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MinLaw extends contract relief periods; OTPs for commercial, industrial properties included
THE relief periods under Part 2 of Singapore's Covid-19 (Temporary Measures) Act will be extended by one to five months, depending on the category of the contract.
Part 2 provides temporary relief from certain legal and enforcement actions. If they are unable to perform their contractual obligations, parties in seven categories of contracts can get temporary relief when they serve a notification for relief.
There will also be updates to the terms of the repayment scheme for rental arrears under the rental relief framework, the Ministry of Law (MinLaw) announced on Monday.
The repayment scheme allows small and medium enterprise (SME) tenants to pay for a specified portion of their rental arrears over an extended period of time in equal instalments, with the interest payable capped at 3 per cent per annum.
Meanwhile, the relief period relating to bankruptcy and insolvency will remain unchanged and will end on Oct 19, 2020. These measures, under Part 3 of the Act, provide temporary relief to financially distressed individuals and businesses, by increasing the monetary thresholds and time limits for bankruptcy and insolvency.
The prescribed relief periods under Part 2 and Part 3 are both currently six months, lasting from April 20, 2020 to Oct 19, 2020.
MinLaw will extend the relief periods by at least one month for all categories of contracts covered by Part 2. Certain sectors that face longer-term effects due to the coronavirus pandemic will get extensions of more than one month.
The ministry said on Monday that these extensions "will support individuals and businesses as they continue to adjust to the economic impact of Covid-19".
After a relief period ends, parties may commence or resume legal and enforcement action, although exceptions apply for three categories of contracts, where parties can apply for an assessor's determination within two months after the extended relief period ends.
The last day to serve a notification for relief or submit an application for an assessor's determination has been extended to Nov 19, 2020 for loans to SMEs secured by certain collateral in Singapore, leases and licences of non-residential property, hire-purchase and conditional sales agreements for commercial vehicles or plant or machinery used for commercial purposes, as well as rental agreements for commercial equipment or commercial vehicles.
For event and tourism-related contracts as well as options to purchase (OTPs) with property developers, the last day to serve a notification is now Dec 31, 2020, and applications for assessors' determination should be submitted by Feb 28, 2021.
As for sale and purchase agreements (SPAs) with developers, the last day to serve a notification for relief and to apply for an assessor's determination is Dec 31, 2020.
OTPs and SPAs for commercial and industrial properties are now also covered by Part 2 of the Act with effect from Oct 9, the Ministry of National Development (MND) said in another statement on Monday. The temporary relief had previously only been available for residential properties.
MND said it considered feedback from buyers and developers, and is extending the relief to commercial and industrial properties "to ensure parity in treatment".
Meanwhile, MinLaw noted the extended relief periods for OTPs and SPAs with property developers will give buyers of residential, commercial and industrial properties more time to make their payments.
As for construction contracts, supply contracts or any performance bond granted, the deadline to serve a notification for relief has been extended to March 31, 2021, and applications for assessors' determination should be in by May 31, 2021.
MinLaw pointed to significant delays in the construction sector, adding that the extension will help contractors that are adjusting to new operating requirements.
Under the repayment scheme for rental arrears, eligible tenant-occupiers now have until Nov 19, 2020 to serve written notice on their landlords if they plan to take up the scheme.
These tenant-occupiers also have one more month to make their first instalment payment - by Dec 1, 2020.
Moreover, the period of rental arrears covered under the repayment scheme will be extended to cover an additional month, up till Nov 19, 2020. It previously covered rental arrears accumulated from Feb 1, 2020 till Oct 19, 2020.
MinLaw on Monday said that at least 7,400 notifications for relief were served through the ministry's electronic system as at Sept 30, 2020, and more than 1,400 applications for an assessor's determination were submitted.
"Given the continued need for safe management measures, many businesses could still use some breathing space to better adjust to the current operating context and consider how they may meet their contractual obligations," MinLaw noted.
"It will benefit parties to use this time to work through their contractual disputes rather than resorting to legal proceedings after the expiry of the extended relief period, which would incur substantial time and costs," it added.