Table of Contents:
- What is OTP?
- When to grant OTP?
- How to grant OTP?
- What happens after granting an OTP?
- What if the buyer doesn’t want to proceed with the purchase?
But first: What is Option to Purchase (OTP)?
An OTP is a form of contract in resale transactions. You cannot enter into any agreement pertaining to the sale or purchase of a flat without an OTP as it will not be valid under the Housing and Development Act.
When to grant an OTP?
Before you cement your resale transaction by granting the OTP to your buyer, you must first negotiate and agree on the resale price of the flat. After that, you must ensure your buyer has registered his/her Intent to Buy. Ask for proof of the buyer’s registration.
As the seller, you must have registered your Intent to Sell on the HDB Resale Portal first. Then wait 7 days before granting the OTP to your buyer.
How to grant an OTP?
After registering your Intent to Sell, you will then be prompted to download a copy of the HDB-prescribed OTP form on the HDB resale portal, which has a unique serial number that you’ll need to state when submitting your resale application.
You are required to sign on the OTP in exchange for an Option Fee from your buyer, which should be between the sum of $1 to $1,000. This is non-refundable and therefore should be seriously negotiated between you and your buyer.
What happens after granting an OTP?
Once you have granted the OTP to your buyer, you cannot grant it to another buyer until it expires: The Option period is 21 calendar days (including Saturdays, Sundays and Public Holidays), from the date of granting the OTP. It expires at 4pm on the 21st calendar day.
What if the buyer doesn’t want to proceed with the purchase?
If a buyer decides after the option period not to proceed with the purchase of your flat, you can keep the option fee and simply wait for the OTP to expire.
You may ask, “Is there a limit to the number of OTP that I can grant?” Nope. You can only grant an OTP once within the option period. After it lapses, then you can grant a new OTP to another prospective buyer.
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