On 3 November 2020, Parliament passed the COVID-19 (Temporary Measures) (Amendment No. 3) Bill 2020 (Bill No. 43/2020), which among other things, inserts a new Part 8C to the COVID-19 (Temporary Measures) Act 2020 (the Act), relating to the developers’ deadline to deliver possession of units to purchasers and the liability for failure to comply with the said deadline. Subsequently, on 5 April 2021, Parliament passed a further COVID-19 (Temporary Measures) (Amendment No. 2) Bill 2021 (Bill No. 10/2021) which further amends Part 8C.
In sum, this new Part 8C allows both housing developers and commercial developers to extend the original deadline to deliver possession of the units to purchasers under the sale and purchase agreements (Original Delivery Date) to a later date (Extended Delivery Date), subject to the fulfilment of certain conditions. As at the date of publication of this article, Part 8C has not come into operation yet.
This new Part 8C only applies if1:-
(referred to as the Affected Agreements).
A developer is allowed to extend the Original Delivery Date by a period not exceeding 122 days in total, by notifying purchasers of the extension period in the prescribed form and manner and within the prescribed time.
This extension is somewhat “automatic” in nature as it will take effect upon notification.
If necessary, the developer may also extend the Original Delivery Date by more than 122 days, provided that:-
The developer is required to furnish the relevant prescribed fees and the requisite declaration, information and/or documents to the Assessor, before the Assessor can determine the following for the purposes of the Assessor’s Certification7:-
After the Assessor’s Certification is obtained, the developer is to notify the purchasers of the Assessor’s Certification in the prescribed form and manner and within the prescribed time.
Pending the issuance of the Assessor’s Certification, a moratorium period is imposed where purchasers are precluded from taking certain actions against the developer in relation to developer’s failure to deliver possession by Original Delivery Date or Extended Delivery Date (as the case may be)8. Such actions include making deductions from the instalments or payments due under the Affected Agreements for any damages, liquidated damages and any other costs allowed under the Affected Agreements. This moratorium period starts on the day on which the purchasers are notified of the developer’s intention to extend the delivery date beyond the 122-days period, and ends on the day the purchasers are notified of the Assessor’s Certification or such prescribed date, whichever is earlier.
For extensions of the Original Delivery Date both within and beyond the 122-days period, the Extended Delivery Date is then treated as the new delivery date provided in the Affected Agreements. Correspondingly, the developer’s liability for failure to comply with the Original Delivery Date is extinguished (e.g. liability to pay liquidated damages under the prescribed form of sale and purchase agreements under the Housing Developer Rules (HDR)), unless prescribed otherwise9.
However, developers are now liable to reimburse purchasers the qualifying costs as prescribed under the Act (Qualifying Costs)10. This includes costs incurred by affected purchasers who have to seek alternative accommodation arising from the extension to the Original Delivery Deadline such as (a) rent, or (b) estate agent fees, moving costs and such other costs as may be prescribed11, and such costs will be subject to a capped prescribed amount12. Purchasers are required to submit their claims to the developer in the prescribed form and manner and within the prescribed time, and accompanied with such prescribed information or document.
As the aforesaid payment is on a reimbursement basis, the purchasers ought to have actually incurred the expense and ought to provide evidence of such expenditure.
For purchasers who make a claim for Qualifying Costs (whether in relation to the extensions of the Original Delivery Date within and/or beyond the 122-days period), they may, after the relevant prescribed time13:-
If the developer does not dispute the claim for Qualifying Costs, it must pay the purchaser in cash or cash equivalent, and within the prescribed time. In an event of dispute as to the Qualifying Costs to be reimbursed to the purchaser, either the developer or purchaser may make an application for assessor’s determination, where the Assessor is to determine (Assessor’s Determination)14:-
Neither party may be represented by solicitors for proceedings before an Assessor, unless the Assessor in charge of the said proceedings grants permission for it15.
Notably, all information and/or documents disclosed or provided by the other party in accordance with a requirement under this Part 8C or during the course of the proceedings are to be kept confidential16. For example, a purchaser who makes a claim for Qualifying Costs will be prohibited from sharing any information disclosed by the developer during the course of the proceedings with other purchasers. If a party is found to have contravened this section, the party shall be guilty of an offence, and shall be liable on conviction to a fine not exceeding $1,000/- 17. Further, a party who has suffered loss or damage as a result of the contravention has a right of action against the contravening party, which includes applying to court for injunction and damages18.
Parties must bear their own costs for all proceedings before an Assessor19, though for fees to be paid for any applications under Part 8C, the Minister may prescribe regulations for the apportionment of such fees as between the developer and the purchaser20.
No appeal is allowed from the Assessor’s Determination, and it will be final and binding upon all parties. However, if:-
an Assessor may, either on his/her own motion or on application of all or any of the parties involved, vary or replace the Assessor’s Determination made by himself/herself or another Assessor21.
In conclusion, we wish to highlight that:-
We understand that developers have long-awaited the passing of legislation to extend the deadline to deliver possession of units to purchasers. We had hoped for an automatic extension of a minimum of six months, consistent with the initial extensions granted by the authorities to developers for the Project Completion Period, the deadline to complete construction of all housing units in a residential development project under the Qualifying Certificate regime, and the deadline to commence and complete the residential development in relation to the remission of the Additional Buyer’s Stamp Duty for housing developers. Although the first 122 days automatic extension mirrors the extension granted to contractors to complete their projects, developers still need some time (approximately two months) from taking delivery of the site from contractors to prepare for delivery of possession of units to the purchasers.
Notes:
This article is an update to an earlier article, and is correct as at 7 June 2021. Part 8C of the COVID-19 (Temporary Measures) Act 2020 has as at 7 June 2021 not yet come into operation.
Dentons Rodyk thanks and acknowledges Senior Associate Geena Liaw for her contributions to this article.
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