After the buyer finished his inspection of my client’s home, we negotiated several repairs to be completed by the seller, and the parties signed an amendment (TAR 1903) reflecting the items to be repaired. Three days later, the buyer sent the seller a notice that he was terminating the contract under his termination option (Paragraph 23). We are still within the option period stated in the original contract. The seller is upset because he already repaired two of the five agreed-upon repair items. Can the buyer still exercise his right to terminate the contract under the termination option after the parties have agreed to the repair provisions contained in the amendment?

Yes, the buyer can still exercise his right to terminate the contract. A buyer does not automatically give up his right to terminate the contract under the termination option because the parties negotiated and signed an amendment that provides that the seller will do repairs to the property.

If Paragraph 7 of the amendment was checked, indicating the parties had included the buyer’s waiver of his right to terminate the contract under the termination option in the amendment, then the buyer could no longer exercise that right to terminate once the amendment became effective. If the buyer has not waived his right to terminate under the termination option, the buyer is still entitled to exercise that right within the option period stated in the contract.

It is important to carefully prepare the amendment to reflect the parties’ intent concerning the waiver of the termination option by checking (or not checking) Paragraph 7 of the amendment.

Keep in mind that under the provisions of Paragraph 7 (Property Condition) of the TREC contracts, the seller is obligated to complete all agreed-upon repairs prior to closing unless the parties have otherwise agreed in writing. A seller might want to wait to do repairs until after the buyer’s right to terminate under the termination option has expired or has been waived according to the terms of the contract.

Note: The recently revised TREC One to Four Family Residential Contract (Resale) that becomes mandatory March 1, 2012 states that if the seller fails to complete any agreed-upon repairs and treatments prior to the closing date, the buyer may exercise remedies under Paragraph 15 or extend the closing date up to 15 days if necessary for the seller to complete the repairs and treatments. The previous version of the contract allowed the buyer to make those repairs and receive reimbursement from the seller at closing.