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With reference to our previous news article regarding Urban Redevelopment Authority (URA) is monitoring the re-issue of Option-to-Purchase (OTP), URA has issued a circular that restrict the developers from re-issuing of Option-to-Purchase (OTP) even with an upfront agreement between the developers and purchasers for new launch condo. Under the standard OTP terms and conditions, it will expire three weeks after the buyer has received the Sale and Purchase Agreement (S&PA) and copies of the title deeds. The OTP has to be exercised by the buyer. They have to sign the S&PA and send it back to the developer before the OTP expires. The developers can forfeit 25% of the booking fee if the buyer fails to exercise OTP before it expires.
With effect from 28 September 2020, the sale licenses issued to developers will include conditions to restrict an upfront agreement between developers and buyers on OTPs’ re-issue. Another Condition is the restriction of re-issuing of the OTP of the same unit to the same buyer within 12 months after the OTP expired. This condition must communicate with the buyer upfront.
While the current three weeks validity period for the current OTP process is sufficient for most buyers to exercise the OTP, the Controller of Housing knows that some buyers might need more time for some arrangement before they can exercise the OTP. One example is when the buyers need more time to complete the sale of their current property before exercising the OTP.
The developers or buyers will have to submit their application to extend the validity of the OTP up to 12 weeks from the date of OTP if both the buyer and developer agreed on the extension. A copy of the OTP, the expiry date of the OTP, and the reasons to extend the OTP’s validity are needed for the application.