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SINGAPORE: Businesses and individuals who are unable to repay loans and meet contractual obligations will now have more time to request temporary relief from legal and compliance actions amid the COVID-19 outbreak.
Additionally, property buyers who have entered into agreements with developers to purchase commercial and industrial properties will also have an extension of the exemption period under the COVID-19 (Temporary Measures) Act.
The Ministry of Law (MinLaw) and the Ministry of National Development (MND) announced on Monday (October 12) that they will extend the period of relief for those who cannot fulfill their contractual obligations from one to five months from October 19 , depending on the category. of the contract.
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“Given the continuing need for safe management measures, many companies could still use a breather to better adapt to the current operating environment and consider how they can meet their contractual obligations,” MinLaw said in a press release.
A summary of the changes is as follows:
(Bureau: Ministry of Law)
The relief period for bankruptcy and insolvency-related measures remains unchanged and will expire on October 19, MinLaw said.
GREATER EXTENSIONS GIVEN TO SECTORS WITH ‘SIGNIFICANT UNCERTAINTY’
The extension of the relief period will allow the parties “to work through their contractual disputes rather than resort to legal proceedings after the expiration of the extended relief period, which would incur substantial time and costs,” MinLaw said.
Longer extensions have been granted to contracts related to events and tourism, construction or supply contracts and agreements to purchase residential, commercial and industrial properties, as they “face significant uncertainty due to COVID-19,” he added.
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Once the extension ends, the reliefs will cease, triggered by a Notice of Relief that has already been delivered.
After which, the parties can initiate or resume legal and enforcement actions, as provided in their contracts and general law, the ministry said.
During this time, companies and individuals will not be able to submit Exemption Notifications or Assessor Determination Requests, except those that fall into three categories: contracts related to events and tourism, purchase options, and construction or supply contracts.
Under the first two categories, applications for the determination of an appraiser can be submitted before February 28, 2021, while parties with construction or supply contracts, or any related performance security can submit the same request before February 31, 2021. May 2021.
This extension does not apply to agreements to buy and sell residential, commercial and industrial properties, and all Requests for an Appraiser’s Determination must be submitted by December 31 of this year, MinLaw said.
As of September 30, at least 7,400 Notices of Exemption have been delivered through MinLaw’s electronic system and more than 1,400 Requests for Determination of an Assessor have been submitted.
At the same time, the reimbursement plan for back rent has been updated in the aid framework.
The updates are as follows:
(Bureau: Ministry of Law)
LEGAL RELIEF TO COVER COMMERCIAL AND INDUSTRIAL PROPERTY
Buyers signing deals to purchase commercial and industrial properties from developers can now apply for temporary legal protection if they face difficulties making payments due to the COVID-19 pandemic.
Previously, the law only covered residential property contracts.
READ: COVID-19: Legal Relief for Those Buying Homes from Developers
MND said Monday that the move was “to ensure parity in the deal” after receiving comments from buyers and developers.
The changes to the law, which took effect on October 9, will now cover buyers who have entered purchase and sale options and purchase agreements for commercial and industrial properties.
“Like other contracts covered by the Law, these contracts must have been entered into before March 25, 2020 and contractual compliance must take place as of February 1, 2020,” the ministry said.
The buyer can provide a relief notice to the developer, MND said.
In the case of a call option agreement, the developer will be prohibited from withholding or losing any part of the reservation fee paid under the agreement during the relief period.
For buy and sell agreements, the developer will be prohibited from rescinding the agreements on the basis of the buyer’s non-payment.
READ: COVID-19: Details set for parties to get relief from construction delays and breaches of contracts
A developer can also send a notice to seek temporary protection against being sued during the relief period, if they cannot meet contractual obligations due to COVID-19, MND said.
“The parties are encouraged to discuss and reach a mutual agreement,” the ministry said.
If the parties cannot reach an agreement even after a Notice of Exemption is served, either party can file a Request for Assessor Determination, he added.
“The Advisor will consider the arguments of both parties and will seek to achieve a result that is fair and equitable in the circumstances.”
Once a Notice of Relief has been delivered, the developer will not be allowed to “unilaterally increase interest rates or impose new charges on late payments” beyond what is provided in the purchase agreement, MND said.
Late payment interest or charges under the sales agreement will also be capped at 5 percent per year simple interest, he added.
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