Early Termination of Option to Purchase for Private Residential and Commmercial Properties

Our Ref : COH/Public/Circular-Vol 1

Fax : 6321 6596

President
Real Estate Developers’ Association of Singapore
190 Clemenceau Ave #07-01
Singapore Shopping Centre
Singapore 239924

President
The Law Society of Singapore
39 South Bridge Road
Singapore 058673

Who Should Know:
Developers and solicitors.

Effective Date:
With effect from 15 Jan 2008.

Objective

This circular is to inform developers and solicitors on the relaxation to allow for early termination of the Option to Purchase a property under the Housing Developers Rules (“HDR”) and the Sale of Commercial Properties Rules (“SCPR”).

Background

1. Under the terms of the standard Option to Purchase, a developer is required to deliver the Sale and Purchase (S&P) Agreement and the title deeds to the property to the purchaser within 2 weeks from the date of the Option. If the purchaser wishes to proceed with the purchase, he has to exercise the option by signing the S&P Agreement and paying the balance down payment. The option will lapse if the purchaser fails to exercise the option within 3 weeks from the receipt of the S&P Agreement and the title deeds. The developer can only resell the unit after the option issued earlier has lapsed.

2. We have received feedback from developers that there are cases where purchasers have given confirmation that they do not wish to exercise the option before the lapse of the option. There are also cases where purchasers stopped the payment of booking fee after the issue of an Option to Purchase. In such cases, developers would like to have the flexibility to terminate the option before it has lapsed and resell the unit.

3. Allowing the option to terminate early will not prejudice purchasers' interests if they have already decided not to exercise the option. The Controller is therefore prepared to consider applications for early termination of option in cases where purchasers have decided not to exercise the option before it has lapsed. The Controller is also prepared to waive the requirement for the developer to deliver the S&P Agreement and title deeds to the purchasers, if the purchasers indicate before the delivery of these documents that they do not intend to exercise the option.

Applications for early termination of option

5. Developers are required to seek the Controller's approval to terminate an option early because this would constitute an amendment to the terms of the Option to Purchase as stipulated under the HDR and SCPR for which the Controller's approval is required.

6. For the Controller to consider applications for early termination of option, the developer is required to provide the following documents:

• a copy of the Option to Purchase issued;

• written confirmation by all the purchasers named in the Option to Purchase or the purchasers’ solicitors that the purchasers do not wish to exercise the option;

• solicitors' confirmation on whether the S&P Agreement and title deeds have been delivered to the purchasers and if applicable, the date of delivery;

• documentary evidence or solicitors' confirmation that the developer has refunded the booking fee to the purchasers; and

• if purchasers have stopped payment of booking fee, documentary evidence to show that the developer has not received the booking fee.

Questions and Answers

7. We are also pleased to attach a set of questions and answers on the early termination of Option to Purchase a property for your reference.

8. We would appreciate it if you could convey the contents of this circular to members of your organisation.

9. We would also appreciate if you can let us know of any feedback that you received from your members.

10. If you or your members have any queries concerning this circular, please do not hesitate to call our COH hotline at Tel: 6329 3512 or send an e-mail to us at ura_coh_registry@ura.gov.sg.

Thank You.

MARC BOEY
CONTROLLER OF HOUSING
URBAN REDEVELOPMENT AUTHORITY

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