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Valuation of Flat
Resale Application
Appointments with HDB
Conditions after purchase

Option to Purchase (OTP)

 

You and the sellers must use the HDB prescribed Option to Purchase (OTP) as the form of contract in the transaction. Any other agreements and supplementary agreements relating to the sale or purchase of the flat are not valid under the Housing and Development Act.

Procedure to enter into a contract using the OTP

 

The five steps involved to enter into a contract using the OTP are:

 

Step 1: Negotiate and agree on the resale price

 

You and the sellers have to negotiate on the resale price of the flat. The resale price of the flat is agreedbased on a willing-buyer and willing-seller negotiation, that is, both you and the sellers decide on the price of the resale flat willingly.

You can make use of the Resale Flat Prices e-Service to check the resale transacted prices for the past two years to assist you in making an informed decision on how much to pay for the flat. From 10 March 2014, the resale transacted prices will be updated daily based on HDB’s registration of the resale applications received.

When entering the OTP, 

  • You and the sellers must declare to the HDB the true resale price of the flat.

  • Salespersons must also declare all relevant information relating to the resale transaction in theSalesperson Statutory Declaration(PDF 20KB).

The penalty for false declaration includes a fine and/or up to 3 years' imprisonment.You and the seller must not enter into any:

  • supplementary/ other agreements, or

  • arrangements that may cause the true resale price as declared to be inflated or understated.


The penalty for false information includes a fine of up to $5,000 and/or up to 6 months’ imprisonment.

 

Step 2: Sellers grant the OTP to you

 

Sellers will grant an Option to you, to buy the resale flat at the agreed resale price.You or the seller must fill in:

  • on Page 1 of the OTP:

      • Option Date

      • Flat Address

      • Purchase Price (resale price of the flat)

      • Option Fee (between $1 to $1,000)

      • Option Expiry Date (21 calendar days from the Option Date [including Saturday, Sunday and public holidays]. e.g. if seller grants Option to you on 1 Apr, the Option will expire on 22 Apr at 4pm)

      • Names and NRIC numbers of all the sellers and buyers

 

  • the top half of page 8 of the OTP:

      • Option Date

      • Flat Address

      • all sellers must sign on the OTP

      • a witness must sign on the OTP (seller's salesperson or any person who is a Singapore citizen or Singapore Permanent Resident aged 21 years or above and not involved in the resale transaction)


At this stage, you are not required to sign on the OTP. However, in exchange for the Option, you will need to pay an Option Fee to the sellers. The Option Fee could be a sum between $1 to a maximum of $1,000, to be negotiated between you and the sellers.

Once the sellers have granted the Option to you, they cannot grant another Option to another buyer until the Option granted expires.

 

Step 3: Make use of the Option period to review the purchase

 

The Option period is 21 calendar days (including Saturday, Sunday and public holidays), given to you by the sellers, from the date of granting the OTP (refer to Step 2). It expires at 4pm on the 21st calendar day.You should use the Option period wisely and not rush into exercising the OTP.

 

During this period, you must:

  • check that you have enough CPF money, cash and loan to buy the flat

  • think and decide whether you really want to buy the flat

 

 

Important Note:

  • You need a valid valuation report of the flat if you are financing your purchase with CPF monies or a housing loan from HDB or bank.

  • The valuation request must be submitted by the next working day after you have been granted an Option by the sellers

 

Step 4a : Exercise the OTP if you wish to proceed with the purchase

 

Before you proceed to this step, you must have completed the Resale Checklist.If you are taking a housing loan to buy the resale flat, you must have

  • a valid HDB Loan Eligibility (HLE) letter for taking an HDB loan or

  • a valid Letter of Offer from the bank for taking a bank loan

 

 

Important Note:
The date of issue of the HLE or the Letter of Offer must be before you exercise the Option. This is to ensure that you have the means to buy the resale flat before you commit to the purchase.

 

If you wish to buy the flat, you have to exercise the Option within the Option Period. To exercise the Option, you or the seller must fill in:

  • Clause 6.1 (c) on page 2 of the OTP:

      • Option Exercise Fee

 

  • Clause 12 on page 4 of the OTP:

      • number of days from the date of exercising the Option that you and the sellers have agreed to submit the resale application to the HDB

 

  • the bottom half of page 8 of the OTP:

      • you and all your co-buyers must sign on the "ACCEPTANCE" section in the OTP

      • a witness must sign on the OTP (your salesperson or any person who is a Singapore Citizen or Singapore Permanent Resident aged 21 years or above and not involved in the resale transaction)

      •  

When you exercise the Option to Purchase, you will need to pay a deposit to the sellers. The deposit, including the Option Fee previously paid in Step 2, must not exceed $5,000 in total. The amount of deposit is negotiated between the you and sellers.

 

Step 4b: Let the Option to Purchase expire if you do not wish to proceed with the purchase


If you do not wish to proceed with the purchase, that is, exercise the Option to Purchase, you need not do anything but wait for Option Expiry Date to lapse. You will forfeit the Option Fee previously paid in Step 2; the sellers may keep the Option Fee..

 

 

Step 5: Decide when to submit the resale application

 

After you have exercised the Option, you and the seller have to decide when both of you wish to submit a resale application to the HDB. Your portion of the resale application and the seller's portion of the resale application must be submitted within 7 days of each other. Besides that, both portions must be submitted within the previously agreed number of days on page 4 of the OTP.If you are taking a housing loan from a bank, you must have a bank's Letter of Offer and Acceptance at the point of the resale submission to HDB.

 

Important Note:
You and sellers (or their salesperson) will have to submit the respective portions of the resale application separately. A resale application is deemed complete only when the HDB receives both portions of the resale application. You and the sellers should ensure that they meet all the prevailing eligibility conditions and resale requirements on the date the second party submits his portion of the resale application.

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