What happens if I decide not to exercise the OTP in Singapore?

If you do not exercise the OTP within the stipulated period (typically 14 days for private resale, 21 days for HDB resale), the OTP expires. The seller keeps the option fee (typically 1% of the purchase price) as compensation. The deal is cancelled and both parties are free to transact with others. You cannot recover the option fee.

Can I get a refund of the OTP fee if the seller backs out?

If the seller refuses to sell after granting an OTP that you have exercised, you have legal recourse -- the OTP is a binding contract once exercised. You can seek specific performance (force the sale) or damages through the courts. A properly exercised OTP is a contractual obligation on the seller. If the OTP has not yet been exercised, the seller can theoretically withdraw, though doing so may expose them to claims for any costs you incurred in reliance.

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Understanding the Option to Purchase in Singapore Property Transactions

By Winfred Quek · CEA R073319H · 9-minute read · Last reviewed May 2026

Quick answer: The Option to Purchase (OTP) is the first binding legal document in any Singapore private property transaction. The buyer pays a 1% option fee in cash; the seller grants an exclusive right to buy for 14 calendar days (private resale) or 21 days (HDB resale). If the buyer does not exercise within the period, the 1% is forfeited to the seller. Exercise requires a further 4% payment. BSD is due within 14 days of exercise.

Facts verified: May 2026 · Sources linked below

Before any Singapore property changes hands, there is an Option to Purchase. Whether you are buying a resale condo, a landed home, or an HDB flat, the OTP is the document that transforms an informal agreement to transact into a legally enforceable right. Understanding every clause, deadline, and consequence of the OTP is not optional for any serious buyer it is the foundation of the entire transaction.

First-time buyers often treat the OTP as a formality. Experienced buyers treat it as the moment the deal becomes real and irreversible. The difference in approach explains why some buyers lose 1% option fees unnecessarily, and why some sellers walk away from deals they could have been legally compelled to complete.

Private Resale OTP: The Full Process

Stage	Action	Amount	Deadline	Notes
OTP granted	Buyer pays option fee to seller	1% of purchase price (cash)	On agreement day	Cheque made to seller. Non-refundable if not exercised.
Option period	Buyer arranges financing, confirms purchase		14 calendar days	Buyer can extend by mutual consent. Seller cannot sell to anyone else during this period.
Exercise OTP	Buyer exercises the OTP	4% of purchase price (cash or CPF)	Within 14 days of grant	Total paid so far: 5% (1% + 4%). Balance 95% due at completion.
BSD payment	Pay Buyer's Stamp Duty to IRAS	Varies (see formula)	Within 14 days of exercise	BSD can be paid from CPF OA.
Completion	Full payment, keys handed over	Remaining 95%	8–10 weeks from exercise	Lawyers handle conveyancing. Mortgage drawn in full.

HDB Resale OTP: Key Differences

The HDB resale OTP process has additional safeguards and a different sequencing from the private resale process:

HDB Flat Eligibility (HFE) letter required first: Before a buyer can receive an HDB resale OTP, they must hold a valid HFE letter from HDB confirming eligibility to buy an HDB resale flat, and (if applicable) the CPF grants and HDB loan they qualify for. Without the HFE letter, the transaction cannot proceed.
Option fee: Negotiated between buyer and seller from as low as $1 to a maximum of $1,000 (HDB caps the option fee at $1,000, unlike private resale where 1% is typical).
Exercise period: 21 calendar days (vs 14 for private resale).
Exercise fee: Up to $5,000 (agreed between parties), not the 4% typical for private resale.
Resale application: After exercising the OTP, buyer and seller submit a joint resale application to HDB. HDB processes and approves the sale there is no conveyancing solicitor equivalent in HDB resale (HDB handles the legal transfer).
No cooling period: Unlike some countries, Singapore HDB resale has no statutory cooling-off period. Once the OTP is exercised, both parties are bound.

HDB OTP trap do not grant OTP without HFE: Sellers sometimes accept a buyer before confirming the buyer holds a valid HFE letter. If the buyer subsequently cannot obtain an HFE (e.g., they are ineligible, or their HDB loan is less than expected), the deal collapses and both parties waste time. Always confirm the buyer's HFE status before granting the OTP.

BSD on Exercise: What You Owe IRAS Within 14 Days

Buyer's Stamp Duty is payable on the purchase price (or market value, whichever is higher) within 14 days of exercising the OTP for private property. The BSD formula in 2026:

First $180,000: 1% = $1,800
Next $180,000: 2% = $3,600
Next $640,000: 3% = $19,200
Remainder above $1,000,000: 4%

Examples: $1.2M purchase → BSD = $1,800 + $3,600 + $19,200 + ($200,000 × 4%) = $32,600. $1.5M purchase → BSD = $1,800 + $3,600 + $19,200 + ($500,000 × 4%) = $44,600. BSD can be paid from CPF OA.

The Option Period: What to Do in 14 Days

Once you hold an OTP, the 14-day clock is running. Use the time efficiently:

Day 1–2: Submit OTP to your bank for formal loan approval (if you have in-principle approval, this accelerates to 3–5 days for formal letter). Confirm your CPF OA balance for the exercise payment.

Day 2–5: Engage a conveyancing lawyer. They will review the OTP, conduct title searches, and prepare the exercise documentation. For resale private property, use a lawyer experienced in Singapore residential conveyancing.

Day 5–10: Receive bank's formal Letter of Offer. Review terms. Confirm the loan quantum covers your intended purchase at TDSR and LTV limits.

Day 10–14: Exercise the OTP if proceeding. Your lawyer submits the exercise notice and 4% exercise fee. If not proceeding, let the OTP lapse the 1% is forfeited.

What Happens If You Don't Exercise?

If you decide not to proceed after receiving an OTP, you simply do not exercise it. The OTP expires at the end of the option period. The seller retains your 1% option fee as compensation for the exclusivity period and the inconvenience of having their property off the market. You cannot recover this fee.

Common reasons buyers let OTPs lapse: financing fell through (bank declined loan), valuation came in lower than purchase price (bank will only lend on the lower figure), buyer discovered a material defect in the property, or personal circumstances changed.

What If Both Parties Want to Cancel After Exercise?

Once an OTP is exercised, it becomes a binding contract (the Sale and Purchase Agreement). Cancellation by mutual consent is possible but legally complex. Both parties must agree, and there will typically be a negotiated settlement on costs and the exercise fee. The buyer usually forfeits the exercise fee (4%) and potentially faces additional liability for the seller's legal costs. Always involve your solicitor before attempting to cancel a completed exercise.

Common OTP Mistakes by Singapore Buyers

Paying the option fee before securing in-principle loan approval: If your bank subsequently declines the loan, you lose the 1% option fee and cannot proceed. Get IPA first, then pay option fee.
Not checking CPF OA availability for the 4% exercise payment: The 4% exercise payment can come from CPF OA, but CPF Board processing takes 2–5 working days. Plan in advance do not wait until Day 13 to request CPF withdrawal.
Assuming 14 days means 14 business days: It is 14 calendar days, including weekends and public holidays. A Saturday grant date means the OTP expires on the second Saturday, regardless of intervening holidays.
Not engaging a lawyer immediately: Some buyers wait until Day 7 or 8 to find a solicitor. With title searches, loan documentation, and exercise paperwork all due before Day 14, this leaves dangerously little time for complications.