Office Space Sale / Purchase Procedure for Commercial Industrial Properties
I) Option To Purchase (OTP)
After the sale / purchase price of a Commercial Industrial property has been agreed between Property Owner and Potential Buyer:
- An OTP form is issued, stating the agreed price, option fee. option period and completion date.
- Buyer will issue a cheque in favour of the LEGAL Owner for the option fee (normally 1% of the Purchase Price)
- Seller will sign on the Option To Purchase form upon receipt of Option Fee;
- 4. Buyer will retain the original signed Option To Purchase while the Seller will keep a copy.
II) Exercise Option
Buyer of a Commercial Industrial property will be required to exercise the received Option within 14 days (this option period can be varied subject to agreement between the Seller and Buyer in the OTP) from the date of issue. To do this, Buyer has to:
- Engage a Lawyer as Buyer’s Solicitor in acting for the interest of Buyer.
- Present another cheque for 5% of Purchase Price LESS previously paid Option Fee to Seller’s Solicitor via Buyer’s Lawyer.
- Acquire Letter Of Offer from Financial Institution if the Buyer is applying for mortgage loan for the property purchase.
It is important that both original signed OTP and the cheque for balance (4%) are to reach Seller’s Solicitor BEFORE the expiry of the OTP. Seller will have the legal right to retain the entire amount of the Option Fee (1%) if Buyer fails to exercise the Option before the expiry date. Seller will engage his/her own Solicitor to act for his/her own interest.
III) Stamp Duty Fee
Buyer of a Commercal Industrial property will be required to pay Stamp Duty to IRAS within 14 days upon exercise of the Option. The amount payable will be based on the Purchase Price or Market Valuation, whichever is HIGHER, calculated as follows:
1% for the first SGD180’000 = SGD 1,800
2% for the second SGDISO’OOO = SGD 3,600
3% for the remainder amount thereafter
IV) Sale Completion
After the exercise of the Option, responsibility for the legal procedure for the sale completion lies between the Solicitors of both parties.
Generally, the sale transaction will be completed in 8~12 weeks duration, depending on what was agreed and stated on the OTP. If you still have questions about the sale / purchase procedure for Commercial Industrial property, please contact us.