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Glossary

Glossary · Buying process

Option to Purchase

By Winfred Quek · CEA R073319H · Singapore property glossary

What is Option to Purchase? The Option to Purchase, OTP, is the first binding legal document in a Singapore property transaction. The buyer pays an option fee to secure an exclusive right to buy at an agreed price for a fixed period, 14 days for private resale or 21 days for HDB resale, after which the option lapses if not exercised.

For private resale property, the option fee is typically 1 percent of the price, paid in cash to the seller. For HDB resale, the option fee is negotiated between buyer and seller, from as little as S$1 up to a cap of S$1,000.

If the buyer decides not to proceed, the option simply lapses at the end of the exercise period and the option fee is forfeited to the seller and cannot be recovered. If the buyer proceeds, they exercise the OTP by paying a further sum, 4 percent for private resale, or up to S$5,000 for HDB resale, which converts the option into a binding Sale and Purchase Agreement.

For HDB resale specifically, a buyer must hold a valid HFE letter before HDB will allow the OTP to be granted, and there is no statutory cooling off period once exercised on either track.

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Winfred Quek is an Associate Marketing Consultant at Crestbrick Pte Ltd (CEA Licence No. L31010886H). CEA R073319H. This page is for general information only and does not constitute financial, investment, or legal advice. Verify current figures with IRAS, HDB, CPF Board, or MAS before making any decision.

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