Option Fee and Proof of Delivery

The standard Texas residential real estate contract contains several options for buyers to terminate their contract for various reasons. While sellers may not like it, it makes sense that the person bringing the money has the most options.

The most popular option is the paragraph that requires the buyer to deliver an option fee for the right to terminate for any reason within a specified period of time. This time period is usually when the buyer will perform inspections. The option fee is payment for the buyer’s right to walk away from the contract. Whether or not they exercise that right doesn’t matter. The seller may cash an option fee check at any time and keep the option fee if the buyer terminates. Typically, the buyer gets credited for the option fee at closing when they do not terminate.

The option fee must be delivered to the seller or listing agent within three days after the effective date of the contract or the buyer may lose their rights under the option period. The crucial part of the option period is the DELIVERY of the option fee. Not receipt of the option fee. These are actually two different actions. Let me explain.

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When someone is buying a house, there is a deadline in which to deliver their earnest money to the title company. And they’d better not miss it. We don’t care if it’s too hot outside, they overslept, or the dog ate their homework. A deadline is a deadline.

A buyer has three days to deposit funds with the title company. If the third day is a Saturday, Sunday, or a holiday, then the last day to deliver it is moved to the following business day. The title company will sign a receipt of earnest money with both the date and time the funds are received.

What happens if a buyer doesn’t deliver the earnest money to the title company on time? The skies will open up and swallow them. Well, maybe not. But there are consequences.

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By Lydia Blair
Special Contributor

When selling a property, everyone wants to collect a big check. Well, maybe not an actual paper check, but lots of money. If you’re getting funds from the sale of your house, there are a couple of ways to collect your money from the title company when it closes. Just a couple.

Would you like a check or a wire? Those are your basic choices. Title companies can also transfer the funds to another transaction if you are purchasing another property. But we’re not going to pay you in real paper cash, foreign currency, with PayPal, Venmo, Bitcoin or anything else.

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By Lydia Blair
Special Contributor

Home buyers often like the sense of protection they feel when getting a home warranty on the property they are buying. Until they discover their home warranty is much less effective than expected.

Seasoned and savvy buyers know that a home warranty policy offers limited coverage. They aren’t all-inclusive. In my opinion, some are kind of useless.

Why hate on home warranty companies? I order a lot of home warranty policies as part of my job. And I’ve had home warranty policies on my own properties. Seems like we all have stories of rejected claims and paltry payouts.

Most homeowners who get a home warranty policy do so at the time they purchase a home. Sometimes they negotiate for the seller to pay for a one-year policy as part of their purchase contract. That may be the best reason to get one.

“Any person can buy a home warranty in most cases,” says Julie Jones, Vice President of Real Estate Sales for Nations Home Warranty. “There are different plans and different pricing. You might get your best deal if you’re getting it at the time you are buying a home. “

Just what are home warranties and what do they cover?

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By Lydia Blair
Special Contributor

If you’re in debt to the IRS, good old Uncle Sam may put a lien on your property. And he isn’t going to let you sell your home without paying that lien.

When someone has a federal income tax lien filed against them, the debt attaches to all of their property, which includes their homestead. Federal income tax liens (also known as IRS liens) are called Super Liens. That basically means you can be super sure they’re going to collect the money owed them when the house sells. 

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By Lydia Blair
Special Contributor
 
Disaster can strike a home at any time. Even the day before it’s scheduled to be sold. Be it hail, wind, fire or water, a casualty loss to property while it’s under contract can be disastrous.

But, there are remedies. The Texas real estate contract folks thought of many ‘what if’ scenarios and they’ve incorporated them in the standard sales contract. A casualty loss results from a sudden, unexpected event like a storm or fire. Casualty losses are addressed in paragraph 14 of the contract. It states that if any part of the property is damaged or destroyed by casualty loss between the time the contract is executed and the closing, the seller shall restore the property to its previous condition as soon as reasonably possible.

That sounds simple on paper but not so much in real life. Often the damage can’t be repaired prior to closing due to no fault of the seller. For example, when a hail storm hits the neighborhood two days before closing, it isn’t likely the roof will be replaced or repaired that quickly.

The seller has obligations and responsibilities for the property when it is under contract and before closing. They must make efforts to restore the property to its previous condition by the closing date. No messing around here. If the seller doesn’t comply, the seller can be in default. There are options available if the seller cannot restore the property before closing due to factors beyond the seller’s control. Note that I said, “due to factors beyond the seller’s control.”

If the seller cannot restore the property by the closing date due to factors beyond their control, the buyer has three options:

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By Lydia Blair
Special Contributor

Lots of folks are dying to buy or sell a home. They may be eager, desperate, impatient, or anxious. However, they’re not literally dying.

Except when they are.

Yes, it has happened that a buyer or seller dies while they have a property under contract. They could die the day after the contract is signed or as they are walking into the title company on closing day. Both of those scenarios have occurred in offices where I’ve worked and it’s awful for everyone.

But what happens to the deal?

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By Lydia Blair
Special Contributor

Selling the marital home. Some refer to this as the great divide. Getting divorcing spouses to agree on selling their home, an asking price, an agent, the final sales price, etc. can be difficult and stressful at best. Emotions and tensions can run high well before we add on the legal requirements of transferring title of the property.

The unfortunate, but real, scenario of legally selling a home while divorcing can combine some difficult tasks. It requires cooperation from all parties. While everyone’s situation is different, there are basically two ways to divide the property before, during, or after a divorce.

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