Buyers of commercial and industrial property who have been unable to meet certain contractual obligations due to the pandemic now have temporary relief from legal and enforcement action.
The Covid-19 (Temporary Measures) Act has been expanded to cover option to purchase (OTP) and sales and purchase agreements between developers and buyers of commercial and industrial sites.
The changes took effect last Friday.
This law already covers OTPs and sales and purchase agreements or agreements for lease with residential developers.
The relief period, which initially ran from April 20 to Oct 19 for home buyers and developers, has been extended to Dec 31. Likewise, the relief period for commercial and industrial property buyers and developers will expire on Dec 31.
The Ministry of National Development said yesterday that it considered feedback from buyers and developers of commercial and industrial properties and extended the relief to "ensure parity in treatment".
This is aimed at helping buyers affected by the pandemic hold on to residential, commercial and industrial property that they have committed to buy.
Longer extensions to the relief period have been given for certain categories of contracts, including OTPs and sales and purchase agreements with developers as these continue to face significant uncertainty, the Ministry of Law (MinLaw) said.
"The extension will assist purchasers... who require more time to make their payments, particularly those who pay developers directly without taking a bank loan, with minimal impact to developers' cash flow," MinLaw said.
Ms Tricia Song, head of research at Colliers International, called the extension of the relief period "a mild positive but expected" after developers of residential, commercial and industrial projects were given an additional six months to complete construction.
"The extension may go some way to help home buyers who qualify for relief as their economic conditions may still not have improved, given the protracted Covid-19 conditions," she said.
"For residential developers, any financial gap resulting from the extension to home buyers should be mitigated" by the extra six months they have to complete building, she added.
Like other contracts covered under the Covid-19 (Temporary Measures) Act, they must have been entered into before March 25, with contractual performance due on or after Feb 1.
Under the Act, the buyer may serve a notification for relief on the developer. This bars the developer during the relief period from withholding or forfeiting any part of the booking fee paid under the OTP, or from terminating the agreement if the buyer is unable to pay.
The developer can also serve a notification for relief on buyers to seek temporary protection from being sued during the relief period if it cannot perform contractual obligations due to the pandemic.
Parties in OTPs must serve the notification for relief by Dec 31.
Once a notification for relief has been served, the developer cannot unilaterally increase interest rates or impose new charges on delayed payments beyond what is provided for in the sales and purchase agreement.
And late payment interest or charges under sales and purchase agreements will be capped at an amount equal to 5 per cent a year of simple interest.
If the parties cannot reach an agreement even after a notification for relief is served, they can apply for an assessor's determination. OTP applications must be submitted by Feb 28 next year, and for sales and purchase agreements, by Dec 31 this year.