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Landlord matter – Common Clauses - PropertyWiki

Landlord common clauses

Tenancy Agreement for landlord

What are the common clauses found in a Tenancy Agreement for landlord ?

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.

Click on the FAQ below to find out more

Before you exercise the OTP, you are advised to check whether:

  • you and your family are eligible to buy an HDB resale flat and can meet the Ethnic Integration Policy and SPR Quota in the month of the resale application submission;
  • you are eligible for an HDB Loan and have applied for an HDB Loan Eligibility letter or you have obtained a bank loan and a Letter of Offer for mortgage;
  • you have a submitted a request for value;
  • you have planned your finances to ensure you can pay for the flat;
  • upgrading work has been completed if the resale flat was affected by redevelopment or upgrading. Check with the respective HDB Branch whether the billing has been served as this will determine which party will be liable to pay for the upgrading cost.
Before you exercise the Option, you must:
-Have registered an Intent to Buy , and
-Have a valid HDB Loan Eligibility (HLE) letter, if you are taking an HDB loan, or a valid Letter of Offer from a bank, if you are taking a bank loan.
If you are taking a housing loan or using your CPF to pay for the flat purchase, you will have to submit a Request for Value by the next working day, after the flat seller has granted the Option to Purchase to you.
 
Buyers are strongly advised to think through carefully and exercise financial prudence to buy a flat within their means, before exercising the Option. Once buyers exercise the Option, they have entered into a binding contract with the sellers for the sale and purchase of the flat.
 
Please see Option to Purchase for more information

The OTP can be downloaded by either the buyers, sellers or their salespersons (if engaging the services of a salesperson).

The prescribed amounts are given below.

Option FeeAn amount not exceeding $1,000
Option Exercise FeeAny amount as long as it does not exceed $5,000 together with the option fee
DepositThe deposit*, which comprises the option fee and option exercise fee, should not exceed $5,000.
* Forms part of the purchase price.
Option Period21 calendar days (including Saturdays, Sundays and public holidays) after the date the Option to Purchase was granted.
The time of expiry is at 4:00 p.m.

e.g. If the seller grants an OTP on 10 March 2014, it will expire on 31 March 2014.

No. The buyer and seller are not allowed to vary the prescribed amounts or option period, even if they mutually agree to vary.

You only need to print one set of the OTP, please do not print multiple copies. Each OTP has a unique Serial Number which will have to be provided when buyers and sellers (or their salespersons) submit their respective portions of the resale application to HDB.

The HDB’s standard Option to Purchase (OTP) helps protect the interests of both buyers and sellers in the resale market. Before the use of the standard agreement, there were various forms of private agreements, which at times contained terms that unduly favoured either party or contravened HDB’s policies.

Please see Option to Purchase for more information.

No. A seller will have to appoint a third party or firm to receive the buyer’s signed Acceptance and option exercise fee on his/her behalf.

After you have exercised the Option, the next step is to submit a resale application to HDB.

The standard Option to Purchase provides for you and the seller to indicate the timeframe to submit the resale application. In order to avoid any disputes between you and the seller, both parties must ensure that the resale application is submitted within the period you have agreed.

Upon exercising the OTP, buyers return the signed OTP and pay an option exercise fee to the flat sellers. Sellers are required to submit the original OTP to HDB during their resale completion appointment.
Sellers and buyers are advised to make photocopies of the OTP for their own reference.

The buyers are advised to keep the OTP as they have paid the Option Fee to the flat sellers.

Sellers and buyers are required to submit a scanned copy of the OTP (10 pages) when they submit their resale application using the HDB Resale Portal.

Buyers are also required to submit a scanned copy of Page 1 of the OTP when they submit their Request for Value.
 
Sellers and buyers are required to submit the original OTP to HDB during their resale completion appointment.

You will lose the option fee. If you are still interested to buy the flat, you may discuss with the seller. The seller may offer another Option to Purchase to you in exchange for a fresh Option Fee.

You can let the OTP expire if you decide not to proceed with the purchase but you will lose the option fee. Since you did not exercise it during the option period, there is no contract between you and the seller.

The standard Option to Purchase provides for a confirmation by the seller that he has either:

  • satisfied the minimum occupation period; or
  • obtained HDB’s prior written consent for the sale, if he has not satisfied the minimum occupation period

If the seller has not met either requirement, the Option to Purchase signed is null and void. In such a case, the seller has to return to you all the money that you have paid.

If the seller refuses to refund the deposit paid or if you wish to pursue any other claims against the seller, it is best that you consult a lawyer on the possible actions that you can take. 

Alternatively, the buyers and sellers may wish to consider settling the dispute through mediation at the Singapore Mediation Centre. You can call them for assistance on the procedures and charges at 6332- 4366.

Yes, you can do so. However, you will have to pay an option fee each time you secure an Option to Purchase. You will lose the option fee if you fail to exercise the Option before it expires. 

As you can only buy one HDB flat at any one time, you will have to bear this in mind before choosing to secure more than one Option to Purchase from different sellers.

Yes, the seller can appoint a third party or firm (e.g. solicitor’s firm or housing agency) by completing the Authorisation Form (Form A) provided in the Option to Purchase.

The seller should inform you about this arrangement and ensure that the appointed person is available to receive the Acceptance and the Option Exercise Fee during the option period.

You may wish to agree upfront with the seller to appoint a third party or firm (e.g. solicitor’s firm or housing agency) to receive the signed Option and the Option Exercise fee.

The seller must complete the Authorisation Form provided in the Option to Purchase Form.

The appointed party or firm should be easily contactable.

Since banks are private financial institute, they will need private law firm to act for them as well.

You can engage their own private solicitor at the contractual stage, before the submission of the resale application to HDB.

Sellers and buyers are contractually bound to complete the sale and purchase once the Option to Purchase is exercised.  If either party breaches the terms of the agreement, the other party will be entitled to enforce the terms of the Option for specific performance, damages and/or any other remedy. 

If there is any dispute, the buyers and sellers may wish to consult a private solicitor on the rights and remedies in the matter.

Alternatively, the buyers and sellers may wish to consider settling the dispute through mediation at the Singapore Mediation Centre. You can call them for assistance on the procedures and charges at 6332- 4366.

Upon exercising the OTP, buyers return the signed OTP and pay an option exercise fee to the flat sellers. Sellers are required to submit the original OTP to HDB during their resale completion appointment.
 
Sellers and buyers are advised to make photocopies of the OTP for their own reference.