Key Takeaways
• The addendum acts as a buyer's financial safety net, making the purchase of a new home conditional on the successful sale of their current one by a specific deadline.
• The seller is not required to wait indefinitely; the addendum includes a "kick-out" clause allowing them to accept another offer and give the buyer a short, negotiated timeframe to either waive the contingency or terminate the contract.
• Waiving the contingency is a high-risk decision for the buyer, as they become fully committed to the purchase; if they then fail to close because their old home didn't sell, they will likely lose their entire earnest money deposit.
• All deadlines mentioned in the form are strictly enforced under a "time is of the essence" clause, meaning that missing a deadline, even by a few minutes, can automatically terminate the contract and a party's rights.
Decoding the Sale of Other Property Addendum: A Texas Buyer's Guide
Think of the Addendum for Sale of Other Property by Buyer as a formal "handshake" between you and the seller. In essence, you're saying, "I absolutely want to buy your beautiful home, on the condition that I can successfully sell my current one first." This document is your primary financial safety net, ensuring you don't get stuck owning two homes at once or losing your earnest money deposit if the sale of your current home falls through. You’re seeing this form because you, like many homebuyers, need the money from your current property to purchase the next one. In a normal market, this is a very common situation, and this addendum is the standard, state-approved way to handle it. Its prevalence often changes with the market, becoming more common when conditions are balanced and less common in highly competitive seller's markets.
This form was created with consumer protection in mind. After the 2008 housing crisis, the Texas Real Estate Commission (TREC) aimed to make transactions safer and clearer for everyone. A special committee of experienced real estate brokers and lawyers designed this specific form to be balanced, fair, and legally sound, protecting both you, the buyer, and the seller. Its purpose is to replace potentially confusing custom clauses with clear, predictable language. This ensures that everyone understands the rules of the game from the very beginning, which helps prevent misunderstandings and legal disputes down the road. The form was officially released in late 2011, a time when the Texas housing market was recovering but still fragile—the median home price was just $146,988—making this kind of protection essential for buyer confidence.
It's important to understand what this form is not. First, it is not the main purchase contract. This form is an addendum, which means it is an add-on that works together with your main offer. It cannot stand on its own. Second, it is not a guarantee that the seller will wait for you indefinitely. The seller can continue to market their home and look at other offers. The addendum includes what is known as a "kick-out" clause, which gives the seller a way to move on if a better, non-contingent offer comes along. Finally, this form is not an "easy out." It provides a very specific exit ramp: if your current home does not sell by the agreed-upon deadline. It does not allow you to back out of the deal simply because you changed your mind or found another house you like better.
To understand the document, it helps to know a few key terms.
• Contingency: This is a legal term for a "condition" or a "safety clause." In this context, your purchase of the new home is contingent on, or conditioned upon, the successful sale of your current property.
• Waive: To waive the contingency means you are voluntarily giving up your safety clause. It is a formal declaration that you are committing to buy the new house no matter what, even if your other home has not sold yet. This is a significant and high-stakes decision.
• The "Kick-Out" Clause: This is a right that belongs to the seller. It allows them to accept another offer as a backup and then give you a short, pre-negotiated deadline. Within that deadline, you must either waive your contingency to move forward or your contract will terminate, allowing the seller to proceed with the new buyer.
• "Time is of the Essence": This is a critical legal phrase used in the form that means all deadlines are absolute, final, and strictly enforced. Missing a deadline by even a few minutes can cause the contract to terminate automatically, and you could lose your contractual rights.
The heading at the top of the form legally connects the addendum to your main offer for the specific property you intend to purchase. The address of the property you are buying must be entered here with 100% accuracy to avoid any ambiguity about which contract the addendum applies to.
Paragraph A is the heart of the form. It states that your contract is contingent upon you receiving the money, or "proceeds," from the sale of your current property by a specific date. If you do not receive the funds or waive the contingency by that date, the contract automatically ends, and your earnest money will be refunded to you. A critical detail here is the phrase "receipt of the proceeds." This means the money must actually be in your hands or available to you. Simply signing the closing papers on your sale is not enough. A last-minute wire transfer delay on your sale could cause you to miss this deadline. The blank date you fill in is the contingency deadline, and it must be on or before your final closing date. A smart strategy is to set this date a few days before closing to create a buffer for any potential funding delays.
Paragraph B contains the "kick-out" clause, which is the seller's protection. It specifies that if the seller receives another written offer that they wish to accept, they must notify you. This notice starts a clock. You then have a limited number of days, which is a negotiated term, to decide whether to waive your contingency. If you do not waive it within that timeframe, the contract terminates automatically. This is the "fish or cut bait" moment where the seller forces you to decide if you are confident enough to move forward without your safety net. The number of days you have to respond is a key point of negotiation. As a buyer, you will want more time, such as 3 to 5 days, while the seller will prefer a very short window, like 1 to 2 days.
Paragraph C details the waiver mechanism, or how you officially commit to the purchase. To validly waive your contingency, you must complete two mandatory actions. First, you must give the seller official written notice that you are waiving it. Second, you must deposit a pre-agreed amount of additional earnest money with the title company. This additional deposit serves a critical strategic purpose: it acts as a financial test of your commitment and compensates the seller for the risk of forgoing a more certain backup offer. By putting more "skin in the game," you demonstrate to the seller that you are serious and financially capable of closing the deal.
Paragraph D explains the significant risk you take when you waive the contingency. It states that if you waive the contingency and then fail to close the purchase solely because you did not receive the money from your home sale, you will be in default of the contract. This is the most important risk to understand. Once you waive, you are fully on the hook. If your own home sale then falls apart and you cannot close, you will likely lose all of your earnest money. However, it's critical to note that waiving this specific contingency does not strip you of all your other contractual protections. If you fail to close for a different reason covered by another clause—for instance, a last-minute loan denial protected by the Third Party Financing Addendum—you may still be able to terminate the contract and have your earnest money refunded.
Paragraph E contains the "time is of the essence" clause. As explained earlier, this means all deadlines in this addendum are strict and must be followed exactly. There is no grace period. If a deadline is 5:00 PM on a Friday, then 5:01 PM is too late. This strict enforcement applies to both the main contingency deadline in Paragraph A and your response time for the "kick-out" clause in Paragraph B.
You may have heard about major updates coming to Texas real estate forms in 2025, but there is good news regarding this form. The experts at the Texas Real Estate Commission have reviewed all the standard contracts and have decided that this specific addendum works extremely well as it is. Its legal language and structure have stood the test of time and various market cycles. This form is not changing. This stability means you can have a high degree of confidence that it is a solid, well-vetted document that clearly and fairly defines the rules for everyone involved in this type of transaction.
If you want to make your offer conditional on selling your current home, you must use this form. It is the standard, state-approved method for this situation in Texas. If the contingency date in the addendum passes and your house has not sold, the contract terminates automatically. You do not need to do anything further, and you are entitled to get your earnest money back. However, a seller is never obligated to accept a contingent offer. In a competitive seller's market, they often prefer non-contingent offers because they represent more certainty and a quicker path to closing. If a seller accepts your contingent offer but then receives a better one, they can accept the new offer as a backup. They would then activate the "kick-out" clause, which gives you a short window to decide whether to waive your contingency or walk away. Finally, if the contract terminates because of this addendum, you do not get your option fee back. The option fee is non-refundable because you paid it directly to the seller for the unrestricted right to inspect the property and terminate during your option period, a right you already used regardless of what happens later with your contingency.
Conclusion
This form is a powerful tool that balances your need for financial protection with the seller’s need for certainty. It allows you to move forward with buying your dream home while managing the risk involved in selling your current one. Now that you understand the terms, read through the actual document with your agent. Discuss your strategy for setting a realistic contingency date and negotiating a fair response time for the kick-out clause. If any part is still unclear, ask questions. Our job is to make sure you are 100% comfortable and confident before you sign anything. Finally, understand the deadlines you are agreeing to and be prepared to make a quick, informed decision if the seller ever activates the "kick-out" clause.
