When you buy a resale home in Texas, you will usually sign a standard form promulgated by the Texas Real Estate Commission (TREC). TREC also promulgates new home contracts: one for completed construction and one for incomplete construction. But many production builders in Houston use their own purchase agreements, drafted by their attorneys and written to protect the builder.
That does not make them unfair. It does mean you should understand what you are signing. Here are the clauses we review most closely with clients. (We are not attorneys; for legal advice, consult a Texas real estate attorney.)
1. Earnest money and deposits
How much is due, when, and under what circumstances it is refundable. Builder contracts often treat deposits for upgrades and structural options as non-refundable because those items are ordered specifically for your home.
2. Financing contingency
Is the contract contingent on your loan approval? Is it tied to a particular lender? What happens if your approval changes during a long build? Know your exit rights and deadlines.
3. Completion dates and delays
Most builder contracts give the builder broad flexibility on completion dates, with long outside dates and limited remedies for delay. If you need a firm move-in date, an inventory home may be a better fit.
4. Change orders and selections
Deadlines for design selections, pricing for changes after deadlines, and the builder’s right to substitute materials of “equal or better quality.” Get selections confirmed in writing.
5. Inspections and site access
Your right to independent inspections, notice requirements, who may attend, and insurance requirements for inspectors.
6. Warranty terms
What is covered, for how long, who administers the warranty (the builder or a third party), and the claims process. Many Texas builders follow a “1-2-10” framework, but details vary.
7. Dispute resolution
Many builder contracts require binding arbitration and may limit remedies. Texas law also requires homeowners to follow notice and opportunity-to-repair procedures before suing a builder over construction defects. Understand these provisions before you sign.
8. HOA, MUD and PID disclosures
You should receive disclosures about the homeowners association, any Municipal Utility District, and any Public Improvement District. Read them early. They affect your monthly cost.
9. Assignment and resale restrictions
Some builders restrict assigning the contract or reselling the home within a certain period. Investors in particular should check.
10. Representations about the community
Marketing materials about future amenities, schools or retail are usually not contractual promises. Rely on what is in the contract and recorded documents.
Frequently asked questions
Do Texas builders use TREC contracts?
Some do, but many production builders use their own purchase agreements drafted by their attorneys.
Is earnest money refundable on new construction?
It depends on the contract. Upgrade and option deposits are often non-refundable. Read the deposit terms carefully.
Should an attorney review my builder contract?
For significant purchases or unusual terms, a Texas real estate attorney review is worthwhile. Your agent can flag issues but cannot give legal advice.
How we help
We review builder contracts with our buyers, flag issues to raise with the builder or your attorney, and negotiate where builders have flexibility. See our new construction buyer program.
Have a deal or question in mind?
Talk it through with Apurva. A 20-minute call is usually enough to know your next step.
