The Texas TREC 20-18 Contract, Explained in Plain English
Every paragraph of the One to Four Family Residential Contract (Resale) — what it does, what the buyer should watch, what the seller should watch.
¶1 — Parties
Names who sells and who buys. These names must match the deed and the buyer’s loan documents.
BuyerUse your full legal name. If you plan to take title in an LLC or trust, say so now — changing later needs an amendment.
SellerEvery owner on the deed must be listed and must sign. A missing spouse can sink closing in a community-property state like Texas.
¶2 — Property
Defines what is being sold: the land, everything permanently attached (2B), listed accessories (2C), minus anything the seller excludes in 2D.
BuyerIf it is not nailed down and not listed in 2B/2C, it does not convey. Want the fridge or the washer? That belongs in a Non-Realty Items Addendum, not here.
SellerAnything you want to keep — a chandelier, mounted TVs, a pool robot — must be written into 2D before signing, and you must remove it before possession.
¶3 — Sales Price
Cash portion (3A) plus financed portion (3B) must equal the sales price (3C). The financing details live in the checked addendum.
BuyerIf the appraisal comes in low, this paragraph does not save you — that protection lives in the financing addendum or the appraisal addendum.
SellerCheck that 3A + 3B actually equals 3C. Math errors here cause amendments later.
¶4 — Leases
Discloses leases that ride with the property: residential tenants, leased fixtures (solar panels, propane tanks, water softeners), and natural-resource leases.
BuyerA leased solar system is a monthly bill you inherit. If 4B is checked, demand the fixture-lease terms during the option period.
SellerAfter the effective date you cannot sign new leases or amend old ones without the buyer’s written consent.
¶5 — Earnest Money & Termination Option
Buyer delivers earnest money plus the Option Fee within 3 days. The Option Fee buys the unrestricted right to walk away during the Option Period — notice due by 5:00 PM on the last day.
BuyerThis is your escape hatch. Miss the fee delivery and the option evaporates (5D). The 5:00 PM deadline does not move for weekends. Terminate in time and you get the earnest money back; the Option Fee stays with the seller.
SellerThe delivery deadline extends past weekends and holidays — do not call default a day early. Once the Option Period lapses, the buyer’s free exit is gone.
¶6 — Title Policy & Survey
Who pays for title insurance, which survey option applies, and the objection machinery: commitment within 20 days, buyer objections due, seller gets 15 days to cure.
BuyerRead the commitment when it lands — your objection window is short and silence waives it. On the survey: option (1) reuses the seller’s old survey; if your lender rejects it, watch who pays for the new one.
SellerIf you promised the existing survey and T-47 and miss the deadline, the buyer gets a new survey at YOUR expense. Dig out that survey the day you sign.
¶7 — Property Condition
Buyer’s inspection rights, the Seller’s Disclosure Notice, and the as-is choice: 7D(1) pure as-is, or 7D(2) as-is except listed repairs.
Buyer“As is” does not kill your option-period exit or your right to negotiate repairs by amendment. If the disclosure never arrived, 7B(2) gives you a termination right all the way to closing.
SellerDeliver the disclosure notice fast — late delivery hands the buyer a 7-day termination window whenever it lands. Repairs in 7D(2) must be specific; “subject to inspection” is not allowed.
¶8 — Brokers & Sales Agents
Brokers disclose if they are a party or related to one. Fee obligations live in separate agreements, not this contract.
BuyerNothing here to act on unless your agent has a stake in the deal — then read the disclosure blank.
SellerSame — check the disclosure blank if an agent is buying or related to the buyer.
¶9 — Closing
Close on or before the stated date, or within 7 days after title objections are cured, whichever is later. Miss it and the other side can use Paragraph 15 remedies.
BuyerLine this date up with your loan lock and lease end. A weekend or holiday closing date is a drafting error — fix it by amendment.
Seller“On or before” means the buyer may close early only if you both agree logistics. The 7-day objection tail can lawfully push closing past the stated date.
¶10 — Possession
Buyer takes possession at closing and funding, or under a temporary lease. Anything else creates a tenancy at sufferance.
BuyerIf the seller stays after closing, insist on the TREC temporary lease — without it you have an unprotected occupant, and your insurer may balk.
SellerNeed days after closing? Check the temporary-lease box and sign the lease form. A handshake leaseback exposes you badly.
¶11 — Special Provisions
Factual, informational additions only. Agents who draft rights-changing language here are practicing law without a license.
BuyerAnything that changes who can do what belongs in a promulgated addendum or attorney-drafted language — not typed here by an agent.
SellerSame. If a sentence in this blank waives, terminates, or overrides anything, ask who drafted it.
¶12 — Settlement & Other Expenses
Splits closing costs. 12A(1)(b) is where a seller contribution to the buyer’s brokerage fee lives; 12A(1)(c) caps other seller-paid buyer expenses.
BuyerThe (c) cap is real money — lender fees beyond it are yours. If an expense exceeds a stated cap, either side can walk unless someone eats the excess.
SellerEverything you agreed to pay is here. Check (b) and (c) against what you actually negotiated.
¶13 — Prorations
Taxes, rents, and dues split at closing day. If the tax bill changes after closing, the parties true it up later.
BuyerIf the seller had exemptions you will not have (homestead, over-65), your real tax bill will be higher than the prorated figure suggests.
SellerThe true-up obligation survives closing — the buyer can come back when the November tax bill lands.
¶14 — Casualty Loss
Fire or storm before closing: seller must restore. If they cannot in time, buyer may terminate, extend up to 15 days, or take the insurance proceeds plus deductible credit.
BuyerAfter a big storm you hold three options — choose deliberately, in writing.
SellerKeep your insurance active until funding. Your restoration duty runs to the closing date.
¶15 — Default
The remedies clause: specific performance or terminate-and-take-earnest-money, for either side.
BuyerIf the seller balks, you can sue to force the sale — or take your earnest money and go.
SellerIf the buyer walks without a contractual exit, the earnest money is your liquidated damages — this is why thin earnest money is weak protection.
¶16 — Mediation
Disputes go to mediation before court. Costs split equally.
BuyerYou cannot skip straight to a lawsuit for most disputes.
SellerSame rule both directions.
¶17 — Attorney's Fees
Whoever wins a legal fight over this contract collects reasonable attorney’s fees from the loser.
BuyerCuts both ways — it disciplines weak claims.
SellerSame.
¶18 — Escrow
Rules for the escrow agent holding the earnest money: demands, releases, and the 15-day silence rule on disbursement.
BuyerIf the deal dies, sign the release promptly or send a written demand. Ignoring a demand for 15 days lets the agent pay the other side.
SellerWrongfully refusing to release earnest money costs you damages, the earnest money itself, AND attorney’s fees (18D).
¶19 — Representations
Representations survive closing; a false one on closing day is default. Seller may keep showing the property and take backup offers.
BuyerBackup offers behind you are legal and common — keep your deadlines tight.
SellerAnything you represented must still be true at closing.
¶20 — Federal Requirements (FIRPTA)
If the seller is a “foreign person” under the tax code, the buyer must withhold part of the proceeds for the IRS.
BuyerThe title company handles the mechanics, but the withholding duty is legally yours. Get the seller’s non-foreign affidavit at closing.
SellerNon-US seller? Loop in a CPA before closing, not after.
¶21 — Notices
Where legally effective notices go. A notice sent to the address in this paragraph counts even if nobody reads it.
BuyerUse an email you actually monitor. Termination notices land here — a missed notice is still effective.
SellerSame. And copy-to-agent lines matter: fill them in.
¶22 — Agreement of Parties (Addenda)
The entire-agreement clause plus the checklist of attached addenda. An unchecked addendum is not part of the deal.
BuyerCount the checked boxes, then count the attached documents. They must match exactly.
SellerSame audit. A financing addendum referenced in 3B but unchecked here is a consistency error.
¶23 — Consult an Attorney
Brokers cannot give legal advice. The attorney blanks are optional but the advice is not decorative.
BuyerFor anything nonstandard — estates, entities, leases, minerals — an hour of real estate attorney time is cheap insurance.
SellerSame.
Educational only — not legal advice. TREC forms are for use by trained license holders; talk to your broker or an attorney about your specific transaction.
