Relief Act Now Applies To OTPs and SPAs For Commercial Properties; Rental Relief Extended By 1 Month

SINGAPORE – Part 2 of the COVID-19 (Temporary Measures) Act now applies to Options to Purchase (OTPs) as well as Sale and Purchase Agreements (SPAs) for industrial and commercial properties with effect from 9 October, according to a press release issued by the Ministry of National Development (MND) on Monday afternoon (12 October).

Previously, Part 2 of the Act only covered OTPs, SPAs, and Agreements for Lease (AFL) for residential properties. Notably, this section provides temporary relief from specified kinds of legal action if one party fails to meet certain contractual obligations due to the COVID-19 pandemic.

For instance, a property developer is not allowed to take any part of the booking fee paid under the Option to Purchase during the relief period. The developer is also barred from terminating the SPA if buyer fails to pay.

To qualify for relief under the act, the contract must be signed prior to 25 March 2020, and the contractual obligation should have been fulfilled on or after 1 February of the same year. Additionally, the property buyer should serve a Notification for Relief (NFR) to the property developer to be eligible for the relief.

Likewise, a developer may serve an NFR to a property buyer to enjoy temporary protection from being litigated if the former fails to meet its contractual obligation because of the virus outbreak.

Moreover, once an NFR has been served, a property developer will be disallowed from unilaterally raising interest rates or imposing new charges due to late payments beyond what is stipulated under the SPA. Charges or late payment interest under the contract will also capped at 5 percent per annum of simple interest. This only applies during the relief period.

If after the NFR is served, but both parties fail to reach an amicable deal, either of them can apply for an Assessor’s Determination. For disagreements over SPAs, the NFR must be served by 31 December 2020, likewise for the Application for Assessor’s Determination. For OTPs, the NFR must be served by 31 December 2020, and the deadline for the application is until 28 February 2021.

Rental relief extension

Meanwhile, there are updates to the Act’s rental relief framework, revealed a press release issued by the Ministry of Law on Monday afternoon (12 October).

Under the rental relief framework, the repayment scheme lets SME lessees pay for a stipulated portion of their rental arrears over a prolonged period in equal instalments, with interest payable capped at 3 percent per year.

For lease agreements and licences involving industrial and commercial properties, the Ministry said the deadline to serve an NFR or make an Application for Assessor’s Determination has been extended until 19 November 2020. Previously, it was only up to 19 October of the same year.

As such, qualified tenants have until 19 November to serve an NFR to their lessor if they want to avail of the repayment scheme for rental arrears.

The occupants are also given an additional month – until 1 December 2020 – to make their first instalment payment. Previously, it only applied to rental arrears that accrued from 1 February to 19 October 2020, but it has been extended until 19 November.

“The relief from legal and enforcement actions afforded by the Act has provided individuals and businesses breathing space to work out contractual disputes arising from COVID-19. As of 30 September 2020, at least 7,400 NFRs have been served through the Ministry’s electronic system. More than 1,400 Applications for an Assessor’s Determination have (also) been submitted,” added the Law Ministry.

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