SINGAPORE, Oct 13 — Individuals and businesses who had sought temporary relief over their inability to fulfil their contractual obligations due to the Covid-19 pandemic will now have at least another month before legal action can be taken to enforce the contracts.
Yesterday, the Law Ministry (MinLaw) said in a statement that it will extend the relief period prescribed under the Covid-19 (Temporary Measures) Act by at least a month from the original end date on October 19, and up to five months for certain types of contracts.
The Act came into force in April to provide temporary relief from certain legal and enforcement actions to parties who are unable to fulfil their contractual obligations due to Covid-19.
Monday’s extension announcement does not apply to another part of the emergency law, which allows those facing bankruptcy and insolvency to receive temporary relief if they meet certain conditions. The October 19 expiry date applies in these cases.
A simplified insolvency programme for micro and small companies that need to restructure or wind down their businesses is in the works, said MinLaw.
The Credit Counselling Singapore and other financial industry partners will also soon launch a scheme to aid sole proprietors and partnerships in financial distress to restructure their debts, the statement added.
Extensions to contractual relief
At least 7,400 notifications for relief had been served through the ministry’s electronic system as of September 30, and more than 1,400 applications for an assessor to resolve disputes arising from such relief have been submitted.
“Approximately six months since the Act commenced, the Covid-19 situation in Singapore has allowed for the calibrated resumption of economic and social activities,” said MinLaw.
“However, 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.”
Here is a summary of the changes to the relief periods:
The relief period for these contracts is extended to November 19, 2020:
- Contracts involving loans to small — and medium-sized enterprises that are secured by certain collateral in Singapore
- Leases and licences of non-residential property
- Hire-purchase and conditional sales agreements for commercial vehicles, plants or machinery used for commercial purposes
- Rental agreements for commercial equipment or commercial vehicles
The relief period for these contracts is extended to December 31, 2020:
- Event and tourism-related contracts
- Options to purchase and sale and purchase agreements with developers
- Housing and Development Board (HDB) agreements for leases, which are also treated as sale and purchase agreements
The relief period for these contracts is extended to March 31, 2021
Construction contracts or supply contracts, or any performance bond granted for such contracts
The longer extensions will give people who have booked events or tours taking place in late 2020 and 2021 more time to monitor the Covid-19 situation and discuss how to proceed with their vendors before deciding if they need to rely on the relief.
Purchasers of residential HDB flats, as well as commercial and industrial properties, will also have more time to make their payments as a result of the move.
MinLaw said the construction sector has continued to face significant delays, adding that the extension will provide those affected with continued support as they adjust to the new operating requirements.
The extension will complement other forms of government relief, said the ministry.
After the extended relief period ends, parties may resume or commence legal and enforcement proceedings as stated in their contracts or under the provisions of general law.
Those who sought relief for these types of contracts will also not be allowed to file for notifications for relief or apply for an assessor’s determination, except for these categories:
- For event and tourism-related contracts, as well as options to purchase, parties may submit an application for assessor’s determination up to February 28 next year
- For construction contracts or supply contracts, or any related performance bond, parties may submit such applications up to May 31 next year
Agreements relating to property developers
Effective from October 9, the Ministry for National Development (MND) has extended the relief available under the Covid-19 (Temporary Measures) Act to options to purchase, and sale and purchase agreements with commercial and industrial property developers.
Previously, these agreements were not covered by the emergency law.
MND agreed to the change after it had received feedback from purchasers and developers. The update will “ensure parity in treatment” for commercial and industrial properties in such contracts, it added.
This means that if a notification for relief is served:
- Developers of commercial and industrial properties will not be allowed to withhold or forfeit the option to purchase booking fee until December 31
- Developers cannot terminate sale and purchase agreements during the relief period because the purchaser did not pay
- Developers are not permitted to unilaterally raise interest rates, and impose new charges on delayed payments beyond what had been agreed upon during the relief period
- Late payment interest or charges under sale and purchase agreements will also be capped at an amount equal to five per cent per annum of simple interest
- On the other hand, developers can also seek temporary relief from being sued by purchasers if it is unable to complete its end of the contract
For qualifying individuals and businesses paying commercial rent, MinLaw has extended the repayment scheme for rental arrears by a month, until November 19.
As a result, the date on which the first instalment payment must be made has also been deferred by one month till December 1. — TODAY