What Should You Know Before Signing a Builder Contract in Texas?

A builder contract in Texas is the builder's own document, not the TREC promulgated resale form. It usually shortens or removes the option period, ties financing to the builder's lender, sets the completion date as an estimate rather than a deadline, and routes disputes into arbitration. Read those four clauses first.

That is the short answer, and it is the one most buyers do not get until they are already sitting at the design center with a deposit down. At The Agency Dallas we walk buyers through a builder contract in Texas the same way we would walk them through a resale contract: clause by clause, before signature, not after. The document is longer, the leverage is different, and almost none of the protections a Texas buyer assumes are automatic are actually automatic here.

Why isn't a builder contract the same as a normal Texas home contract?

The One to Four Family Residential Contract most Texas buyers see is promulgated by the Texas Real Estate Commission. It is standardized on purpose. Every agent in the state is looking at the same paragraph numbers, and the negotiable parts are the blanks.

A production builder does not use that form. The builder's legal department wrote its contract, and it was written to protect the builder. That is not a scandal — it is ordinary commercial reality — but it means three things for you:

• There is no shared baseline. Two builders in the same DFW master-planned community can hand you contracts that differ substantially on remedies, deposits, and delay.
• The blanks are not where the risk is. The risk sits in the boilerplate paragraphs most buyers skim.
• Your agent's familiarity with TREC paragraph numbers does not transfer. Someone has to actually read this document.

Which clauses in a Texas builder contract actually matter?

Five, in roughly this order.

1. The option or termination period. Resale buyers in Texas are used to paying a small option fee for an unrestricted right to terminate. Many builder contracts either omit an option period entirely or offer a very short one, and some make the earnest money non-refundable after a defined milestone. Find out exactly when your money stops being yours.
2. The completion date. Builder contracts routinely describe the closing date as approximate and give the builder generous delay allowances — weather, supply, labor, "force majeure." Ask what happens if the home is ninety days late. In many contracts, the honest answer is: nothing, and your rate lock is your problem.
3. The preferred-lender incentive. Builders often attach meaningful incentives — closing-cost credits, design-center dollars, rate buydowns — to financing through their affiliated lender. That can be genuinely good value. It can also be a higher rate wearing a discount costume. Price the incentive against an outside quote before you decide.
4. The change-order and allowance structure. Design-center selections are where budgets move fastest. Get the allowance amounts in writing, get the change-order pricing method in writing, and get the deadline after which changes are refused or repriced.
5. The dispute-resolution clause. Most builder contracts in Texas send disputes to binding arbitration and waive a jury trial. Understand that before you sign, not when you have a problem.

What does Texas law give you no matter what the contract says?

Texas Property Code Chapter 27, the Residential Construction Liability Act, sits behind every new-home contract in the state. Two provisions matter to a buyer:

• The 60-day notice. Before you file suit or start arbitration against a builder over a construction defect, you must send written notice by certified mail, return receipt requested, at least 60 days before you file. The notice has to reference Chapter 27 and describe the defect.
• The bold-print warning. A new-home contract is required to contain a notice, in at least 10-point bold type, outlining the steps for asserting a Chapter 27 claim. If you cannot find that block in the contract you were handed, that is a question worth asking out loud.

What Chapter 27 does not do is create a state-mandated warranty. Texas has had no statutory new-home warranty administrator since the Texas Residential Construction Commission was allowed to expire in 2009. Whatever warranty you get is the warranty written into your contract — commonly a one-year workmanship, two-year systems, ten-year structural package, but the terms and the exclusions vary by builder and you should read the actual warranty booklet before closing, not after.

Can you negotiate a builder contract in Texas at all?

Yes, but not evenly. Builders protect price above almost everything else, because a recorded low sale price re-prices every remaining home in the section and every appraisal behind them. What tends to be movable:

• Incentives and closing-cost contributions
• Design-center credits and included upgrades
• Lot premiums, especially on lots that have sat
• Timing of the deposit and the size of it
• Occasionally, the arbitration clause on a semi-custom or spec home

What almost never moves on production inventory: base price, and the delay allowances.

Do you need your own agent on a new build?

The sales consultant in the model home works for the builder. That is their job and most of them do it well, but they are not your fiduciary, and the contract they hand you was drafted by their employer's counsel. Bringing your own representation costs you nothing on the vast majority of DFW new-construction deals — but you generally have to register your agent on your first visit to the community. Walk in alone, and you may have given up representation before you ever saw a floor plan. We cover that in detail in our guide to using a Realtor when buying new construction in Texas.

What should you verify before you sign?

• The warranty booklet — the actual document, not a summary sheet
• Whether the option period exists and how long it is
• The precise date your earnest money becomes non-refundable
• The builder's delay language and what remedy, if any, you have
• Whether an outside lender is permitted and what incentive you forfeit
• The MUD or PID assessment on the lot and what it adds to your annual tax bill
• The HOA documents and any deed restrictions on leasing the home

That last item matters more than buyers expect. If you are buying new construction with any intention of renting it out later, the leasing restrictions in the community documents can quietly undo the whole plan. We cover the operating math in our companion pieces on how property taxes and insurance affect rental returns in Texas and short-term versus long-term rentals in Dallas.

Frequently asked questions

Is a builder contract in Texas a TREC form?

No. TREC's promulgated One to Four Family contract is for licensed agents in resale transactions. Texas builders use their own contracts, drafted by their own counsel, and those contracts vary from builder to builder.

Does a Texas builder contract include an option period?

Not necessarily. Many do not, and others offer a much shorter window than the resale norm. Confirm in writing whether an option period exists, how many days it runs, and when earnest money becomes non-refundable.

Do I have to use the builder's lender?

Usually no, but incentives are often conditioned on it. Get a competing quote and compare the total cost — rate, points, and fees — against the value of the incentive before deciding.

What is the 60-day notice under Texas Property Code Chapter 27?

Before suing or arbitrating a construction-defect claim against a Texas builder, you must send written notice by certified mail, return receipt requested, at least 60 days beforehand. The notice must reference Chapter 27 and describe the defect.

Is there a state-mandated new home warranty in Texas?

No. The Texas Residential Construction Commission expired in 2009 and was not replaced. Your warranty is whatever your contract and warranty booklet provide, which is why reading them before closing matters.

Should I have an inspection on a brand-new home?

Yes. Municipal code inspections confirm code compliance, not quality or completeness. We explain the difference and the right inspection timeline in our guide to inspecting a brand-new home in Texas.

How does The Agency Dallas review a builder contract in Texas?

The Agency Dallas reads a builder contract in Texas clause by clause before signature, flagging the option period, the earnest-money trigger date, the delay language, the lender incentive math, the change-order structure, and the arbitration provision, then puts the negotiable items in writing before the buyer commits.