Option to Purchase (OTP) in Singapore
The OTP is the most important document in any property transaction. It's your exclusive right to buy — and the clock starts ticking the moment you sign.
Answer: An Option to Purchase (OTP) is a legal contract that gives you the exclusive right to buy a property within a set period. For private property: you pay 1% option fee upfront, then have 14 days to decide. If you exercise, you pay an additional 4% exercise fee (total 5% deposit). For HDB resale: option fee is $1–$1,000, exercise period is 21 days. If you don't exercise, you forfeit the option fee — on a $1,500,000 condo, that's $15,000 gone. After exercising, backing out costs up to 20% of the purchase price.
OTP at a Glance: Private vs HDB
| Detail | Private Property (Condo/Landed) | HDB Resale |
|---|---|---|
| Option fee | 1% of purchase price | $1–$1,000 (negotiable) |
| Exercise period | 14 days (negotiable) | 21 calendar days (fixed) |
| Exercise fee | 4% (total deposit = 5%) | None (pay deposit at completion) |
| If you don't exercise | Forfeit 1% option fee | Forfeit $1–$1,000 option fee |
| After exercise | Binding S&P, 8–12 weeks to complete | HDB resale application, ~8 weeks |
| Backing out after exercise | Lose 5–20% (per S&P terms) | Lose deposit + potential damages |
OTP Timeline for Private Property
Day 0 — Option Fee Paid (1%)
You pay the seller 1% of the purchase price. On a $1,500,000 condo, that's $15,000. The seller grants you the OTP document. The property is now reserved exclusively for you.
Day 1–14 — Due Diligence Period
Use this time to: secure your mortgage (get IPA/LO from bank), engage a conveyancing lawyer, check title and caveats, verify the property details, and confirm CPF and TDSR eligibility. Your lawyer will review the OTP terms.
Day 14 — Exercise Deadline
You decide: exercise the OTP by signing and paying the exercise fee (4%, i.e. $60,000 on a $1,500,000 condo), or let it lapse and lose your 1% option fee. Once exercised, you are legally committed to complete the purchase.
Week 3–12 — Completion
Lawyers handle conveyancing: title search, mortgage documentation, CPF withdrawal, stamp duty payment (within 14 days of exercise). Completion typically 8–12 weeks after exercise. Remaining 95% paid at completion (from loan + CPF + cash).
What You Pay and When
Example: $1,500,000 private condo, first-time SC buyer
| Stage | What | Amount | Cumulative |
|---|---|---|---|
| Option fee | 1% of $1,500,000 | $15,000 | $15,000 |
| Exercise fee | 4% of $1,500,000 | $60,000 | $75,000 |
| Stamp duty (BSD) | Within 14 days of exercise | $44,600 | $119,600 |
| Remaining 20% down | At completion (CPF + cash) | $225,000 | $344,600 |
| Mortgage disbursement | 75% LTV from bank | $1,125,000 | $1,500,000 |
The 5% deposit (option fee + exercise fee) can be paid in cash only — CPF cannot be used for the deposit on private property. CPF applies to the remaining down payment and mortgage.
What You Lose If You Back Out
| Stage | What You Lose | Example ($1,500,000) |
|---|---|---|
| Don't exercise OTP | Forfeit option fee (1%) | $15,000 |
| Back out after exercise | Forfeit 5% deposit + potential damages | $75,000+ |
| Fail to complete | Seller can forfeit up to 20% + sue for damages | $300,000+ |
The penalty for not completing varies by contract terms. Most S&P agreements allow the seller to forfeit 20% of the purchase price and resell the property. Legal costs may be additional.
OTP for New Launch Condos
New launches work slightly differently from resale:
Key Tips for OTP
Know your numbers before signing an OTP
Calculate your total cash needed (option fee + exercise fee + stamp duty + legal fees) and monthly mortgage commitment.
FAQ
What's the difference between option fee and exercise fee?
The option fee is paid upfront to the seller to secure your exclusive right to buy. For private property, it is typically 1% of the purchase price. The exercise fee is the additional amount paid when you decide to proceed with the purchase. For private property, the exercise fee is typically 4%, bringing the total deposit to 5%. For HDB resale, the option fee is $1-$1,000 and there is no separate exercise fee.
Can I get my option fee back if I change my mind?
No. If you do not exercise the OTP within the validity period, you forfeit the option fee entirely. The seller keeps it as compensation for taking the property off the market. For a $1.5M private property, that means losing $15,000. This is by design: the fee compensates the seller for holding the property exclusively for you.
What happens after I exercise the OTP?
Once you exercise the OTP by signing and paying the exercise fee, you enter into a binding Sale and Purchase (S&P) agreement. Your lawyers handle the conveyancing process (title search, CPF application, mortgage arrangements). Completion typically occurs 8-12 weeks after exercise for private property. Backing out after exercise has severe penalties (up to 20% of purchase price).
Can the seller sell to someone else during the OTP period?
No. Once the seller grants you the OTP and accepts your option fee, they are legally bound to sell to you if you exercise the option within the validity period. The seller cannot grant another OTP or accept another offer during this time. This is the legal protection the option fee buys you.
How long is the OTP valid for?
For HDB resale flats, the OTP is valid for 21 calendar days from the date of issue and cannot be extended. For private property (condo/landed), the standard validity is 14 days, but this can be negotiated between buyer and seller before the OTP is granted. Some new launches may have different validity periods.
Do I need a lawyer to exercise the OTP?
For private property, yes. You need a conveyancing lawyer to act on your behalf. The lawyer reviews the OTP terms, handles the exercise, conducts title searches, and manages the completion process. Legal fees typically run $2,500-$4,000. For HDB resale, HDB handles much of the process through their portal, but many buyers still engage a lawyer ($1,800-$2,500).
Related
- Down Payment for First Condo — 25% breakdown (5% cash + 20% CPF)
- Legal Fees for Property Purchase — conveyancing costs
- In-Principle Approval (IPA) — get this before signing OTP
- HDB Resale Process Timeline — OTP to keys for HDB buyers
- Property Purchase Cancellation Penalty — what it costs to back out
Last updated Feb 2026. OTP terms and fees are based on standard market practice. Option fee percentages and exercise periods may vary by negotiation. For HDB resale, terms are set by HDB. This is general information, not legal advice. Consult a conveyancing lawyer for your specific transaction.