Exercising an Option to Purchase Property by Way of Cheque: What If the Cheque is Dishonoured

Abstract

In Singapore, real property is usually bought and sold by way of an option to purchase granted by the vendor to the prospective purchaser in exchange for payment of an option fee by the prospective purchaser. The option normally stipulates that it is to be exercised within a specified time (usually two weeks) by the prospective purchaser signing and returning the acceptance page of the option together with a payment of a deposit, failing which the option fee paid by the prospective purchaser in exchange for the option is forfeited and the option lapses. But what if the option is exercised before it expires, but the cheque tendered in payment of the deposit is dishonoured upon presentation for payment?

Keywords: Land law, immovable property, real property, real estate, conveyancing practice, options to purchase, banking and negotiable instruments, dishonour of cheques upon presentation for payment, Singapore

JEL Classification: K11, K12, K29