Structuring Enforceable Option Contracts in Texas

Option contracts are a staple in real estate development. A real estate option contract is often relied on by developers to preserve repurchase rights, enforce construction deadlines, or control build-out strategy. But recent Texas decisions show that not every option will hold up in court. This article breaks down two key cases, Joppich and Angell, to explain where option agreements succeed, where they fail, and what developers need to know before relying on them. If your project hinges on an option to buy back, enforce a build condition, or limit future transfers, this article is for you.

Two Texas appellate decisions—1464-Eight, Ltd. v. Joppich, 154 S.W.3d 101 (Tex. 2004), and Angell v. Culpepper, 2021 WL 5018758 (Tex. App.—Austin)—serve as critical case studies. Both cases apply the same legal framework. Their differences reveal how much hinges on language, structure, and precision.

In Joppich, the Texas Supreme Court expressly adopted Restatement (Second) of Contracts § 87(1)(a). The issue was whether an option agreement (reciting a $10 consideration that was never actually paid) was enforceable.

The Court held that:

“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

It further concluded:

“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 Court emphasized that the nominal $10 (recited as “acknowledged and confessed”) fulfilled the formal requirement. The fact that it was never paid was legally irrelevant. The Court explained that this rule avoids allowing parties to invalidate written agreements based on easily fabricated oral testimony about consideration.

The option at issue in Joppich was not only supported by a recital of nominal consideration, it was also recorded in the property records, contained a defined five-year expiration, and was executed as part of a single, clear transaction.

Key Takeaway: Courts will more likely uphold option contracts that are written clearly, signed, have even nominal consideration mentioned, and are time-bound and balanced.

The court in Angell v. Culpepper also applied the Joppich standard. But there, the option agreement did not recite nominal consideration or clearly define the duration as reasonable under the Restatement framework.

The appellate court reversed summary judgment in favor of enforcement, finding material fact issues on both consideration and duration:

“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 over the extended timeframe:

“While the twenty-year restraint is shorter than options that have been found unreasonable, 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

This reasoning was framed directly through Joppich’s lens. The court recognized Joppich’s adoption of the Restatement standard and analyzed the option’s enforceability based on whether it proposed “an exchange on fair terms within a reasonable time.” Angell demonstrates that even if an option appears facially valid, courts will scrutinize its structure, duration, and the presence (or absence) of clearly stated consideration.

Key Takeaway: A contract that doesn’t mention payment or benefit to the seller, and lasts decades, is likely to get challenged in court, even under the same rules as Joppich.

Although Joppich adopted the Restatement’s requirement that an option must be exercisable “within a reasonable time,” it gave no guidance on what that term means in practice. The option in Joppich had a five-year term, which the Court upheld without comment. But the court in Angell confronted a materially different duration (20 years) and was not so quick to approve.

The Angell court, while applying Joppich, raised concerns that a 20 year option may not qualify as “reasonable,” at least under the circumstances presented. The opinion acknowledged that longer durations had been upheld in some contexts, but found that this option’s terms, including its pricing structure and vague consideration, left its enforceability uncertain.

The court did not offer a threshold for reasonableness, nor did it declare the option invalid. But by identifying “reasonableness” as a fact issue, and refusing to uphold the agreement as a matter of law, it exposed the underlying tension in applying a standard that depends so heavily on context.

What emerges is an open question. The boundaries of what courts will find to be a “reasonable time” under Joppich remain unsettled. Durations that once may have been presumed acceptable now require a closer look. Whether this trend continues will depend on how future courts choose to apply the Restatement framework to real-world agreements.

What is clear is that when the duration of an option is long, or when the benefit to the optionor is unclear, courts are unlikely to presume enforceability. The more an option drifts from the formal clarity of Joppich, the more it invites judicial skepticism.

Key Takeaway: There’s no hard rule for what counts as a “reasonable time,” but the longer your option lasts, the more likely it is to face legal scrutiny.

Joppich and Angell apply the same rule. But one was enforced and the other sent back for deeper scrutiny. The difference in what makes an option contract legally enforceable in these examples is clear: in Joppich, the option was structured deliberately, clearly, and with legally sufficient formality. In Angell, ambiguity around consideration and timeline opened the door to dispute.

Texas courts are not rewriting the rules, they’re enforcing them with more scrutiny. Whether you’re drafting a new option or reassessing a recorded agreement, now is the time to ensure the documents you’re relying on can withstand judicial review.

Key Takeaway: Texas courts are enforcing option contracts by the book. Top options contracts by Texas standards are clearly written, balanced, and formally correct. If your deal depends on one, get it reviewed now, before it becomes a problem.

If you have an option contract that matters, it’s worth reviewing before someone else does. Request a consultation with an experienced Texas contract lawyer by filling out our contact form below. 

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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