Challenging Option Contracts in Texas

Have you been told you’re bound by an “option contract” to sell your land, or let someone else buy it years after the deal closed? You may have more rights than you’ve been told. Texas courts don’t automatically enforce these agreements. In fact, many option contracts can be challenged, or thrown out entirely, if they’re vague, one-sided, or never properly agreed to in the first place. This article walks through two real court cases that show how Texas judges decide whether an option agreement is enforceable, and what makes one fall apart.

Option contracts are common in Texas real estate. They are often used by developers or sellers to reserve the right to repurchase property or enforce construction timelines. But the existence of an option contract doesn’t mean it’s enforceable. In fact, Texas courts have made clear that these agreements are subject to strict requirements, and may be set aside if they fail to meet them.

Two appellate decisions, 1464-Eight, Ltd. v. Joppich, 154 S.W.3d 101 (Tex. 2004), and Angell v. Culpepper, 2021 WL 5018758 (Tex. App.—Austin), show how courts evaluate option contracts under Texas law. Both cases applied the same legal framework. One option was upheld. The other was sent back for further scrutiny. The difference came down to clarity, structure, and proof.

More importantly, both cases demonstrate that option contracts can be challenged—on several grounds: 

1. A missing signature
2. A lack of mutual obligations
3. Vague or nonexistent consideration
4. A duration that extends too far
5. Unclear or one-sided terms

Any of these issues can raise serious enforceability concerns.

In Joppich, the Texas Supreme Court adopted the Restatement (Second) of Contracts § 87(1)(a), which defines when an option contract is enforceable. The case involved a buyer who signed an option agreement granting the developer the right to repurchase the property if construction did not begin within 18 months. The agreement stated that the developer had paid $10 for the option, but the $10 was never actually delivered.

Still, the Court enforced the agreement:

“Section 87(1)(a) of the Restatement (Second) of Contracts provides: ‘An offer is binding as an option contract if it is in writing and signed by the offeror, recites a purported consideration for the making of the offer, and proposes an exchange on fair terms within a reasonable time.’”

— Joppich, 154 S.W.3d at 105

“We agree with the petitioners that the nonpayment of the recited nominal consideration does not preclude enforcement of the parties’ written option agreement.”

— Id. at 102

The agreement in Joppich was clear, specific, recorded, and signed by both parties. The consideration, though nominal, was explicitly recited and “acknowledged and confessed.” The terms were precise, and the five-year duration was limited and commercially justifiable. In short, the option looked like a real contract, and the Court treated it as one.

In Angell v. Culpepper, the court was presented with another real estate option, this time one that gave buyers the right to purchase a neighboring tract of land within twenty years. But unlike Joppich, the agreement here raised multiple red flags.

The appellate court reversed a summary judgment enforcing the option and identified key factual disputes. One was consideration:

“Here, however, the Option Agreement did not recite any consideration from Buyers, and it established a twenty-year term… Without evidence that the Angells accepted the terms in the Deed that differed from those in the Contract as consideration for the change from the Contract’s right of first refusal by the Option Agreement, we cannot say that Buyers proved they were entitled to summary judgment on this issue.”

— Angell, 2021 WL 5018758, at *22

The court also raised concerns about the length of the option:

“While the twenty-year restraint is shorter than options that have been found reasonable, it is longer than the four-year period found to be an unreasonably tardy exercise of an indefinite option… The record before us, viewed most favorably to the Angells, raises a genuine issue of material fact as to the reasonableness of the restraint on alienation embodied in the Option Agreement.”

— Id. at *18

In both quotes, the court used the Restatement framework adopted in Joppich. The difference was in the facts. In Angell, the agreement was vague, layered across multiple documents, and not supported by clear benefit to the landowner. Those facts cast doubt on whether it ever formed a valid option under Texas law.

Do option contracts have to be in writing? By the Texas Supreme Court adopting the Restatement (Second) of Contracts § 87(1)(a), a valid option must be in writing, signed by the offeror, recite a purported consideration, and propose an exchange “on fair terms within a reasonable time.” But while the standard is clear in theory, its application in real-world disputes remains unsettled, and increasingly contested.

Do option contracts require consideration? In Joppich, the Court upheld an option with a five-year duration without questioning whether it was reasonable. The option was separately executed, expressly stated consideration (even if nominal), and clearly tied to the underlying transaction. It contained a definite expiration date and bound both parties with reciprocal expectations. The Court had little difficulty concluding that the contract satisfied the Restatement framework.

But Angell presented a more complicated picture. There, the court faced an option agreement that lacked any express statement of consideration, offered no clearly defined mutual obligations, and extended for twenty years. These differences proved significant. The appellate court, applying Joppich, declined to enforce the agreement on summary judgment, and flagged multiple potential deficiencies, not just the extended duration.

Though the court declined to strike the option outright, its reasoning highlighted several areas of vulnerability:

• The use of boilerplate phrases like “mutual consideration” without identifying any value given;
• The absence of a defined benefit to the landowner or option grantor;
• The length of the option’s duration in relation to the transaction;
• The lack of meaningful obligations on the part of the party holding the option;
• The overall ambiguity of the instrument when read in context.

These concerns weren’t addressed in isolation. The court treated them collectively as indicators that the agreement might not meet the “reasonable time” and “fair terms” requirements adopted in Joppich.

What emerges from Angell is not just uncertainty about how long an option can remain open, but a broader doctrinal tension in how courts evaluate the entire structure of an option agreement. Texas law now clearly requires that an option contract be the product of identifiable value, reciprocal intent, and defined boundaries. Where these elements are missing or unclear, courts are increasingly willing to look behind the form of the agreement to assess its substance.

Put simply, it’s not enough for an option to exist in writing. A court may still ask: What did the grantor receive? What obligation, if any, was imposed on the holder? Is the term commercially justifiable? And is the agreement balanced, or merely opportunistic?

These are not academic concerns. They are live questions that courts are already engaging. And they are all potential bases for contesting an option’s enforceability.

Option contracts are not immune from challenge. In fact, the more an agreement deviates from the structure enforced in Joppich, the more vulnerable it becomes. Angell is a clear reminder that Texas courts are willing to scrutinize options that appear imbalanced, ambiguous, or unsupported by value.

An option may be vulnerable if:

• It lacks a valid signature or mutual obligation;
• It fails to recite consideration (even nominal);
• It imposes obligations on only one party;
• Its terms are too vague to enforce; or
• Its duration is indefinite or unreasonably long.

If you are facing an option agreement that seems overreaching, poorly documented, or unfairly structured, you are not without legal tools. Texas courts are not enforcing these contracts blindly. They are applying established rules, carefully, and with increasing scrutiny. Not every option must be honored. Some can, and should, be challenged. 

A knowledgeable real estate attorney can help you review the contract’s language, evaluate its enforceability under Texas law, and protect your rights before you’re locked into something unfair. Don’t navigate this alone, contact a qualified attorney to understand your options and take control of the situation.

This publication is provided by Amini & Conant, LLP for educational and informational purposes only and is not intended and should not be construed as legal advice. Should the reader seek further analysis of the subject matter or answers to specific questions about the subject matter, please contact the author at aaron@aminiconant.com. This publication is considered advertising under applicable state laws.

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