Skip to content
ClosingCodeClosingCode
ENES

Texas · TREC RSC-4 · ¶7HTexas home warranty: residential service contract rules and the RSC-4 disclosure

In Texas a home warranty is a residential service contract sold by a provider licensed by the Texas Department of Licensing and Regulation. Buying one is optional and the buyer chooses the provider. In the TREC One to Four Family contract (20-19, ¶7H) the parties write the maximum amount the seller reimburses at closing if the buyer buys one. A broker who receives compensation from a provider discloses it on TREC form RSC-4, and neither a broker nor a seller may condition the sale on the buyer's purchase of a contract.

The rules

  1. Optional (RSC-4)

    “The purchase of a residential service contract is optional.” The buyer chooses the provider and the extent of coverage – any licensed provider.

  2. Seller reimbursement (¶7H)

    If the buyer buys a residential service contract, the seller reimburses the buyer at closing for its cost, up to the dollar amount written in ¶7H.

  3. No conditioning

    Neither a broker/sales agent nor a seller may condition the sale of a property on the buyer's purchase of a residential service contract (RSC-4).

  4. Broker compensation (RSC-4)

    Listing and other broker each check whether they receive compensation from a provider and for which services. The compensation may not depend on anyone buying a contract, and RESPA limits it to the reasonable value of services actually rendered.

Good to know

  • Providers are licensed and regulated by the Texas Department of Licensing and Regulation; coverage and cost vary, and co-payments typically apply to service calls.
  • ¶7H tells the buyer to review the scope of coverage, exclusions and limitations; similar coverage may be bought from various companies authorized in Texas.
  • RSC-4 is signed by the brokers and acknowledged by buyer and seller.

What the TC tracks

  • The reimbursement cap in ¶7H of the executed contract.
  • The buyer's chosen provider and the invoice before closing.
  • The reimbursement line on the settlement statement – not above the ¶7H amount.
  • RSC-4 signed when a broker receives compensation from a provider.

Questions about Texas home warranties

Is a home warranty required when buying a house in Texas?

No. The purchase of a residential service contract is optional, and neither a broker nor a seller may condition the sale on buying one (TREC RSC-4).

Does the seller pay for the home warranty in Texas?

Only if negotiated. In ¶7H of the TREC contract the parties write the maximum amount the seller reimburses the buyer at closing.

Who chooses the home warranty company?

The buyer. RSC-4 says the choice of the provider and the extent of coverage lies with the buyer.

What is TREC form RSC-4?

The Disclosure of Relationship with Contract Provider or Administrator, used by license holders to disclose compensation received from a residential service contract provider.

Who regulates home warranty companies in Texas?

The Texas Department of Licensing and Regulation licenses and regulates residential service contract providers.

Related guides

Track the ¶7H cap, the provider invoice and the RSC-4 acknowledgment as tasks with owners and due dates in ClosingCode – and keep the documents with the deal.

Start free trial

Source: TREC RSC-4 (05-16-2023) and TREC One to Four Family Residential Contract (Resale) 20-19, ¶7H (trec.texas.gov, read October 24, 2026).

General information, not legal advice. ClosingCode is software; it is not a law firm or brokerage.