In Texas, you back out of a home purchase by delivering a Notice of Buyer’s Termination of Contract — currently TREC Form 38-8 — to the seller before your deadline, with the checkbox marked for the specific contract right you are exercising. The form itself is one page. The hard part is making sure you actually have the right you’re claiming and that your notice arrives in time.
Which Form to Use
The current version is TREC No. 38-8, adopted in 2025 and available for download from the Texas Real Estate Commission.1Texas Real Estate Commission. Notice of Buyer’s Termination of Contract It asks for the property address and the full legal names of buyer and seller exactly as they appear on the sales contract. Even a missing middle initial can give the seller an opening to dispute whether your notice was valid, so copy the names from the contract rather than retyping them from memory.
Only the buyer signs. No seller signature is needed for the termination to take effect.2Cornell Law Institute. 22 Texas Administrative Code 537.45 – Standard Contract Form TREC No. 38-8, Notice of Buyer’s Termination of Contract
Picking the Right Checkbox
The form offers eight grounds for termination, each tied to a specific paragraph or addendum in the One to Four Family Residential Contract. You must check the one that actually applies to your situation:
- Box 1 — Unrestricted termination right under Paragraph 5 (the option period).
- Box 2 — Buyer cannot obtain buyer approval under the Third-Party Financing Addendum.
- Box 3 — The property does not satisfy property approval under the Third-Party Financing Addendum.
- Box 4 — Termination under the Property Owners’ Association Addendum.
- Box 5 — Termination related to the Seller’s Disclosure Notice under Paragraph 7B(2).
- Box 6 — Termination under the Addendum Concerning Right to Terminate Due to Lender’s Appraisal.
- Box 7 — Termination under Paragraph 6D for uncured title or survey objections.
- Box 8 — Other grounds, where you identify the specific paragraph number yourself.
Checking the wrong box can be as damaging as missing the deadline. If you mark Box 1 for the option period but the option period expired yesterday, your termination is arguably invalid — even if a financing contingency under Box 2 would have worked. Pull up the original contract, find the paragraph that gives you the right you’re exercising, then check the matching box.
Deadlines That Govern Each Ground
Option Period (Box 1)
Paragraph 5 of the TREC contract gives you an unrestricted right to terminate for any reason — bad inspection, cold feet, anything — but only during the negotiated option period, and only if you paid the option fee.3Texas REALTORS. One to Four Family Residential Contract (Resale) – Section: The Termination Option The fee must be delivered to the title company within three days of the contract’s effective date.4Texas Real Estate Commission. Changes to Delivery of Option Fee Miss that window, or leave the option fee amount blank on the contract, and this unrestricted right never activates.
Day counting matters here more than anywhere else. TREC starts the clock the day after the effective date, and every calendar day counts, including weekends and holidays.5Texas Real Estate Commission. How Are Days Counted in a TREC Contract A five-day option period on a Wednesday contract ends the following Monday, not Tuesday. Unless the contract says otherwise, the deadline is midnight.
Financing (Boxes 2 and 3)
The Third-Party Financing Addendum protects you if the lender denies your loan. Buyer approval is the lender’s credit decision on you; property approval covers the home’s appraised value and condition.6Texas Real Estate Commission. Third Party Financing Addendum A low appraisal is the most common trigger. When terminating on financing grounds, you must deliver the lender’s written statement explaining the denial along with your notice.
Title and Survey (Box 7)
Paragraph 6D gives you a defined period to review the title commitment and survey and raise written objections. If the seller cannot or will not cure those objections within the cure period, you can terminate.7Texas Real Estate Commission. One to Four Family Residential Contract (Resale) Unresolved liens, boundary problems, and unacceptable easements all fall here.
HOA Documents (Box 4)
If the property is in a mandatory HOA, you have three days after receiving the subdivision’s governing documents and resale certificate to terminate. If the seller never delivers them, you can terminate any time before closing.8Texas Real Estate Commission. Addendum for Property Subject to Mandatory Membership in a Property Owners Association Surprise restrictions on rentals, pets, or exterior changes often show up only in these documents.
Seller’s Disclosure (Box 5)
Under Paragraph 7B(2), if the seller hadn’t given you the statutory disclosure notice when you signed, you have seven days after receiving it to terminate for any reason. If the seller never delivers it, you can terminate any time before closing.7Texas Real Estate Commission. One to Four Family Residential Contract (Resale)
Lender Repairs and Casualty Loss (Box 8)
Two narrower rights fall under Box 8. If the lender requires repairs and the parties can’t agree on who pays — or those repairs exceed 5% of the sales price — you can terminate. If the property is damaged by fire or other casualty after the effective date and the seller can’t restore it by closing, you can terminate.7Texas Real Estate Commission. One to Four Family Residential Contract (Resale) Both refund the earnest money.
Delivering the Notice
A notice that arrives one day late is worth about as much as no notice at all. Paragraph 21 of the TREC contract says notices must be in writing and are effective when mailed to, hand-delivered at, or transmitted by fax or electronic transmission to the addresses listed in the contract.7Texas Real Estate Commission. One to Four Family Residential Contract (Resale) Email is the most common method in practice because it creates an automatic timestamp.
Keep proof. Save the sent email, get a signed receipt for hand delivery, or hang onto the certified mail tracking number. If a dispute arises later about whether you terminated in time, that record is your defense. The listing agent or title company will usually acknowledge receipt and start closing out the file, but their acknowledgment is not what makes the termination effective. Your timely delivery is.
Getting Your Earnest Money Back
The termination notice ends the contract. It does not release your deposit. The earnest money sits in escrow at the title company, and getting it out is a separate step governed by Paragraph 18. Either party or the escrow agent can send a Release of Earnest Money form, and both buyer and seller sign to tell the title company how to disburse the funds.7Texas Real Estate Commission. One to Four Family Residential Contract (Resale)
When the seller agrees the termination was valid, this is quick. Both parties sign and the title company cuts a check, usually within a few business days. If the seller refuses to sign, the contract has a mechanism: either party can submit a written demand to the escrow agent, who then forwards a copy to the other side. If no written objection comes within 15 days, the escrow agent can disburse to whoever made the demand, minus any unpaid expenses incurred for the receiving party.7Texas Real Estate Commission. One to Four Family Residential Contract (Resale)
If both sides submit competing demands, the title company usually files an interpleader — a lawsuit depositing the disputed funds with the court — and recovers its attorney’s fees from the deposit before handing what’s left to the judge. Legal costs can eat a meaningful share of a typical earnest money amount, which is why most agents push hard for a negotiated resolution before it gets there.
If You Terminate Without a Valid Right
Losing the earnest money is not the only risk. Paragraph 15 gives the seller two options when a buyer defaults:
- Enforce specific performance, meaning ask a court to order you to complete the purchase, or pursue other legal relief.
- Keep the earnest money as liquidated damages and release both sides from further obligations.
The seller must pick one; they cannot keep the deposit and also sue for specific performance.7Texas Real Estate Commission. One to Four Family Residential Contract (Resale) Most sellers take the earnest money because forcing an unwilling buyer to close is slow and expensive. But in a rising market, where a buyer walked away from a favorable price, specific performance suits do happen.
Before you check a box, make sure you can point to a specific paragraph or addendum that gives you the right. If you’re unsure, that uncertainty is worth a call to a real estate attorney before you send the notice, not after.
No General Three-Day Right to Cancel
Buyers often assume there’s an automatic three-day cooling-off window for any contract. There isn’t, for a home purchase. The FTC’s Cooling-Off Rule explicitly excludes real estate transactions.9Federal Trade Commission. Buyer’s Remorse: The FTC’s Cooling-Off Rule May Help The Truth in Lending Act’s right of rescission covers some refinances and home equity loans but exempts the mortgage used to buy a home.10Consumer Financial Protection Bureau. Regulation Z 1026.23 Right of Rescission
In Texas, every termination right comes from the contract itself. If your option period has passed and no other contingency fits your situation, you are bound to close.