The TREC 1–4 Residential Contract is the backbone of almost every resale real estate transaction in Texas. It’s a legally binding, state-promulgated contract—and every blank, checkbox, date, and section matters.
When I represent buyers or sellers, I walk them through this contract line-by-line so nothing is confusing, surprising, or misunderstood. This article gives you the same clear explanation I give my clients.
1. Parties (Paragraph 1)
This section lists:
✔️ Buyer name(s)
✔️ Seller name(s)
Names must match legal identification.
I double-check this to avoid title issues.
2. Property Description (Paragraph 2)
This covers:
✔️ Lot, block, and subdivision
✔️ County
✔️ Legal description
✔️ Address
✔️ Included improvements (house, garage, fixtures)
✔️ Accessories (curtains, blinds, built-in appliances, landscaping, etc.)
Anything not listed as excluded stays with the home.
3. Sales Price (Paragraph 3)
Broken into:
A. Cash portion
Your down payment.
B. Loan amount
Amount financed.
C. Total sales price
The sum of A + B.
I always confirm these match your lender’s pre-approval.
4. Earnest Money & Option Money (Paragraph 5)
This section specifies:
✔️ Earnest money amount
✔️ Option fee amount
✔️ Delivery deadlines
✔️ Earnest money holder (title company)
✔️ Refundability rules
In Texas, these two payments are crucial—and must be delivered on time.
5. Title Policy & Survey (Paragraphs 6A–6D)
A major section with several parts:
6A: Who pays for title insurance?
Buyer or seller (negotiable).
6B: Title commitment & exceptions
Seller must provide clear, insurable title.
6C: Survey
Options include:
-
Seller’s existing survey
-
Buyer purchasing a new one
-
Seller paying for a new one
6D: Objections
Buyers can object to:
-
Encroachments
-
Easements
-
Violations
-
Restrictive covenants
I evaluate these during due diligence.
6. Property Condition (Paragraph 7)
This covers:
✔️ Seller disclosures
✔️ Repairs
✔️ Utilities on for inspection
✔️ Lender-required repairs
The home is “as-is” unless we negotiate repairs or credits.
7. Option Period (Paragraph 23)
This gives the buyer the unrestricted right to terminate for any reason within the Option Period.
Includes:
✔️ Option fee
✔️ Number of days
✔️ Delivery deadlines
✔️ Refund rules (generally non-refundable but credited)
Texas is unique here—this is buyer protection at its strongest.
8. Financing (Paragraph 4 + Third-Party Addendum)
The contract ties directly into the Third-Party Financing Addendum.
Key points:
✔️ Loan type
✔️ Approval timeline
✔️ Appraisal conditions
✔️ Buyer obligations
✔️ Financing contingency protection
This is one of the biggest protections for buyers.
9. Closing Date (Paragraph 9)
The date both parties intend to close.
Texas closings are:
-
Typically 25–35 days with financing
-
Much faster for cash buyers
-
Dependent on lender timelines
I always verify the seller’s preferred timeline before writing the offer.
10. Possession (Paragraph 10)
Buyers usually take possession:
✔️ Upon closing and funding
Unless:
✔️ Seller leaseback (Temporary Lease Addendum)
This section prevents confusion about move-in dates.
11. Special Provisions (Paragraph 11)
This is for:
✔️ Clarifications
✔️ Non-legal instructions
✔️ Agreed terms not covered elsewhere
No legal language can be written here.
I keep this section clean to avoid contract issues.
12. Settlement & Other Expenses (Paragraph 12)
Covers:
✔️ Who pays what
✔️ Home warranties
✔️ Title policy
✔️ Survey costs
✔️ HOA transfer fees
✔️ Buyer closing costs
✔️ Seller closing costs
I structure this section strategically based on market conditions.
13. Prorations (Paragraph 13)
Adjustments for:
✔️ Taxes
✔️ HOA dues
✔️ Utilities (rare)
✔️ Rent (if applicable)
Texas uses calendar-year proration based on current tax rates.
14. Casualty Loss (Paragraph 14)
If the home is damaged before closing:
✔️ Seller repairs
or
✔️ Buyer can terminate
Important during our storm seasons.
15. Default (Paragraph 15)
Explains what happens if:
✔️ Buyer defaults
or
✔️ Seller defaults
Buyer risks earnest money; seller risks specific performance.
16. Mediation (Paragraph 16)
Both parties agree to attempt mediation before litigation.
Standard in Texas.
17. Attorney’s Fees (Paragraph 17)
The losing party in a legal dispute may pay the other’s legal fees.
18. Escrow (Paragraph 18)
Clarifies how earnest money is held, released, or disputed.
19. Representations (Paragraph 19)
Seller confirms correctness of disclosures and statements.
20. Federal Tax Requirements (Paragraph 20)
Applies to foreign sellers (FIRPTA).
Rare, but I watch for it.
21. Notices (Paragraph 21)
Details how official notices must be delivered:
✔️ Email
✔️ Address
✔️ Phone
I ensure all contact details are accurate.
22. Contract Execution (Paragraph 22)
Clarifies the date the contract becomes effective.
This triggers all deadlines:
-
Earnest money
-
Option money
-
Option period start
-
Financing timelines
I track these meticulously.
23. Addenda Attached (Paragraph 22 + Addenda List)
Common addenda include:
✔️ Third-Party Financing
✔️ HOA Addendum
✔️ Seller’s Disclosure
✔️ Lead-based Paint
✔️ Non-Realty Items
✔️ Temporary Lease
✔️ Back-Up Contract Addendum
✔️ VA Loan Addendum
✔️ PID/MUD Notice
I make sure ALL required addenda are included to avoid contract rejection.
24. Final Signatures (Last Page)
Once signed by both parties:
✔️ Contract is executed
✔️ Clock starts
✔️ Deadlines begin
This is considered “day zero.”
Why This Contract Matters So Much
The TREC 1–4 isn’t just paperwork—it establishes:
✔️ Your rights
✔️ Your protections
✔️ Your deadlines
✔️ Your financial obligations
✔️ The seller’s responsibilities
✔️ Inspection rules
✔️ Appraisal rights
✔️ Title requirements
✔️ Closing expectations
When I represent you, I make sure you fully understand every part of this contract before you sign anything.
Bottom Line: The TREC 1–4 Is the Foundation of Every Texas Real Estate Deal
And when you know what every paragraph means, the process becomes much less stressful—and you’re far better protected.
I guide you through every page, every checkbox, and every addendum so you know exactly what you’re signing and why.
Need a Realtor Who Explains Every Line Clearly?
If you want someone who knows the TREC 1–4 contract inside and out and protects you at every step, I’d love to help.
