01
When does a Texas buyer have to deliver the earnest money?
Paragraph 5A gives the buyer 3 days after the effective date. Both the earnest money and the option fee go to the escrow agent inside that window. If the third day lands on a weekend or a legal holiday, the deadline moves to the next business day. The clock starts at the effective date, not at the showing and not at the offer.
What a strong answer sounds like
A good answer names the escrow agent and the exact due date. A buyer might hear this: the effective date is Monday, so both amounts are due at the title company by Thursday. Paragraph 5A sets one deadline for both, so they usually travel together.
Red flag
Telling a buyer to send the money whenever the title company calls ignores the date in the contract. Paragraph 5E states that time is of the essence and that strict compliance is required. A late delivery is not a paperwork hiccup.
02
Does the broker have its own deadline to deposit the earnest money?
A broker holding earnest money must deposit it by the close of business of the second working day after the principals execute the contract. The principals can agree otherwise in writing. That deadline comes from TREC Rule 535.146(b)(3), and it is a rule on the broker. It is not the buyer's deadline.
What a strong answer sounds like
A good answer keeps the two clocks apart. The buyer delivers inside 3 days under Paragraph 5A. A broker who is holding the funds deposits them by the close of business of the second working day. A buyer can ask where the money sits and on what date it was deposited.
Red flag
Quoting Rule 535.146(b)(3) back to a buyer as the buyer's own deadline is the common mix up. The rule binds the license holder who holds the funds. Paragraph 5A still governs the buyer, and the two clocks start on different events.
03
What happens if the earnest money is delivered late?
A late delivery hands the seller a choice. Under Paragraph 5C the seller may terminate the contract, pursue remedies under Paragraph 15, or do both. The seller does it by giving notice before the buyer delivers. The right lives in the gap between the deadline and the delivery.
What a strong answer sounds like
A good answer is a date, not a reassurance. The buyer or the buyer's agent confirms the delivery in writing and keeps the receipt from the escrow agent. Paragraph 5E says time is of the essence and that strict compliance is required, so proof of the day matters.
Red flag
Any version of the line that a seller will not care about one day is the red flag. Paragraph 5C does not ask whether the seller was harmed. A seller in a Texas deal with a better offer waiting needs only to send notice before the money arrives.
04
What happens if the buyer misses the option fee deadline?
Paragraph 5D answers this one directly. A buyer who fails to deliver the option fee on time does not have the unrestricted right to terminate. The contract itself does not end. The buyer stays under contract without the clean exit the option fee was meant to buy.
What a strong answer sounds like
A good answer separates the two results. The option is gone and the purchase contract is still alive. A buyer in that spot should ask which other exits the contract still carries, such as the title provisions in Paragraph 6.
Red flag
Two bad answers show up here. One says a late option fee voids the whole contract. The other says the option still works because the fee went out eventually. Paragraph 5D supports neither reading. The unrestricted right to terminate is lost, and the purchase contract carries on.
05
How does the option period keep the earnest money refundable?
Paragraph 5B gives the buyer an unrestricted right to terminate. The buyer gives notice to the seller within a negotiated number of days after the effective date, by 5:00 p.m. local time on the date specified. Terminate inside that window and the earnest money is refunded. The option fee is not refunded.
What a strong answer sounds like
In Georgetown, Round Rock and Liberty Hill, where T. Kerr Property Group works, that deadline belongs on the calendar first. A good answer from Georgetown realtors names three things: the number of days written into Paragraph 5B, the calendar date it falls on, and the hour. TREC's forms list carries a Notice of Buyer's Termination of Contract, Form 38-8.
Red flag
A spoken line that the buyer is out is not notice. Paragraph 5B runs on notice to the seller by a stated hour on a stated date. Waiting on a repair quote until the afternoon of the last day is the other common way the window closes.
06
What does the escrow agent need before it releases the earnest money?
Paragraph 18 governs escrow. Under Paragraph 18B, if no closing happens, the escrow agent may require a written release of liability from all parties before releasing any earnest money. No signed release, no money. A Texas buyer who is clearly owed a refund still waits on the paperwork rather than on the merits.
What a strong answer sounds like
Paragraph 18C sets the path. Either party, or the escrow agent, sends a release to each party, and the parties execute and deliver counterparts. TREC does not publish a Release of Earnest Money form. Form 50-0 states that release of the earnest money is governed by the contract.
Red flag
Holding a signature back for leverage is expensive. Under Paragraph 18D a party who wrongfully refuses to sign a release acceptable to the escrow agent within 7 days of the request is liable for damages, the earnest money, reasonable attorney fees and all costs of suit.
07
Where does the earnest money go at closing?
At closing, Paragraph 18B applies the earnest money first to any cash down payment, then to the buyer's expenses. Any excess is refunded. The option fee is credited to the sales price under Paragraph 5A(4). Neither amount vanishes, and neither one comes back as a separate payment to the buyer.
What a strong answer sounds like
A good answer shows the buyer where both credits land before closing day. The earnest money goes against the cash due at closing first, then against the buyer's expenses. The option fee reduces the sales price. A buyer should see both amounts itemized and should ask about any excess.
Red flag
Calling the earnest money a fee the buyer never sees again is wrong. It is the buyer's money applied to the buyer's side of the closing. Treating the option fee as a pure loss is the same error, because Paragraph 5A(4) credits it to the sales price.
This article is general information about the Central Texas market and is not legal, tax or financial advice. Statutes, rates, deadlines and district rules change. Confirm anything that affects a decision with a licensed attorney, a tax professional, the Williamson County Tax Assessor Collector or the Williamson Central Appraisal District before acting on it.
