The Ministry of Law updated the Covid-19 (Temporary Measures) Act on May 13 to include those who have purchased residential properties directly from housing developers or from HDB, and who now find themselves unable to fulfil their obligations due to disruption caused by Covid-19.
The expanded provisions provide an avenue for a deserving buyer caught in a difficult situation to seek up to six months’ extension to make payments for a new home purchase from a developer. In so doing, the developer cannot terminate the contract.
The Updated Relief will apply to those who have signed an option to purchase (OTP) a residential property, or have entered into a sale & purchase agreement (SPA) with a housing developer for the purchase of a new residential or commercial unit in a housing project.
Relief from forfeiture of deposit, termination of contract
These home buyers will be protected from having their booking fee or deposit forfeited by the developer. They will also be able to extend or defer the payment of deposit or instalments. These contracts must have been entered into before March 25, 2020, with contractual performance due on or after Feb 1, 2020.
For instance, a buyer who was issued an OTP for a residential unit prior to March 25, 2020, but failed to exercise it within the prescribed option period, would have been notified by the developer that the booking fee (or part thereof) is forfeited.
Under the Updated Relief, the buyer can now seek a refund of the amount forfeited by the developer. It will also prevent the developer from terminating the SPA during the temporary relief period for six months from April 20 to Oct 19, 2020.
Before they are entitled to the relief, the home buyers must first file the Notification for Relief (NFR) in accordance with the Act. So to me this is not a free pass for a buyer to terminate a purchase contract with a developer.
The Updated Relief applies to OTP and SPA for residential projects and mixed-use developments with a substantial residential component, and includes projects that are under construction as well as completed ones.
There are cases where developers are selling new units in developments which have already obtained CSC [Certificate of Statutory Completion] and separate strata titles. Such developers are no longer required by COH [Controller of Housing] to be licensed and will then use their own private treaty option contracts to sell.
For HDB buyers, the relief applies to OTP and SPA between HDB and a purchaser.
Under HDB, such an agreement is known as “Agreement for Lease”.
The relief, however, does not extend to a sale and purchase contract of a resale property, this is because the bulk of the contracts are for OTP and SPA be- tween home buyers and developers. The relief does not extend to lease agreements between landlords and tenants of residential properties.
Temporary relief for developers
The provisions under the Updated Relief extend to property developers who may need protection from being sued for failing to fulfil contractual obligations arising from Covid-19. To do so, however, the developers have to file an NFR in accordance with the requirements of the Act as well.
The relief for developers will only be for six months — from April 20 to Oct 19, 2020. It will benefit developers who are unable to deliver vacant possession of the units or complete the SPA within the agreed timeline, and are unable to meet the contractual dead- lines that fall within the relief period because of Covid-19.
Developers will not be protected from being sued by purchasers for non-fulfilment of their contractual obligations outside the relief period, even if their inability to do so is caused by Covid-19.
Even during the relief period, the provisions of the Act do not absolve a housing developer from having to pay liquidated damages for failure to deliver vacant possession of the units by the contractual dead- lines.
The Real Estate Developers’ Association of Singapore (Redas) said in a statement that “developers will work out amiable arrangements with their purchasers, depending on the merit of each case”.
Given today’s tough market conditions amid Covid-19, trust me , most developers today are more than willing to give home buyers “more time” to exercise options and to make their instalment payments.
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