What’s an option to purchase?
OPTION TO PURCHASE
Sellers of resale flats must use the HDB prescribed Option to Purchase as the form of contract in resale transactions. No party is allowed to enter into any other agreement pertaining to the sale and purchase of the flat, as this would be null and void pursuant to the Housing and Development Act. No amendments may be made to the prescribed form.
Sellers (or their agents) can download the prescribed Option to Purchase form from the HDB InfoWEB (www.hdb.gov.sg). Each form has a unique Serial Number. Sellers must state the Serial Number of the Option to Purchase when they submit a resale application to HDB.
Sellers who are granting an Option to Purchase from 1 January 2018 must use the prescribed Option to Purchase in the format approved for use with effect from 1 January 2018. Any Option to Purchase granted on/after 1 January 2018 which is not in accordance with the prescribed format will be null and void.
Sellers must declare to HDB the true resale price of the flat. They shall not enter into any supplementary agreement or other agreements or arrangements that may cause the resale price as declared to be inflated or understated.
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.]
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.
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. Neither the Option Fee nor the Option Exercise Fee can 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.