Thinking of buying a property? Here’s everything you need to know about Option to Purchase (OTP), explained in plain English.

What is an OTP?

It’s a legal agreement giving you the exclusive right to buy a property at an agreed price within a set time. Used for both HDB resale flats and private properties.

For HDB, there is a standard one and every HDB transaction needs to use that.

For private, agency has a template, but it is possible to be changed by the seller.

What terms are usually inside an OTP?

Key items include:

• Parties’ details: buyer and seller’s names, ICs, addresses (to confirm legal ownership).
• Property details: address, floor area, tenancy or vacant possession, warranties on renovations.
• Purchase price: the agreed amount.
• Option period: validity of the OTP.
• Option fee & exercise fee: payments you must make.
• Rights & duties: usually follow the Law Society’s Conditions of Sale (who pays taxes, what happens if late, etc.).

How long do I have to decide?

• HDB flats: fixed 21 days, expires 4pm on the last day.
• Private property: usually 14 days, but negotiable. Both parties can agree to a longer period (no maximum), usually with higher option fee.

How much do I pay upfront?

• Option fee:
  • HDB: min $1, max $1,000.
  • Private: usually 1% of price (negotiable, higher if you want more time).
• Exercise fee:
  • HDB: together with option fee, total deposit ≤ $5,000.
  • Private: usually 4% of price (negotiable).

How do I get an OTP?

• HDB:
  • Seller registers Intent to Sell on HDB portal (valid 12 months).
  • Buyer may need an HDB Flat Eligibility letter if taking HDB loan.
  • Seller issues HDB-prescribed OTP form in exchange for option fee.
• Private:
  • Price negotiated, seller’s lawyer drafts OTP.
  • Buyer pays option fee to secure OTP.
  • Best to involve a lawyer since terms are customisable.

How do I exercise the OTP?

• Return signed OTP and pay exercise fee.
• HDB: submit resale application via HDB portal. Both buyer and seller must file within 7 days of each other. Completion usually within 8 weeks of HDB’s acceptance.
• Private: return OTP to seller, pay exercise fee, then pay Buyer’s Stamp Duty (and ABSD if applicable) within 14 days.

What if I don’t go through with it?

If you don’t exercise the OTP within the option period, it lapses. Seller keeps the option fee. You walk away with no further liability.

What if the seller backs out after signing?

That’s a breach. The buyer can sue for specific performance (force the sale) or claim damages. A 2022 case confirmed that a seller can’t just refund the option fee and walk away — courts may compel completion.

Do I need to check the property’s condition?

Yes. Unless otherwise stated, it’s sold “as-is-where-is”. You can negotiate for a second inspection clause and should always document the property’s condition with photos or videos.

What taxes or duties are involved?

• Buyers: must pay Buyer’s Stamp Duty within 14 days. If buying your 2nd+ property, Additional Buyer’s Stamp Duty applies.
• Sellers: may pay Seller’s Stamp Duty if selling within 3 years of purchase (not applicable for HDB due to 5-year MOP).

Can the OTP terms be changed later?

No. Once signed, terms can’t be changed unilaterally. Any variation (longer option period, special conditions) must be agreed upfront and written in.

Bottom Line

The OTP is a powerful but binding contract. For HDB flats, everything is fixed and straightforward. For private property, terms are negotiable — so get a lawyer to protect your interests before you sign.