Knowledge Highlights 23 October 2020
From 9 October 2020, the Covid-19 (Temporary Measures) Act 2020 (“Act”) and subsidiary legislation were enhanced to cover options to purchase and sale and purchase agreements for commercial and industrial properties. The enhancements came after the Ministry of National Development (“MND”) considered feedback from purchasers and developers.
By way of background, the Singapore Government in May 2020 included (1) options to purchase (“OTPs”) and (2) sale and purchase agreements (“S&P Agreements”) or agreements for lease (“AFL”) with housing developers under Part 2 of the Act. Part 2 of the Act provides for temporary relief from stipulated types of legal action in relation to the inability to perform certain contracts as a result of Covid-19.
To ensure parity in treatment, the relief is extended to OTPs and S&P Agreements for commercial and industrial properties. Only OTPs and S&P Agreements between developers and purchasers are covered.
The relief period for the following under Part 2 of the Act expires on 31 December 2020.
Inclusion of additional contracts under Part 2 of the Act
The Schedule to the Act has been amended to include OTPs and S&P Agreements for commercial and industrial properties which were entered into before 25 March 2020, with contractual performance due on or after 1 February 2020.
The purchaser may serve a Notification for Relief (“NFR”) on the developer to enjoy relief under the Act. Upon receiving an NFR from a purchaser, a developer will be prohibited from carrying out the following actions:
- OTPs: Withholding or forfeiting any part of the booking fee paid under the OTP during the relief period.
- S&P Agreements: Terminating the agreement on the basis of the purchaser’s non-payment.
If a developer is unable to perform any contractual obligation due to Covid-19, it may serve an NFR on purchasers to seek temporary protection from being sued during the relief period.
Parties are encouraged to discuss and reach a mutual agreement. If the parties are unable to reach an agreement even after the NFR is served, either party to an OTP or S&P Agreement may make an application for an assessor’s determination. Applications for assessor’s determination must be submitted by 28 February 2021 for OTPs, and by 31 December 2020 for S&P Agreements.
Assessors will consider both parties’ arguments, and will seek to achieve an outcome that is just and equitable in the circumstances.
Prohibition of unilateral increase of interest rates, charges, and other types of actions
A developer who has been served an NFR is not permitted to unilaterally increase interest rates or impose new charges on delayed payments beyond what is provided for in the S&P Agreement. Any late payment interest or charges provided for under an S&P Agreement is capped at an amount equal to 5% per annum of simple interest.
- Press release: Enhancements to the Covid-19 (Temporary Measures) Act to Cover Options to Purchase and Sale and Purchase Agreements for Commercial and Industrial Properties
- Covid-19 (Temporary Measures) (Amendment No. 2) Act 2020 (Commencement) (No. 4) Notification 2020
- Covid-19 (Temporary Measures) Act 2020 (Amendment of Schedule) (No. 4) Order 2020
- Covid-19 (Temporary Measures) (Temporary Relief for Inability to Perform Contracts) (Amendment No. 3) Regulations 2020
In addition, we have a cross-disciplinary Covid-19 Legal Task Force consisting of Partners across various practice areas to provide rapid assistance. Should you have any queries, please do not hesitate to get in touch with us at email@example.com.