In Singapore's property market, there's a clear distinction between Option to Purchase (OTP) and Offer to Purchase, even though the terms might be used interchangeably at times. Here's a breakdown:
* **Offer to Purchase (OTP):**
* **Definition:** A formal letter from a potential buyer to the seller expressing their **serious interest** in purchasing the property. **Not legally binding.**
* **Content:** Typically includes the **offered purchase price**, the **desired option period** for the OTP (if applicable), and any **contingencies** (conditions the buyer's purchase is subject to, like securing financing).
* **Purpose:** Serves as a starting point for negotiation and shows the seller the buyer's commitment.
* **Buyer Action:** The buyer **submits the Offer to Purchase** along with an **earnest deposit** (usually 1% of the purchase price) to show good faith. The deposit is **usually refundable** if the offer is not accepted.
* **Option to Purchase (OTP):**
* **Definition:** A **legally binding agreement** between the buyer and seller **granting the buyer the exclusive right** to purchase the property at a **predetermined price** within a **specified timeframe** (option period).
* **Issued by:** The seller **issues the OTP** once they **accept the buyer's Offer to Purchase** (or a negotiated version of it).
* **Buyer Action:** The buyer **carefully reviews the OTP** and ensures it reflects the agreed-upon terms (price, option period, etc.). They then **sign and return the OTP** along with the **option fee** (typically 1% of the purchase price). This fee is **non-refundable** if the buyer backs out without a valid reason.
**Option Period:**
* The **typical option period** for an OTP in Singapore is:
* **14 days** for private properties
* **21 days** for HDB resale flats
* However, **it can be negotiated** between the buyer and seller and specified in the OTP document.
**What to Do with an OTP (as a Buyer):**
* **Review and Understand:** Carefully read and understand all the terms and conditions in the OTP before signing.
* **Secure Financing:** If the OTP is subject to securing financing, use the option period to **arrange your mortgage** and ensure you meet the loan approval conditions.
* **Engage a Lawyer:** Consider consulting a conveyancing lawyer to review the OTP and advise you on the legal aspects of the purchase.
* **Prepare for Sale and Purchase Agreement (SPA):** Use the option period to gather necessary documents and prepare for the signing of the Sale and Purchase Agreement (SPA), which is the final contract for the property purchase.
**In conclusion:**
* The Offer to Purchase expresses initial interest, while the OTP is a legally binding agreement with the right to purchase.
* Understand the difference and their implications before proceeding.
* As a buyer with an OTP, use the option period productively to complete necessary steps before the final purchase agreement.
- If you need further assistance, feel free to reach out to me! Unfortunately, this platform doesn't allow direct contact, but you can contact me via WhatsApp at
9856 9255
or visit https://wa.me/6598569255.
- I'm here to help with no obligations and happy to answer any questions you have.
- You can check out my reviews at
https://www.propertyguru.com.sg/agent/able-s-k-toh-61591.
- For buyers:
- I can help you find resale and new private homes such as condominiums or landed properties.
- There are currently no fees charged for my services.
- I can connect you with a reputable banker for private housing loan (In-Principle Approval) at no charge and no obligation.
- For mortgage home insurance matters, I have a partnering liaison to assist with your needs.
Read More
