare but consequential.
21

Notices

How notices must be delivered. Always cc your agent and title officer.
22

Agreement of Parties

Addenda checkbox list. THE MOST OVERLOOKED PARAGRAPH. Common addenda for buyers:
  • Third Party Financing Addendum (TXR 1901) - almost always needed for financed buyers
  • Addendum for Property Subject to Mandatory HOA (TXR 1922) - required if HOA
  • Addendum for Seller's Disclosure of Information on Lead-Based Paint (homes built pre-1978)
  • Loan Assumption Addendum, Addendum for Reservation of Oil/Gas/Minerals, etc.
23

Termination Option

The option period itself - dollar amount, business days, deadline. The single most powerful buyer protection in Texas. Use it.

Three things buyers most often miss

  1. Forgetting to check addendum boxes in Paragraph 22. No checkbox = no addendum, even if attached.
  2. Listing concessions in Special Provisions (11) instead of 12.A.(1)(b). Lender may reject; some loans require concessions appear in the proper paragraph.
  3. Missing the Third-Party Financing Addendum termination deadline. Different from option period - usually 21 days. Miss it and you lose your financing escape hatch.
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