Texas · TREC 40-11Texas Third Party Financing Addendum: the financing deadlines
When a Texas buyer uses a loan, the TREC Third Party Financing Addendum (40-11) sets two financing rights. Buyer Approval: if the buyer cannot get approved, the buyer may terminate within the number of days written after the effective date, with a written statement from the lender – after that, the contract is no longer subject to Buyer Approval. Property Approval: if the lender finds the property does not meet its requirements (appraisal, insurability, required repairs), the buyer may terminate on or before the 3rd day before the closing date, again with the lender's written statement.
The two financing rights
Buyer Approval (¶2A)
About the buyer: assets, income, credit and the loan terms. Termination within the days written after the effective date, with notice and the lender's written statement; the earnest money is refunded.
After the Buyer Approval date
If the buyer does not terminate by then, the contract is no longer subject to Buyer Approval – the earnest money is at risk if the loan later fails for buyer reasons.
Property Approval (¶2B)
About the property: appraisal, insurability, lender-required repairs. Termination on or before the 3rd day before the closing date, with the lender's written statement; the earnest money is refunded.
Strict deadlines
Time is of the essence for the approval paragraph: strict compliance with the times is required.
FHA and VA loans
Paragraph 4 adds the FHA/VA appraisal clause: the buyer is not obligated to complete the purchase or forfeit earnest money if the required appraised or reasonable value is not met. The 3-day notice of ¶2B does not apply to that clause; the buyer may still choose to proceed regardless of the appraisal.
What the TC tracks
- The Buyer Approval date – the number of days written in ¶2A, counted from the effective date.
- The Property Approval date – the 3rd day before the closing date; recount if the closing date changes.
- That a termination includes the lender's written statement.
- Any change to the Buyer Approval date made with the TREC Amendment (39-11).
Questions about the Texas financing addendum
What is Buyer Approval in Texas?
Under TREC 40-11, Buyer Approval is obtained when the loan terms are available and the lender determines the buyer meets its requirements on assets, income and credit history.
When is the Buyer Approval deadline?
The number of days written in ¶2A, counted after the effective date of the contract.
What if the appraisal comes in low in Texas?
If the lender determines the property does not satisfy its requirements, including the appraisal, the buyer may terminate on or before the 3rd day before closing with the lender's written statement (¶2B).
Does the buyer need a letter from the lender to terminate?
Yes – both financing terminations require a copy of the lender's written statement of the reasons.
Can the Buyer Approval date be extended?
Yes, both parties can change it with the TREC Amendment to Contract (39-11).
Texas deadlines
ClosingCode puts the Buyer Approval date next to the TREC contract deadlines and reminds the buyer's side before it – in English or Spanish.
Start free trialSource: Texas Real Estate Commission, TREC No. 40-11 Third Party Financing Addendum (11-04-2024, effective January 3, 2025), ¶2, ¶4.
General information, not legal advice. ClosingCode is software; it is not a law firm or brokerage, and it is not affiliated with TREC.