Builder Contracts in Texas: What Houston New Construction Buyers Must Know Before Signing

Builder Contracts in Texas: What Houston New Construction Buyers Must Know Before Signing

When you buy a resale home in Texas, the contract is usually a standard form from the Texas Real Estate Commission (TREC), written to be balanced between buyer and seller.

But many new construction builders in the Houston area use their own contracts. When a contract is written by the builder’s attorneys, it protects the builder.

Here’s what I see most often as a Houston realtor® reviewing builder contracts with my buyers.

1. Your Earnest Money Can Be Easy to Lose

On a builder inventory home, if you change your mind, the builder often keeps your earnest money. In many builder contracts, the main way to get your earnest money back is if your financing isn’t approved within the contract’s time frame, and you usually must give notice in writing before the deadline. Miss it, and the money may be gone.

Tip: Put every contract deadline on your calendar the day you sign.

2. There’s Often No Option Period

On a Texas resale home, buyers usually get an option period, a window to walk away for any reason. Many builder contracts don’t include one.

3. The Builder Controls the Closing Date

Builder contracts often let the builder extend the completion date with little or no penalty. Meanwhile your lease is ending, or your rate lock is expiring.

4. Upgrade Deposits Are Often Nonrefundable

Design center selections like flooring, cabinets and countertops usually require deposits that you may not get back if the deal falls apart.

5. Mandatory Arbitration and Limited Warranties

Some builder contracts require binding arbitration for disputes, which can mean giving up your right to go to court. Many also replace broader legal protections with the builder’s own limited warranty. Read exactly what it covers and for how long.

6. “It’s Up to Code” Is Not the Same as Done Right

When a third-party inspector finds problems, some builders answer, “It’s up to code.” Building code is the minimum legal standard. Push for repairs based on:

• Your inspector’s report
• The manufacturer’s installation requirements
• Quality workmanship standards

Always send repair requests in writing.

How to Protect Yourself

• Read every page, including addenda.
• Bring your own buyer’s agent to your very first visit.
• Ask questions about earnest money, deadlines, delays and warranties.
• Consider a real estate attorney review before signing.

Frequently Asked Questions

Can I get my earnest money back from a builder in Texas?
It depends on your contract. In many builder contracts, it’s mainly refundable if financing isn’t approved and you give written notice on time.

Do builder contracts have an option period?
Many don’t. Check before you sign.

Do builders have to use TREC contracts?
Builders who aren’t licensed agents are generally allowed to use their own contracts, which is why reading them carefully matters.

Buying New Construction in Houston?

I help buyers read builder contracts and negotiate with builders in Katy, Cypress, Spring, The Woodlands, Conroe, Pearland, Sugar Land, Fulshear and across Greater Houston.

This article is general information, not legal advice. Contract terms vary by builder. Have your contract reviewed by a qualified professional.