Completion Dates of Auction Sales In View of Covid-19
Written By Justine Loi
The MCO imposed nationwide between 18 March and 28 April 2020 mandates that amongst others, all government and private business premises are to be closed except for those dealing with essential services. Such an “once-in-a-hundred-years” event has brought about concerns on its effects on the timeframes and deadlines falling in the MCO period, and whether they will be extended automatically. Here we will examine if the completion dates for auction cases will be extended “automatically” following the MCO without any required consent from the relevant authorities or parties involved.
There are 2 types of auctions in respect to foreclosed properties – judicial and non-judicial auctions. Judicial auctions are governed by the National Land Code 1965 (“NLC 1965”), carried out by the High Court or Land Administration Office; while non-judicial auctions (commonly known as loan agreement cum assignment “LACA” cases) are not regulated by any legislation as the property has not been issued an individual document of title or strata title, and are directly carried out by the bank holding the power of attorney and deed of assignment to the property.
The time period for a successful bidder to complete a sale by paying the balance purchase price is also referred to as the “settlement period”. Section 257(1)(g) NLC 1965 (for High Court auctions) and Section 263(2)(g) NLC 1965 (for Land Administration Office auctions) require that the successful bidders settle the balance purchase price of the property within 120 days from the date of sale, otherwise the deposit paid for the property would be forfeited by the Chargee/bank. No extension to the stipulated timeframe shall be given. For non-judicial auctions, the settlement period is shorter than judicial auctions which the balance must be settled within 90 days.
Notwithstanding this, this unprecedented situation that we are in might be considered as an exceptional circumstance to request for an extension to the strict timeframes provided. Therefore, concerned Purchasers are advised to contact their own solicitor to negotiate and request for an appropriate extension to the completion dates from the relevant bank (and thereafter, if it was a judicial auction, seek for an additional court order if necessary) so that deposit paid by the Purchaser would not be forfeited despite the failure to comply with the mandatory 90 or 120 days completion period.
In conclusion, the completion period for an auction case would not be “automatically” extended in view of the mandatory 90 or 120 days’ timeframe as provided statutorily or in the proclamation of sale. Nevertheless, all parties involved should attempt in a spirit of reasonableness to negotiate and agree on an extension of time and take the necessary actions to complete the sale transaction without any party’s interest being prejudiced.