| Q1: |
What
is an Option to Purchase? |
|
It is an irrevocable offer made by the
seller to the buyer which prevents the Seller from offering the same
property to another buyer within the agreed time period (usually 14
days). To ensure that a contract is enforceable the buyer pays the seller
1% of the selling price for private properties. The Housing Development
Board requires purchasers to pay up to S$5,000 as option money for HDB
flats.
|
| Q2: |
Who
usually prepares the Option to Purchase document? |
|
It is usually prepared by the Seller's
lawyer. Some real estate agencies also provide their clients with the
agency's Option to Purchase documents.
|
| Q3: |
What
is "exercising" the Option? |
|
It means that the buyer is complying
with all the terms in the option made by the seller for selling his/her
property. A binding contract is created, and the buyer also pays up
the next 9% of the purchase price of the property.
|
| Q4: |
What
are the terms to include for an option contract to be valid? |
|
The main terms are:
| a) |
The names of the parties involved
in the transaction |
| b) |
The description of the property
and the price |
| c) |
The validity period for the Buyer
to exercise the option in order to purchase the property |
|
| Q5:
|
What
happens if my buyer has paid the Option money but cannot exercise the
Option within the agreed due date? |
|
If your buyer does not exercise
the option within the validity period stated, the option will expire
and you are entitled to forfeit the option money and sell the property
to another buyer.
|
| Q6: |
Is
there a difference between an 'Option' and a 'Sale & Purchase agreement'? |
|
Yes. An Option is an offer you (the seller)
have made to the buyer to accept within a stipulated time period (usually
14 days). You would make this offer after your buyer pays you 1% of
the property's selling price. When your buyer accepts your offer (or
exercises the option), then the option becomes a contract and the buyer
pays you another 9 % of the property's selling price. Whereas if you
signed a Sale & Purchase agreement, you are entering into a contract
immediately, and the buyer usually pays up to 10% of the sale price
of your property.
|
| Q7: |
Can
I forfeit my buyer's deposit if he fails to complete the purchase, even
if I did not suffer any financial loss? |
|
Yes. You can still forfeit the deposit
even though you have not suffered any financial loss.
|
| Q8: |
What
can I do if my buyer he did not complete the transaction on the date fixed
for completion? |
|
As the seller, you have to send to him
a notice to complete the transaction within a 21 days' period. If he
fails to complete within the time limit given, you may then officially
end the contract. Your buyer is liable to pay you a 10% interest on
the unpaid amount, for every day he failed to complete the sale transaction.
|
| Q9: |
I
heard that my buyer has already paid part of the price of my property,
but may not continue to do so because he is in debt, can I end the contract
before the completion date? |
|
No. You can only terminate the contract
after your buyer has failed to complete the transaction on the agreed
completion date.
|
| Q10: |
What
can I do if I need to go overseas before the completion date of the sale
of my property? |
| All you need to
do is to appoint somebody to sign the documents on your behalf and/or
do all the things necessary to complete your sale. You can do this by
signing a formal document called a 'Power of Attorney', prepared by a
lawyer. |
