Early this year, a husband and wife were caught in a bind when they placed a 1% option fee on a 3-bedroom condominium unit, but the condo owner changed his mind about the sale.

This is because the couple had just sold their HDB flat and would be left without a home by September 2022. The condo owner, however, had a different point of view about what transpired.

Here’s what went down:

Chronology of Events

Around February or March 2022, the couple sold their HDB flat and asked their property agent to look for a condo in the western area of Singapore. They figured they could afford a three-bedroom apartment for around S$1m.

When they chanced upon the apartment unit at Choa Chu Kang Loop on 8 March, they made an offer of S$1.058m via the owner’s property agent.

On 10 March, the owner, who was residing in Myanmar at the time, confirmed through his agent that he was agreeable to the S$1.058m sale. The agent then sent the Option to Purchase via WhatsApp message to him.

On 18 March, the owner sent a duly signed Option to his agent via WhatsApp, which was then forwarded to the buyers’ agent. He actually signed it twice as the first copy was initially unclear.

On 19 March, the couple transferred the 1% option fee of S$10,580 to the owner via PayNow.

On 22 March, the seller agent informed the buyer agent that his client had sent over the original Option (we assume this means the physical copy). As the couple had yet to receive the original Option, they went ahead to exercise the Option (since they received a digital copy via WhatsApp on 18 March).

On 6 April, the couple’s lawyers proceeded with the Option exercise and sent a cheque for 5% of the sale price (less the option fee) to the owner’s lawyers. However, the legal firm refused to accept the Option as they had not been appointed to act on the owner’s behalf in the sale.

On 11 April, the couple’s lawyers issued a letter of demand to the same lawyers to proceed to accept the Option and complete the sale and purchase of the property. Both parties were unable to resolve the dispute and ended up in court.

Differing Points of View

According to the husband and wife, as they had sold their HDB flat, they have to vacate it by September 2022. The condo apartment owner’s actions not to proceed with accepting the Option has left them in a bind.

The condo owner, however, has a different point of view. He informed the court that he had initially asked his agent to market the condo at an initial asking price of S$1.2m. The couple’s offer of S$1.058m was lower than his reserved price, so when he received the offer via WhatsApp, he told the agent he needed some time to consider the price.

He also asked the agent for a valuation before he decided whether to sell.

He claimed that his agent did not inform him that the buyers would be transferring the option fee to him via PayNow, nor did he ever instruct his agent to have the fee transferred to him via PayNow. Instead, he had wanted to be paid by cheque.

He also shared that he signed the Option (with the S$1.058m selling price) with his brother as a witness because his agent had been pestering him on the matter. When he sent the signed Option to his agent, he told his agent that he could not sell it at that price as he felt “it was grossly unfair to him.”

When the condo owner performed his own check, he found that a similar unit on a different block in his development had been sold for S$1.24m in December 2021. He felt that his agent had not done his due diligence and misled him on the price.

This explains why, on 31 March, he called off the sale and did not instruct his lawyers to proceed.

The condo owner also shared that he has an autistic son who was slowly getting used to the property and its surrounding estate. If he were to sell his condo now, it would be challenging for his family to readjust.

He even offered to return the option fee to the husband and wife. When he tried to transfer the fee to them, he could not do so. He then claimed that the couple was trying to frustrate his attempt to return the option money.

The Judgement and Verdict

In his ruling, the judge stated that the Option document – while signed in digital form and transmitted via WhatsApp among buyers, agents and sellers – had all the essential details of the sale, including their names, property, amount to be paid and so on. In other words, it is valid documentation.

When examining what the condo owner claimed about being pressured to sign the Option (while in Myanmar) and not being keen to sell the property at the stated price, the judge ruled that there was insufficient evidence to support them. WhatsApp messages did not show that the owner had no wish to sell the property at S$1.058m. Signing the Option itself, with a witness, was already counter to his claim.

If the owner had no wish to sell the property at that price, he should have refused to sign the Option. In fact, the owner actually signed the Option twice.

As for being paid via cheque and not PayNow, there was no evidence in their WhatsApp exchanges where the owner had informed his agent that he objected to the PayNow transfer and wanted to be paid by cheque. The Option document had even clearly stated that the option fee would be paid by “paynow transfer” and that the owner actually went through the process of linking his NRIC details to his POSB bank account to facilitate the buyers’ PayNow transfer of the fee.

“The only reason the defendant (the condo owner) decided not to complete the transaction was because he subsequently discovered another property in the same development had been transacted at a higher price,” the judge ruled.

“If the defendant felt that (his agent) had not done his due diligence before advising the defendant on whether he was getting a fair price for the Property (as he claimed), then it was for the defendant to pursue (his agent) on this matter.

“As for his son’s condition, this was not something that invalidated the Option.”

The judge ruled that the condo owner never raised his son’s condition as an issue when discussing the lead time to sell the condo with his agent. An extract of a WhatsApp exchange dated 1st March, was shared in court where the condo seller was eager to sell despite his son’s condition:

Defendant: Bro how’s the property selling progress? It’s been a quite a few months and we didn’t get a good offer right bro?
Agent: Best was 1.07m. Most of the comment is they need to reno the whole house which is a significant cost.
Defendant: I see 1.07 also was not bad.
Agent: Ya but over already. I will towards that.
Defendant: Ya bro. I hope will close the deal soon.

The judge thus ruled that the condo owner had breached his obligation under the Option.

In his ruling, the judge ordered the owner to proceed with the sale and purchase agreement and to have the sale completed by September 2022. This would allow the new buyers to take over the property as planned.

Meanwhile, the condo owner and his family can continue to stay at the property.

What’s clear here is that once an option to purchase is signed, it is often difficult to change your mind. For a buyer, if they back out after signing the OTP, they forfeit the fee to the seller.

For the seller (in this case, the condo owner), if he backs out, he has to refund the fee. On top of that, the buyer may have a claim against the seller for “specific performance”, which is usually a court order requiring the breaching party to perform their obligations under the contract.

Have you ever been caught in a bind over your Option to Purchase? Let us know in the comments below.

If you found this article helpful, 99.co recommends Option To Purchase: 5 things you might not know about (but really should) and Offer to Purchase vs. Option to Purchase: What’s the difference?