COVID-19 has created a very real concern for a number of business owners worldwide. What happens if the business can’t fulfill the contractual obligations of their business agreements during this time? Singapore has recognized that a vast number of businesses are in this situation and have therefore provided temporary relief to individuals and businesses that are unable to fulfill the obligations of their current contracts specifically due to COVID-19 related reasons.
Some examples of this include property lease payments, construction and supply contracts, contracts for the provisions of a good or a service, and certain loans. These new guidelines have been proposed to help to mitigate the overall loss and destruction that COVID-19 will create over time. It is hoped that once it is safe to reopen more businesses, that the economy of each nation will recuperate over a period of time, and that many individuals and businesses will be able to fulfill the terms of the contract over an extended period of time. This consideration is vitally important to ensure that the overall losses sustained due to COVID-19 are kept at a minimum throughout the entirety of the pandemic.
In Singapore, this regulation will have a retroactive effect for any contracts that were entered between February 1st and March 25th, 2020. This bill will be in effect for at least 6 months, with the option of an additional 6-month extension. More specifically, this bill has been created with the intention of supporting some specific industries, including insurance, marine, hospitality and leisure, projects and construction, commercial disputes and insolvency.
Ensuring that business tenants will not be evicted from their premises during this time is becoming increasingly important when it comes to the long-term perspective of reviving the economy. Singapore’s government has recognized that during the recovery period it will be even more vital to ensure as many businesses as possible continue to operate so that fewer people are out of work, so that additional government assistance would be less necessary in order to recover from the worst effects of COVID-19.
Additionally, commercial property owners in Singapore have been ordered to provide property tax remissions to commercial tenants by one of three methods: lump sum, installment payment or as a credit for future rent payments.
This temporary bill has also made it a criminal offense to evict a business tenant in Singapore at this time. If a landlord takes legal action or enforces eviction on a commercial tenant for not paying their lease, the landlord could be subject to criminal offense. This bill has also increased the financial threshold required for insolvency to ten times its current amount, going from $10,000 to $100,000.
Overall, during this situation, it is important that landlords and commercial tenants continue to keep an open line of communication. That way, landlords and tenants can work together to determine the best way to get through this situation while mitigating risk to both parties. As with any variance to a contractual agreement, it is in the best interest of both the landlord and the tenant to get the new payment terms in writing so that it is clear to both parties what has been agreed to and over what period of time, as the country regroups and restores from the devastation caused by COVID-19.
