How to Read the TREC Contract as a Home Seller in Texas

By Stephen Harris | July 27, 2026

The TREC One to Four Family Residential Contract is the document that governs your sale from accepted offer to closing day. Most sellers sign it with only a vague understanding of what they’ve agreed to — and then discover the specifics matter a great deal when disputes arise, deadlines approach, or a deal threatens to fall apart. Here’s a section-by-section explanation of what sellers need to understand before signing.

What Is the TREC Contract?

TREC stands for the Texas Real Estate Commission — the state agency that licenses and regulates real estate agents and brokers in Texas. TREC promulgates (legally requires the use of) standardized contract forms for residential real estate transactions. The form used in most Killeen-area home sales is TREC Form 20-17, the One to Four Family Residential Contract (Resale).

Licensed real estate agents in Texas are required to use TREC promulgated forms — they cannot draft their own purchase agreements. This standardization protects both buyers and sellers by ensuring the contract covers all legally required elements. Agents can fill in the blanks and attach addenda, but the core contract is fixed.

Paragraph 2: What’s Included in the Sale

This is the paragraph that catches sellers off guard most often. Texas law draws a line between fixtures (permanently attached to the property and included in the sale by default) and personal property (freestanding items that are not included unless specifically listed).

Items included in the sale by default: built-in appliances, ceiling fans, light fixtures, curtain rods and blinds, garage door openers and remotes, mailboxes, outdoor play equipment (if permanently attached), security systems (hardware only), and similar items permanently attached to the structure.

Items NOT included by default: refrigerators, washers, dryers, freestanding ranges (in some interpretations), and any personal property not attached to the home. These can be included — but they must be specifically written into Paragraph 2 to be part of the deal.

Read this paragraph carefully before signing. If you intend to take a decorative light fixture, it needs to be excluded in writing. If the buyer expects the refrigerator, it needs to be listed in writing. Disputes over what stays with the house are a frequent source of closing-day conflict — Paragraph 2 is how you prevent them.

Paragraph 3: Sales Price

Paragraph 3 breaks down the purchase price into its components: the cash portion and the amount financed. The total of these two must equal the purchase price. For sellers, the most important thing to understand about the purchase price is what you’ll net after deductions. The sales price is gross; your net proceeds are what’s left after your mortgage payoff, commission, closing costs, tax proration, and any seller concessions. Your listing agent should provide an estimated net sheet when you’re evaluating offers.

Paragraph 4: Financing

This paragraph defines how the buyer is financing the purchase: loan type (conventional, FHA, VA, USDA, or seller financing), the loan amount, and the financing period (the days the buyer has to obtain financing approval). If the buyer fails to obtain financing by the financing period deadline, they can terminate and recover their earnest money. For sellers, the financing type determines the appraisal process and the likelihood of required repairs — VA and FHA have MPR requirements that conventional loans don’t.

Paragraph 5: Earnest Money

Earnest money is held by the title company — not the listing agent or the seller. The seller cannot access it until the deal closes or there is a valid entitlement to the deposit. The seller is entitled to earnest money only after the option period expires and the buyer terminates without a valid contract contingency. If the buyer terminates during the option period (for any reason), earnest money returns to the buyer. If the buyer terminates within the financing period because their loan fell through, earnest money returns to the buyer. Only if the buyer refuses to close after all contingencies are satisfied does the seller have a clear claim to the earnest money.

Paragraph 7: Property Condition

One of the most important paragraphs for sellers. Paragraph 7A requires the seller to deliver the property in substantially the same condition as of the effective date at closing — normal wear and tear excepted. If a major system fails between contract and close, this paragraph governs responsibility.

Paragraph 7B requires delivery of the Seller’s Disclosure Notice by the deadline specified in the contract. Failure to deliver on time can create additional buyer termination rights.

Paragraph 7D covers the “as-is” election — the buyer accepting the property in current condition without requiring repairs. As-is does not excuse the seller’s disclosure obligation. The buyer can still inspect and still terminate during the option period even in an as-is sale. As-is is most common in investor transactions, estate sales, and situations where the seller cannot or does not want to negotiate repairs.

Paragraph 9: Closing and Possession

Paragraph 9 specifies the closing date — the date by which all parties agree to complete the transaction. If the deal doesn’t close by this date, either party may have rights to extend or terminate depending on why the delay occurred and whether it’s attributable to one party’s failure to perform.

Possession is addressed here: the default is possession at closing, meaning the seller vacates when the deed records and the deal funds. Possession-after-closing arrangements are written here or via addendum. If you need time after closing to move, negotiate this upfront and get it in writing.

Paragraph 10: Special Provisions

The free-form paragraph where parties add deal-specific language — items not covered by standardized provisions. Used for things like specific inclusions, possession clarifications, or contingencies not addressed elsewhere. Any language in Paragraph 10 should be clear and specific. Vague Paragraph 10 language is a frequent source of disputes. Your agent should review everything that goes here.

Paragraph 23: The Option Period

Paragraph 23 covers the option fee (paid by the buyer directly to the seller and non-refundable) and the option period length (in calendar days). The option fee is yours regardless of what happens — even if the buyer terminates during the option period, you keep it. The earnest money, however, returns to the buyer if they terminate during the option period. The option period length is negotiated; buyers request longer periods in a buyer’s market. A 14-day option period when 7 days is typical is a buyer leverage ask worth negotiating.

Addenda: What They Are and When They Matter

TREC contracts are frequently accompanied by addenda — supplemental forms for specific circumstances. Common addenda in Killeen transactions include the Third Party Financing Addendum, the VA Loan Addendum, the Property Owners Association Addendum (for HOA properties), and the Back-Up Contract Addendum (Form 11-7). Each addendum modifies or supplements base contract terms. Read every addendum as carefully as the base contract — VA and FHA addenda in particular contain provisions about low appraisals that sellers need to understand before signing.

Frequently Asked Questions

What is the TREC contract in Texas?

The required standardized purchase agreement for most Texas residential real estate sales, promulgated by the Texas Real Estate Commission. TREC Form 20-17 (One to Four Family Residential Contract, Resale) is used in most Killeen-area transactions. Licensed agents are required to use TREC forms and cannot draft their own. The form covers all material transaction terms from purchase price through closing and possession.

What does ‘effective date’ mean in a TREC contract?

The date the last party signs the contract or final acceptance is made. Almost every deadline — option period, financing period, repair amendment deadlines — is calculated from this date. Understanding when the effective date will be set is essential for anticipating your full transaction timeline before signing.

What does ‘as-is’ mean in a Texas real estate contract?

An election in Paragraph 7D where the buyer accepts the property in its current condition without requiring repairs. It does NOT relieve the seller of disclosure obligations — you must still provide a truthful Seller’s Disclosure Notice. The buyer can still inspect and still terminate during the option period. Most common in investor purchases and estate sales.

What is included in a Texas home sale under the TREC contract?

By default: permanently attached items — built-in appliances, ceiling fans, light fixtures, curtain rods, blinds, garage door openers, security system hardware. Not included by default: refrigerators, washers, dryers, and freestanding items. Everything must be specifically listed in Paragraph 2 to be in or out of the deal. Read this paragraph carefully before signing — it’s where closing-day disputes begin.

Can a seller back out of a TREC contract in Texas?

Not without legal consequences. Once both parties have signed, the contract is binding. Sellers who refuse to close can face lawsuits for specific performance (requiring them to complete the sale) or claims for the buyer’s actual damages. Limited termination rights exist if the buyer fails to perform. Consult a real estate attorney before taking any action to back out of an accepted contract.