All about the Option to Purchase contract for buying properties in Singapore

The Option To Purchase contract - Purchasing of private property in Singapore

What is Option to Purchase?
It is an irrevocable offer made by the seller to the buyer which prevents the seller from offering another buyer of the same property within the agreed time period (usually 14 days). To ensure that a contract is enforceable the buyer pays the Option Money to the seller.

When an Option to Purchase is presented, what should I do?
You should not rush to pay the Option money until you agree with all the terms on the contract. You should:
Consult a solicitor before taking any action
If you want any amendments to be made to the Option, you should ensure that the Seller does so before you pay for the Option
Make sure that any amendment is made with the Seller's consent, because the Seller is not legally obligated to make any amendments.

Who prepares the Option to Purchase?
It is usually prepared by the Seller's solicitor. Some real estate agencies also provide their clients with the agency's Option to Purchase documents.

What is "exercising" the Option to Purchase?
It means that the Buyer is complying with all the terms in of the Option made by the Seller for selling his/her property. A binding contract is created, and the Buyer will also pay for the next 4% of the purchase price of the property.

How much Option money should I provide?
1% is the usual practice for the purchase of private properties. The standard option money for HDB flats is up to S$5,000.

What happens if I did not exercise the Option which I had paid before/on the agreed due date?
If you do not exercise the Option within the validity period stated, the Option would expire and your seller is entitled to forfeit the option money and sell the property to another buyer.

What are the main terms to look out for to make the Option valid?
The key items are:
the description of the property and the price
the validity period within which the Buyer must exercise the option in order to purchase the property.
the names of the parties involved in the transaction

Will I be able to get my deposit back, if the Seller did not complete the contract?
Yes.

The completion of the property that I am purchasing is due before my return to Singapore? What should I do?All you need to do is to appoint somebody to sign these documents on your behalf and/or do all the things that are necessary to complete your purchase. You have to do this by signing a legal document called a 'Power of Attorney'.