Paper 2 · Private Property Sale
OTP Singapore: Option to Purchase Fee, Period & Exercise
Must-know for the exam
- An Option to Purchase (OTP) gives a private resale buyer the exclusive right to buy within a set window, ahead of the formal Sale & Purchase Agreement.
- The buyer pays an option fee of about 1% on grant, and the seller cannot sell to anyone else during the option period, commonly 14 days.
- On exercising, the buyer signs the OTP and tops up the deposit to 5% of the price, which converts the option into a binding contract of sale and purchase.
- The option period is the window to exercise, not to complete; completion follows about 8 to 12 weeks later, when the buyer pays the balance 95% plus stamp duties.
- If the buyer lets the option lapse without exercising, only the option fee (about 1%) is forfeited to the seller and no further liability arises.
- A buyer who fails to complete after exercising forfeits the 5% deposit, held by the seller's solicitor as stakeholder, and faces damages or specific performance.
- If the seller defaults after exercise, the buyer can recover the deposit plus damages or ask the court to order the sale through.
For a private resale, the Option to Purchase (OTP) is the contract that locks the deal in place before the formal Sale & Purchase Agreement. It gives the buyer an exclusive right to buy within a set window. The RES exam tests the mechanics and the money at each stage.
The stages, with the money
| Stage | What happens |
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Practise exam-style questions on Private Property Sale — with instant answers and explanations.
Practise Private Property Sale questions →Exam-style questions on this topic
- RES exam question on Private Property Sale: A buyer exercises an Option to Purchase and proceeds towards completion
- RES exam question on Private Property Sale: The Sale of Commercial Properties Act 1979 (SCPA) regulates the sale of certain…
- RES exam question on Private Property Sale: Nadia buys a unit in a building under construction (BUC) from a licensed developer
- RES exam question on Private Property Sale: In a private residential resale transaction in Singapore, consider the following…
- RES exam question on Private Property Sale: A buyer of an uncompleted unit sells it on before completing his own purchase
Common questions
- How much is the option fee for a private property in Singapore?
- It is typically 1% of the purchase price, though it can be negotiated. On exercising the option the buyer usually tops up to a 5% deposit.
- What happens if the buyer does not exercise the OTP?
- The option simply lapses at the end of the option period and the option fee (typically the 1%) is forfeited to the seller. The larger deposit only comes into play once the option is exercised.
- What happens if the buyer exercises the OTP but then fails to complete?
- Exercising creates a binding contract of sale and purchase, so the buyer can no longer walk away for the price of the option fee. The seller may forfeit the deposit (typically the 5%), resell the property and sue for damages such as the shortfall on the resale — or seek specific performance, which courts grant readily for land because each property is unique. If instead the seller defaults after exercise, the buyer can recover the deposit plus damages or ask the court to order the sale through.
- Is a new-launch OTP the same as a resale OTP?
- No. For a new launch from a developer you pay a booking fee in cash on the grant of the OTP, normally 5% (Housing Developers Rules r 8 allows 5% to 10%); the developer must deliver the prescribed Sale & Purchase Agreement within 14 days, and you have 3 weeks from receiving it to exercise. If you don't proceed, the developer may forfeit 25% of the booking fee and must refund the remaining 75%. The 1%/5% structure is for a private resale.
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