Texas · TREC 20-19 resale contractTexas contract default: what happens when the buyer or the seller does not perform
Paragraph 15 of the TREC resale contract sets the remedies. If the buyer fails to comply, the buyer is in default and the seller may either enforce specific performance, seek other relief allowed by law, or both – or terminate the contract and receive the earnest money as liquidated damages, which releases both parties. If the seller fails to comply, the seller is in default and the buyer may either enforce specific performance, seek other relief, or both – or terminate and receive the earnest money, which releases both parties. A dispute not settled informally goes to a mutually acceptable mediation service, with the cost shared equally, though either side can still ask a court for equitable relief (¶16). A buyer, seller, either broker or the escrow agent who prevails in a legal proceeding about the contract recovers reasonable attorney's fees and costs (¶17). Termination rights in the contract itself – the option period, financing or other contingencies – are not default.
The remedies (¶15)
Buyer defaults
Seller may enforce specific performance and/or seek other legal relief, or terminate and keep the earnest money as liquidated damages.
Seller defaults
Buyer may enforce specific performance and/or seek other legal relief, or terminate and receive the earnest money.
Mediation (¶16)
Disputes not resolved informally go to a mutually acceptable mediator; costs split equally; court equitable relief still possible.
Attorney's fees (¶17)
The prevailing buyer, seller, broker or escrow agent recovers reasonable attorney's fees and costs.
Not a default
- Terminating during the paid option period.
- Terminating under a financing, appraisal or other addendum, within its deadline and with the required notice.
- Terminating for a late seller's disclosure under ¶7B, or lender-required repairs over 5% under ¶7E.
What the TC does when a deal goes sideways
- Record every notice and its delivery time – default is about who failed to comply, and timing matters.
- Do not tell either party what they are entitled to: that is legal advice; point them to their agent and an attorney.
- Keep the earnest money release process with the escrow agent – see the earnest money release guide.
Questions buyers and sellers ask
What happens if the buyer backs out of a Texas contract?
If it is a default and not a contract termination right, the seller may seek specific performance or other relief, or terminate and keep the earnest money as liquidated damages (TREC 20-19 ¶15).
Can a Texas buyer force the seller to sell?
If the seller defaults, the buyer may enforce specific performance and/or seek other relief, or terminate and get the earnest money (¶15). An attorney can explain the options.
Do Texas contract disputes go to mediation?
Yes: disputes not resolved informally are submitted to a mutually acceptable mediation service, with costs shared equally (¶16).
Related guides
ClosingCode logs every deadline, notice and status change on the deal with a time stamp – the record everyone needs if a deal ends in a dispute.
Start free trialSource: TREC One to Four Family Residential Contract (Resale) 20-19, version 05-04-2026, paragraphs 15, 16 and 17 (read October 25, 2026).
General information about the TREC resale contract, not legal advice. A party in a dispute should talk to a Texas attorney. ClosingCode is software; it is not a law firm and is not a substitute for the advice or services of an attorney. This guide is not a substitute for the advice or services of an attorney.