Typically, a developer of a private residential project issues an OTP after a buyer has paid a booking fee of 5 per cent of the purchase price of a property. Within two weeks from the OTP date, the developer has to send the sale and purchase agreement (SPA) to the buyer.
Within three weeks of receiving the SPA, the buyer is required to exercise the option by signing the SPA and returning it to the developer.
The purchaser has to pay the buyer’s stamp duty and, if applicable, also the additional buyer’s stamp duty (ABSD) within 14 days of exercising the option (that is, the date of signing the SPA).
The remainder of the downpayment to the developer – 15 per cent of the purchase price – has to be paid within eight weeks from the OTP date.
If the buyer does not exercise the option by the stipulated deadline, a quarter of the booking fee – which works out to 1.25 per cent of the purchase price – will be forfeited to the developer.
See below chart for illustration.