Can the option fee and the earnest money deposit be combined into a single payment?

The option fee and the earnest money deposit serve distinct purposes within a real estate transaction in Texas. The option fee is a payment made by the buyer to the seller in exchange for the right to terminate the contract within a specified option period. This fee is generally non-refundable and acts as a way for the buyer to secure exclusive rights to the property during this time.

On the other hand, the earnest money deposit represents the buyer's good faith commitment to the transaction. It is held in escrow and typically applied toward the purchase price at closing. The earnest money is meant to demonstrate the buyer's serious intention to proceed with the transaction.

Because these two payments have different functions and implications, they cannot be effectively combined into a single payment. Keeping them separate helps clarify their intended uses and protects the interests of both the buyer and the seller throughout the transaction process.