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Relief period extended for parties unable to fulfil contracts due to Covid-19

Relief period extended for parties unable to fulfil contracts due to Covid-19

Source: Business Times
Article Date: 13 Oct 2020
Author: Fiona Lam

Depending on category of contract, 1 to 5 months' extension to be given under Part 2 of Covid-19 Act.

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 portion of their rental arrears over an extended period - up to nine months - in equal instalments, with the interest capped at 3 per cent per annum.

Meanwhile, the relief period relating to bankruptcy and insolvency remains 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.

For all categories of contracts covered by Part 2, MinLaw will extend the relief periods by at least one month, while sectors facing longer-term effects due to the Covid-19 pandemic will get longer extensions.

After a relief period ends, parties may commence or resume legal and enforcement action. Exceptions apply to three contract categories, where parties can apply for an assessor's determination within two months after the extended relief period ends. Such applications are made if parties are unable to come to an agreement.

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 starting Oct 9, the Ministry of National Development (MND) said 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".

As for construction contracts, supply contracts or any performance bond granted thereto, 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 as they adjust 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. 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 has been extended to cover an additional month, up till Nov 19, 2020. It previously covered rental arrears accumulated from Feb 1, 2020, to Oct 19, 2020.

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.


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