Conveyancing in Singapore: a series from OTP Law Corporation, Part 6 of 12
Buying a new launch condominium directly from a developer feels, on the surface, similar to buying a resale unit: you view a unit (or, more often, a showflat and floor plans), agree on a price, and sign an option. Underneath, the legal structure is quite different, governed by a standard form contract prescribed under the Housing Developers (Control and Licensing) Act, and tied to a payment schedule linked to construction progress rather than a single completion date. In this instalment, we explain what buyers need to understand before booking a unit.
The Option to Purchase for Uncompleted Property
New launch purchases begin with an OTP, but its terms are largely fixed by regulation rather than freely negotiable between buyer and developer. The booking fee is conventionally around 5% of the purchase price, and the buyer must exercise the option within a defined period, commonly three weeks, failing which a portion of the booking fee may be forfeited. Once exercised, the buyer typically pays a further tranche, bringing the initial payment to around 20% of the purchase price, alongside signing the Sale and Purchase Agreement (S&P).
The Sale and Purchase Agreement Is a Standard Form, But Read It Anyway
Because the S&P for new launch private property follows a prescribed standard form, buyers sometimes assume there is little point in reviewing it closely, since the core terms cannot be negotiated unit by unit. This is only partly true. While the core structure is fixed, there are still schedules, specifications, and addenda specific to the development that vary from project to project, and these are where the details that matter to an individual buyer, finishes, included fittings, car park allocation, actually live. A lawyer’s review at this stage is less about renegotiating the standard terms and more about ensuring you understand exactly what you are contractually entitled to receive.
The Progressive Payment Scheme
Unlike a resale purchase, where the full balance is paid at a single completion, new launch purchases under the standard payment scheme are paid in stages tied to construction milestones: on completion of foundation work, on completion of reinforced concrete framework, on brickwork, on roofing, on installation of doors and windows, on completion of car parks, roads and drains, and finally a larger tranche on obtaining the Temporary Occupation Permit (TOP), with a final instalment on the Certificate of Statutory Completion (CSC). This structure protects buyers, in principle, by tying payment to demonstrable progress, but it also means the buyer’s total financial commitment is spread over several years and needs to be planned for accordingly, particularly around financing, since banks disburse loan proceeds in step with these same milestones.
I have advised several first-time new launch buyers who, having previously only purchased resale property, were surprised to learn that “completion” for a new launch does not mean a single date circled on a calendar, in the way HDB or private resale completion does. One client, having budgeted her CPF and loan drawdowns as though the full amount would be needed at a fixed near-term date, found herself with an unnecessarily large sum sitting idle in a bank account for over a year while construction progressed through its early stages, money that could have remained invested or been used to reduce a separate loan in the meantime. Understanding the progressive payment structure before booking a unit, not after, allows for considerably better financial planning across the life of the purchase.
What TOP and CSC Actually Mean for You
The Temporary Occupation Permit marks the point at which the development is deemed safe and legally fit for occupation, and is generally when buyers can collect keys and move in, even though defects rectification and finishing work may still be ongoing in parts of the development. The Certificate of Statutory Completion, issued later, confirms the development fully complies with all approved plans and regulations. Many buyers assume TOP and legal completion are the same thing; they are related but distinct, and understanding the difference matters for what happens next: it is from TOP that the Defects Liability Period begins to run, and it is at CSC that the final instalment of the purchase price falls due, in the particular way described below.
The Defects Liability Period and the Stakeholding Money Held by SAL
Once you take possession after TOP, a twelve-month Defects Liability Period (DLP) applies, during which the developer is obligated to rectify defects notified within that window at no cost to you. This obligation is not left to the developer’s goodwill alone. The final instalment under the standard payment schedule, generally 15% of the purchase price and payable on CSC, is not paid directly to the developer but to the Singapore Academy of Law (SAL), which holds it as an independent stakeholder. SAL only releases this sum to the developer once the DLP has run its course without unresolved claims, or once any claims you have raised against it have been resolved.
In practice, this means a meaningful sum remains outstanding and beyond the developer’s reach for the whole of the DLP, giving the developer a real, financial incentive to attend to defects promptly rather than delay. If a defect is not rectified and you incur reasonable costs putting it right yourself, those costs can, in appropriate circumstances, be claimed against the sum SAL is holding, rather than pursued as a fresh claim against the developer directly.
None of this removes the need for diligence on your own part. Keep a clear, dated record of every defect you identify during the DLP, and notify the developer formally and within the prescribed timeframe; defects not properly raised within the period can become your own responsibility to fix, whatever protection the stakeholding arrangement otherwise offers.
Frequently Asked Questions
Can I negotiate the price or payment terms directly with the developer for a new launch unit? Price is sometimes negotiable, particularly for later units in a launch or during quieter market periods, but the payment schedule and core S&P terms are fixed by the standard form and generally cannot be individually varied.
What happens if construction is delayed and TOP is later than expected? The S&P typically includes provisions addressing delay, including, in some circumstances, compensation for late delivery beyond a specified period, though the specific terms should be checked in your particular contract rather than assumed.
Is the 15% held by SAL an additional cost on top of the purchase price, or part of it? It is part of the purchase price you have already agreed to pay, not an extra sum. The only difference is timing and destination: rather than reaching the developer immediately on CSC, that final instalment is routed through SAL and held until the DLP outcome is known.
If I want to sell my unit before CSC is issued and before the stakeholding sum is released, what happens to it? This needs to be addressed specifically in how the sub-sale is documented, since rights and obligations under the original S&P, including the eventual release of the stakeholding sum, do not automatically transfer to a new buyer without appropriate assignment. This is a scenario worth raising with us early if you are considering a sale before your unit has reached CSC.
Speak to Us
New launch purchases involve a different rhythm of payments and obligations from resale transactions, and the standard form contract, while largely fixed, still rewards careful review of its project-specific schedules and addenda. Our team at OTP Law Corporation can review your S&P before you commit and help you plan your CPF and loan drawdowns across the full construction timeline. Speak to us before booking, if possible, or as soon as you have exercised your option.
This article is intended for general information purposes only and does not constitute legal advice. Payment percentages and timelines described above reflect the standard payment scheme structure commonly used as at the time of writing; the exact schedule for any specific development should be confirmed against that development’s own Sale and Purchase Agreement.
