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  • Writer's pictureZachary Epps

What's An Active Option Contract?

In our Colorado real estate world, using the term Active Option Contract is a funny way to refer to the contract all Realtors in Colorado already use, but let me explain. The term Active Option Contract isn't a term we use here in Colorado much, but it is common in other states such as Texas.

An active option contract is a clever way to refer to the portion of the time when a seller and buyer have signed a Contract to Buy and Sell in Colorado. The buyer has made an offer, typically through their agent, or REALTOR® (that distinction I'll save for another blog post), and the home seller has accepted the offer to sell the home.

The reason some might use the term "active option contract" is because there is essentially an "option" period until certain conditions are met, or the conditional items (conditions) have passed due to the deadlines associated with those conditions. In Texas they call this the "option period".

During this "option period" the buyer has a specific number of days (as stated in the signed contract) to have the home inspected, to review Common Interest Community (sometimes also referred to as Homeowners Association, or HOA) documents, investigate insurance costs and terms, confirm loan terms and conditions, and other similar topics we sometimes might generally call doing your due diligence.

In Texas, buyers apparently have to give the seller an option period deposit, which is not the same as the earnest money deposit. Get ready, now you're going to see why you like Colorado real estate contract rules more than those in Texas. In Texas, the option period deposit is kept by the seller if the buyer backs out of the sale, even if it’s for a reason covered by a contingency in the contract. Sounds crazy, I know... but we're used to doing it differently here. At least the good news is if the buyer moves forward and completes the purchase, the option deposit Is applied to the final purchase price.

So essentially all of our contracts are a form of Active Option Contracts, however in Colorado we don't have to pay for the right to have an "option period".

Thinking about moving? Call or text me today! 303-520-0070

I’d seriously enjoy having the opportunity to talk to you about your plans if you’re moving, or if you know someone who is considering a move, and needs some straight answers.

Also, I’m never too busy for your referrals. As a real estate professional intent on giving back to the community, my relationship-based approach is exactly what you’ve been looking for in a helpful RE/MAX Professional.

Zachary Epps


RE/MAX Hall of Fame, RE/MAX Platinum Club

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