The Earnest Money Release Form in Texas, Explained

The earnest money release form Texas agents use is TXR 1904, Release of Earnest Money. It's a Texas REALTORS® form, not a TREC-promulgated one — TREC doesn't publish its own version, so TXR 1904 is the standard document used statewide whenever a deal terminates and the parties need to instruct the escrow agent on how to disburse the deposit.

TXR 1904 is categorized as 'other' rather than as a contract or an addendum, which matters: it isn't a term of the purchase agreement itself. It's a standalone instruction that buyer and seller (or their authorized signatories) send to the title company or escrow agent once the underlying contract has already ended, directing where the earnest money should go.

The form applies across deal types — residential sales, farm & ranch, commercial sales, and vacant land — because earnest money deposits and terminations happen under all of Texas's promulgated and TXR contracts, from the One to Four Family Residential Contract (Resale) to a Commercial Contract.

Earnest money is deposited with a title company or escrow agent under the terms of whichever contract governs the deal — the One to Four Family Residential Contract (Resale), the Unimproved Property Contract, the Farm and Ranch Contract, a New Home Contract, a Residential Condominium Contract, or a Commercial Contract. That deposit sits in escrow until closing or until the contract terminates.

Termination is often documented first, separately from the release itself, particularly when one party is exercising a unilateral right to end the contract. A buyer exercising a termination right typically signs a Notice of Buyer's Termination of Contract, and a seller terminating under the contract's terms typically signs a Notice of Seller's Termination of Contract; in those cases, the parties then move to TXR 1904 to tell the escrow agent what happens to the deposit. When both sides are simply agreeing to walk away from the deal together, though, TXR 1904 itself typically records that mutual release and termination, and a separate termination notice often isn't used.

Common triggers include an option period termination, a failed financing contingency tied to a Third Party Financing Addendum or Seller Financing Addendum, an unresolved inspection issue, or a straightforward mutual agreement to walk away from the deal before closing. Which path applies — a separate termination notice followed by TXR 1904, or a single mutual release that covers both — depends on how the contract ended.

Generally both buyer and seller (or their authorized signatories) sign the release, directing the escrow agent on how to disburse the earnest money — to the buyer, to the seller, split between them, or applied toward closing costs if the deal is proceeding on amended terms.

If only one party signs and the other disagrees with the proposed disbursement, the escrow agent typically won't release the funds without full agreement from both parties or another form of resolution. The money doesn't automatically go to whoever terminated the contract, and it doesn't automatically go to whoever didn't — the escrow agent is simply holding the deposit until it receives clear, mutual instructions (or a court order, interpleader, or similar resolution).

Agents should never advise a client on who is legally entitled to the earnest money in a dispute. That's a legal question for the client's own attorney, and it's exactly the kind of situation where a sponsoring broker's involvement matters.

The most common delay is a release sent to the title company before both signatures are collected — the escrow agent simply can't act on a half-signed instruction, and the file sits open longer than it needs to.

Another frequent issue is confusing the termination notice with the release itself. In situations where a separate termination notice applies, an agent who sends TXR 1904 without first properly documenting termination under the contract (via a Notice of Buyer's Termination of Contract or Notice of Seller's Termination of Contract, as applicable) can create a gap in the file that complicates things later if the disbursement is ever questioned.

When the buyer and seller can't agree on how the earnest money should be split, the funds generally stay in escrow with the title company until the dispute is resolved. Agents should not attempt to broker that resolution themselves — loop in the sponsoring broker and direct the client to their own attorney for advice on their legal rights.

RaiderX agents handle terminations and releases like any TREC-licensed Texas agent, but with direct access to dedicated broker support when a release gets complicated or disputed — instead of waiting in a queue at a large brokerage, agents can get the sponsoring broker's input quickly.

RaiderX's EZDocs tool (currently in beta) lets agents fill out current TREC forms and a growing library of TXR forms from a guided workflow inside the platform, then send them out for e-signature with no per-signature fee — the signed copy files into the deal automatically. Check /resources/forms for the current library of supported forms.

Because RaiderX agents pay a flat monthly sponsorship fee instead of a commission split, and RaiderX never takes a share of commission, handling a terminated deal — including the time spent sorting out an earnest money release — doesn't cost an agent anything extra in fees. Individual sponsorship starts at $99/month; see /contact for questions about how sponsorship handles edge cases like this.