Option to Purchase
Option to Purchase
What is the objective of having a standard Option to Purchase?
The standard Option to Purchase was introduced to protect the interests of both sellers and buyers in the resale market.
buyers of resale flats must use the HDB prescribed Option to Purchase as the form of contract in resale transactions. No amendments may be made to the prescribed form.
Buyers (or their agent) can download the prescribed Option to Purchase form from the HDB InfoWEB (www.hdb.gov.sg). Each form has a unique Serial Number.
Buyers must declare to HDB the true resale price of the flat. Buyers and Sellers shall not enter into any supplementary agreement or other agreements.
The prescribed Option Fee, Deposit and Option Period are given below:
Option Fee – An amount not exceeding $1,000
Deposit – An amount not exceeding $5,000
(Option Fee + Option Exercise Fee = Deposit)
Option Period – 21 calendar days (including Sat/Sun & public holidays) after the Option Date.
[E.g. If the sellers grant an Option to the buyers on 1 January 2020 (Wednesday), the Option will expire on 22 January 2020 (Wednesday). The Option expiry time is standardised at 4pm.]
Sellers and buyers will negotiate and agree on the resale price of the flat. The sellers will grant an Option to the buyers to purchase the resale flat at the agreed resale price. In exchange, the buyers pay an Option Fee to the sellers.
The seller’s offer is for a fixed period (“Option Period”) during which the sellers cannot sell the flat or make offers to other buyers.
To exercise the Option, the buyers must do the following before the expiry of the Option Period:
(a) Sign the Acceptance in the Option to Purchase [Buyers who are getting a bank loan must ensure that the date of issue of the bank’s Letter of Offer is before the date of Acceptance],
(b) Deliver the signed Option to Purchase to the sellers (or an authorised recipient by completing the Authorisation Form (Form A) provided in the Option to Purchase), and
(c) Pay a sum called “Option Exercise Fee” to the sellers.
The Option Fee and Option Exercise Fee will form the “Deposit” for the purchase of the resale flat. The sellers and buyers must state an amount for the Option Fee as well as for the Option Exercise Fee. The Option Fee cannot be $0. This is to ensure that there is a valid Option or contract.
Upon exercise of the Option to Purchase, the sellers and the buyers enter into a binding contract for the sale and purchase of the resale flat. The Option to Purchase shall be witnessed by a third party, who is above the age of 21 years.
After the buyers have exercised the Option to Purchase, the sellers and buyers shall, within the timeframe they have agreed in the Option to Purchase, submit their respective portion of the resale application to HDB for processing.