Sneaky trick sellers use to get free extension!
Next comes the most important part of HDB resale purchase, the Option To Purchase.
Buyers will place a deposit amount between $1 - $1000 (called option fee) to obtain the OTP. Sometimes if you’re unsure, you may ask if you can give $500, just in case you back out you only lose $500. The norm is to give $1000 but it’s up to the buyers and sellers to decide.
The OTP is a legally binding contract between sellers and the buyers. So if the buyer backs out, the sellers get to keep the option fee. If the seller backs out, the buyer can sue the seller to get back the amount they deem fit.
In the OTP, there’s a clause that most people might miss, which is “Point 12. Application for HDB’s approval” in the second slide. This clause states the number of days from exercising of option, to the day sellers and buyers need to submit the resale application. The period varies from 1 - 90 days. That’s a whopping 3 months! 😮
Some listing doesn’t state any extension of stay and sellers will use this clause to increase the days they get to stay in their flat, without having to lower selling price from extension of stay. For us, we were lucky that the seller agent informed that she would state 45 days, which is the mid of max 90 days that can be used, to allow the sellers some time to hunt for a unit they’re downgrading to. The norm is usually 30 days or less.
So if you’re buying a HDB resale flat without an agent, remember to ask how long they would need to state in this clause! ☺️
When buying an HDB resale flat, one of the biggest surprises I encountered was how sellers can cleverly use the Option To Purchase (OTP) contract to extend their stay for free, affecting the timeline of your move-in. The key is in the often-overlooked "Point 12. Application for HDB’s approval" clause in the OTP. This clause allows sellers to specify from 1 up to 90 days before both parties must submit the resale application to HDB. What this means is that sellers can delay the submission, effectively staying in the flat longer without paying rent or facing penalties. This delay also pushes back the entire resale completion process, leaving buyers waiting. When I first faced this, I didn’t realize how critical it was to ask about this clause, especially if buying without an agent. Sellers and their agents might default to longer extension days, like 45 or even the maximum 90 days, as a standard practice to give themselves time to find their next home without rushing. To protect yourself, always check specifically how many days the seller has requested in the OTP for the resale application submission. If the period is unusually long, try negotiating—this delay can justify lowering the resale price since you’ll be inconvenienced. Also, understand your rights if you want to back out after signing the OTP. Legally, the sellers get to keep the option fee if you withdraw, but if they back out, you can claim compensation. However, this doesn’t affect the extension clause. Knowing these nuances is essential. My takeaway? Don’t overlook the OTP's fine print. Engage openly with the seller or agent about the extension days to avoid unexpected delays and to negotiate terms that suit your timing and budget.
