The key questions to think about for exercising a BUC Property’s Option to Purchase in Singapore:
- What is an Option to Purchase (OTP)?
- Key things to to know before I exercise my OTP Agreement?
- If I decide not to exercise my OTP Agreement, what will happen?
So what is OTP for?
The developer of the property will be required to issue buyers (that’s you), with a set of mandatory information regarding the entire housing project and your selected unit, before accepting the booking fee that you have paid. (As you know, a binding contract = You may the booking fee in exchange for developer to reserve the unit for you). So, when you decide to proceed with the purchase of the offered unit after reviewing the information, you will pay the booking fee for the issuance of an Option to Purchase (OTP) for the unit.
A licensed housing developer uses a standard OTP form, and must seek an approval from the Controller of Housing to include any amendments within the OTP. (It’s not a random form that the developers come up with!)
This is typically how the first page looks like:
It will contain information such as:
- The Option to Purchase (OTP) date.
- Developer’s name/license and office.
- Your full name, NRIC/passport No. and corresponding address.
- The address unit that you intend to purchase.
- The size of the unit (sq ft /sq m).
- Tenure of the land (In Singapore it’s either Freehold, 999 years, or 99 years)
- Encumbrance on the land
It contains the following:
- Purchase price of your unit
- 5% Booking fee that you’ve paid (Because you will only receive the OTP after you’ve paid the booking fee)
- Vacant Possession Date (The final date that the developers promised to complete the property by, otherwise they will incur taxes from the government authorities)
The important information to note are:
- No. of copies of the Sales & Purchase agreement (S&P or SPA), the developers would provide (Either duplicate or triplicate copies of it).
- How a property needs to be exercised, (By exercised = The buyer signs the S&P documents in the presence of their lawyers, who also arranges for these documents to be submitted to the developers’ law firm by hand), within 14 days from the date you receive the document.
- The signed S&P document is to be exercised with the exercising fee of 15%, payable to what is indicated in clause 4.3 for this example document.
So what happens if you do not exercise?
- Out of the 5% Booking fee paid, you will be refunded back 75% of that booking fee.
- You must not give your instructions to lodge a caveat on the unit (That would indicate that you have intentions of owning it)
- If you decide not to continue with this property purchase after you exercise, however, the full 20% (This includes the 15% exercising fee + 5% booking fee) will be forfeited and the developers are not liable to refund you this amount.