As a Texas real estate attorney and business template specialist with over 12 years of drafting closing documents and handling disputed escrows, I’ve personally resolved hundreds of earnest money disputes across the state. One of the most common questions my clients ask is: “How do we properly execute a release of earnest money so the title company will finally disburse the funds?” The answer almost always starts with a correctly completed earnest money release form—specifically the official Texas Real Estate Commission (TREC) or Texas Association of Realtors (TAR) version.
In this comprehensive guide, I’ll explain everything you need to know about the release of earnest money in Texas, when it’s required, who gets the deposit, and how to avoid costly delays. Most importantly, I’m providing a free downloadable Release of Earnest Money form (TAR-1904 updated for 2025) that I personally use in my practice.
Important Disclaimer: This article and the attached template are for informational purposes only and do not constitute legal advice. Always consult a licensed Texas real estate attorney or broker for your specific transaction.
Earnest money (also called a contract deposit) is the good-faith deposit a buyer provides when executing a Texas real estate purchase contract. Under the standard TREC 1-4 Family Residential Contract (the “One to Four”), the earnest money is typically 1-3% of the purchase price and is held in escrow by the title company.
The title company cannot release the earnest money to either party without written authorization. This is where the release of earnest money form becomes essential. Without a mutually executed release (or a court order), the funds remain frozen—sometimes for months—causing frustration for buyers, sellers, and agents alike.
The most common scenarios requiring a TREC release of earnest money include:
In my experience, over 80% of releases occur because the parties mutually agree to terminate during the option period or due to inspection issues.
The Texas Association of Realtors provides the official form TAR-1904 Release of Earnest Money. This is the document accepted by every major title company in Texas (Chicago Title, Fidelity, Alamo Title, etc.).
TREC itself does not publish a standalone earnest money release form—instead, TREC refers users to the TAR-1904 or the “Release of Earnest Money” language found in Amendment forms. This is why you’ll often hear agents say “we need the TAR release of earnest money” or “TREC Form Release of Earnest Money”—they’re all referring to TAR-1904.
| Form Name | Publisher | Most Recent Version | Accepted Statewide? |
|---|---|---|---|
| TAR-1904 Release of Earnest Money | Texas Association of Realtors | 01-01-2024 (still current 2025) | Yes – 100% of title company acceptance |
| TREC Termination Forms (20-16, 38-7, etc.) | Texas Real Estate Commission | Various | Only if release language is included |
From reviewing thousands of rejected releases, here are the most common mistakes that delay disbursement:
Click here to download the free fillable TAR-1904 Release of Earnest Money form (updated 2025)
This is the exact template I provide to my attorney clients. It includes:
If one party refuses to sign the release, the other can send a formal demand letter for release of earnest money. While Texas law does not require a specific format, the letter should:
After demand, if still no resolution, the title company will usually file an interpleader lawsuit and deposit the funds with the court (at the losing party’s expense).
When the buyer defaults after the option period expires, the seller is typically entitled to the earnest money as liquidated damages (Paragraph 15 of TREC contract). However, many sellers mistakenly believe they can unilaterally take the deposit—no. The buyer must still sign the release of earnest money to seller or the title company remains frozen.
In my practice, I’ve seen sellers lose leverage by waiting too long. Send the TAR-1904 with a demand letter immediately upon default.
Can a buyer get earnest money back after option period?
Only if the contract specifically allows (financing contingency, appraisal, etc.) or seller agrees.
How long does title company hold earnest money after release is signed?
Usually 5-10 business days, though some (like Fidelity) can do same-week.
Is the TAR-1904 the same as TREC earnest money release?
TREC does not have a standalone form; TAR-1904 is the industry standard.
Do both parties have to sign the release?
Yes for mutual termination. No only if court order.
Having a clean, properly executed release of earnest money form is the difference between getting your deposit back in a week or waiting months in litigation. Download my free TAR-1904 template above, follow the checklist, and you’ll avoid 99% of the headaches I see in disputed closings.
Remember: This article is not legal advice. For complex terminations or disputed earnest money, contact a licensed Texas real estate attorney immediately.
Sources:
- Texas Real Estate Commission (TREC) Promulgated Forms – trec.texas.gov/forms
- Texas Association of Realtors Legal Hotline Archives
- Texas Property Code Chapter 5