On the other hand, if the buyer chooses to not exercise his OTP, he will have to forgo the 1% or $1000 paid for the option fee.

At this stage, the buyer would have locked-in to the contract and can no longer back out without consequences. The total of 5% or $5000 would act as the cash down payment of the property as the buyer and seller enters into a S&P Agreement. For HDB resale flats, it would be $4000 instead. If the buyer decides to proceed to the purchase of the property, he will have to exercise the OTP and pay an exercising fee of 4% of the purchase price. In that case, the seller is likely to try to sell the same apartment twice, but it could end up to the first buyer instead of you as he is already in the process of transferring the property under his name. One example would be to check if another buyer has already lodged an exercised OTP to the property in good faith. There may be legal encumbrances on the property that cannot be told from property viewing alone, such as others having priority to the property. Over the period of 14 days, the buyer would secure a mortgage loan to finance his property purchase, and his lawyer should conduct legal requisitions on the property. Over the period of 14 days, the seller cannot sell the house to another buyer, else this buyer can sue him for breach of contract. In turn, the buyer has to pay the seller an option fee of 1% of the property (for private properties) or $1000 for HDB resale flats.

Typically, the OTP would give the buyer 14 days (21 days for HDB) to consider if he wants to continue with the purchase of the property. OTP refers to a contract between a buyer and a seller that gives the buyer a period of time to consider whether he wants to proceed with the purchase in exchange for 1% of the agreed purchase price. Before entering into a Sales & Purchase (S&P) Agreement for the transaction of the property, buyers and sellers usually enter into an Option To Purchase (OTP).

What does otp mean