An extension of stay can help sellers transition to their new homes more smoothly, but many opt for a private agreement without going through HDB.
This leaves both buyers and sellers in a precarious situation – and it can get ugly.
We’ll lay out the 5 scenarios we commonly encounter, what traps to avoid, and what your options are moving forward:
This is the most straightforward scenario. Ideally, the seller communicates his request during the negotiations so you know what you’re getting into in advance.
The Temporary Extension of Stay can be a max of 3 months after the date of completion. To quote HDB, “there shall be no further extension beyond the 3-month period.”
You can then agree on a purchase price with the extension in mind. You’ll have to account for factors like:
The seller should compensate you for these added costs in a private agreement separate from the flat’s resale price. Just bear in mind that even though it’s a “private agreement,” you’ll still need HDB approval to proceed with the extension!
The Sellers and Buyers of the Flat may sign a private agreement between themselves on the terms of the Temporary Extension of Stay, including but not limited to terms dealing with monetary compensation and any other mutually agreed considerations. In this regard, both Sellers and Buyers understand that the resale price of the Flat cannot incorporate any intended or prospective monetary compensation for the Temporary Extension of Stay. (HDB Terms and Conditions)
If you’re all right with the timeline and the level of compensation, it’s time to ask for an OTP. (More info on the timeline in the Step-by-Step Guide to Buying a Resale Flat.)
When you fill out the Resale Application later, both you and the seller will have to note the request for the extension in your respective copies.
As the buyer, you’ll have to pay a S$20 admin fee to process the extension. The seller will also need to show proof of purchase for the new property before HDB will grant the Temporary Extension of Stay. You can check on the approval by emailing the officer in charge of your case (you’ll find his or her name when you log in to the resale portal).
The Temporary Extension of Stay, once approved, starts from the date of resale completion and automatically terminates 3 months after.
If there are any disputes over the extension, you’ll need to resolve these privately with the seller. HDB will only provide relevant documentation.
As the buyer, it’s in your best interest to avoid granting an extension after the OTP has been issued. This should’ve been negotiated upfront as agreeing to the extension of stay means extra costs to you.
In the event that you encounter a seller who wants an extension of stay but doesn’t want to apply via HDB, be very careful. This is a huge risk: if HDB finds out, they could take legal action against both you and the seller as you’re in breach of the Minimum Occupancy Period.
There’s also an issue with taxes: filing an extension of stay means the unit is non-owner-occupied and therefore subject to the higher property tax rates. Without HDB’s approval of the extension, they assume that the flat is owner-occupied. If it turns out it isn’t, it could be considered tax evasion.
In many cases, this scenario occurs because the seller has not yet acquired their next place of residence. HDB requires sellers to provide proof of purchase for their next home before granting the extension of stay. Otherwise, resale completion processes could drag on for months and leave buyers in a very difficult position.
More often than not the seller is able to arrange alternate accommodation, so don’t feel obligated to grant the extension of stay.
There have been cases in which the seller offers to lease the property back from the buyer. However, you’re not allowed to rent out the entire flat within the Minimum Occupancy Period, not to mention that short-term HDB rentals have a minimum duration of 6 months.
It’s not a valid threat. After the seller has issued the OTP, they’re in a legally binding agreement to sell the property to you during the 21-day option period. If they back out, you’re entitled to pursue damages on the grounds of contractual non-performance.
Your conveyancing lawyer can also place a lien on the property so that the seller can’t sell the property to another buyer until the matter is resolved.
This is the best scenario as it puts you and the buyers on an even footing for the negotiations. It helps to provide the buyer with proof that you’ve already acquired your next place of residence – you’ll need to send the documentation to HDB when you file for the Temporary Extension of Stay anyway. This can be:
If the buyer accepts your request, make sure you put the terms of the agreement in black and white. This includes (but is not limited to) monetary compensation, duration, and any other mutually agreed-upon considerations.
Either party may cancel the Temporary Extension of Stay at any time before the date of resale completion, so your private agreement should also state what happens if they do – including whether there needs to be compensation.
You should also put in a termination clause allowing either party to cancel the agreement upon the other party’s receipt of a written notice of termination.
Assuming you’ve asked for the extension at the beginning of the negotiations, it just might not be the right match. The buyer’s circumstances may not allow them to grant an extension.
This is also why you should make the request before issuing the OTP: that way, you aren’t legally bound to sell the property to that buyer.
It might also help to extend a discount on the property price along with the appropriate compensation. Buyers would negotiate with their financial and living situation in mind.
While unsettling, this is allowable under HDB’s terms and conditions:
3.8 Either the Sellers or the Buyers may cancel the private arrangement for the Temporary Extension of Stay at any time before the completion date of the resale of Flat. Sellers and Buyers are advised to provide in their private agreement what will happen in this instance, including issues of compensation etc.
And if HDB approved the Temporary Extension of Stay, then the terms of the ‘private arrangement’ are in effect. HDB will not arbitrate or enforce the agreement on your behalf.
This is where it helps to have a good agent doing up the terms of the agreement beforehand, but you should also check that compensation for early termination is explicit in the arrangement.
One more scenario, buyer agree to temp extension of stay and both buyer and seller submitted their resale application, but HDB rejected as seller have not received keys to their BTO.
Up to within a week of completion of resale flat, seller still hasn’t received info on their BTO key collection. What should seller do?
Hi Eunice, sorry to hear about your current situation. However, if there is an agent representing the seller for this transaction, the agent should have been able to advise the seller properly so that the seller does not end up in a situation where he/she does not have a place to stay. It is actually quite a serious offence. Do hope this helps you in some way.
Hi I got doubt for seller agent has selected Hdb submission “no extension”with external agreement on extension which both party has agreed to signed with yes. But come to buyer side need to submit the application on Hdb only can select no extension. Plus in the earlier the agent told the submission will only do after 3weeks when we signed to exercise the otp. which is dragging time. In this case if we select no extension what will be happen in future as the external agreement in force which no proper declare to Hdb. But both party had signed the private agreement.
Hi, thanks for sharing! The terms and conditions that you have mentioned to us here seem to be legitimate requests from the seller for an extension of stay. Also, since there is an agent involved with the selling portion, he/she should have known better. In short, the buyer has every right to complain to CEA about this and there have been cases of agents getting penalised because of such scenarios. Do hope this helps in some way!
Hello! I’m wondering what if I’m a seller and upfront I explained that I needed 3 months extension. I issued the OTP based on this unofficial agreement but subsequently after exercising the OTP the buyer decided not to allow for extension. In that case, can I not sell my property or am I legally bind to sell?
Hi Vincent, apologies for the late reply and thanks for sharing your issue on hand!
HDB would have to be informed if there is a need for any extension of stay and it is subject to HDB approval. Since this case is an unofficial agreement between both parties, you are still required to go ahead with the whole process as from HDB’s standpoint, it is considered a normal completion without any extension. If either party still wishes to cancel the sale at this stage, there might be some legal implications incurred. Do hope this helps in some way.
Buyer agree 2 mth extension before OTP.
After exercise OTP, BUYER say he can’t submit 2mth extension because he also selling his house with extension.
HDB have such system to prevent it?
Hi Alex, thank you for reaching out! For such cases, you need to reach out to HDB directly and explain the situation. They may approve it but it would be on case by case basis.
Hi there, just wondering after submission or completion, buyer reject the 3mths extension done with a private agreement not through HDB. There is no written endorsement by both by seller and buyer. Can I insist for a extension and will there be any implications?
Hi Mashita, thanks for reaching out! In such circumstances, either party would not be able to insist on any extension as it is not approved by HDB. There is usually some form of risk like this if the extension is not recognised by HDB and it is based on a gentleman’s agreement. Do hope this helps!
I’m a buyer. Seller communicated that they wanted an extension. My agent told me to pay the 1k option fee without discussing the extension arrangement. Now the seller is not willing to pay monthly rental. Am I allowed to refuse the extension? Will I be losing the 1k option fee if I decide to back out? I feel like I’m on the losing end because my agent assumed I will be ok with no monthly rental paid from seller.
Hi Ryan, thanks for reaching out and apologies for the late reply! For such cases, your agent should have properly communicated the whole timeline properly for you even before you gave the initial option fee of $1000. You can actually reach out to CEA in regards to lodging feedback/complaints on this.