Promise Of Sale Agreements (Kovenju) And The COVID-19 Pandemic

The expiration of a promise of sale agreement by effluxion of time naturally gives rise to various obligations on the parties to the agreement, inclusive of the imposition of liabilities and other legal issues if a party fails to act in accordance with the terms of the agreement.

Where an extension of time is necessary, the parties would normally need to amicably agree to extend the promise of sale agreement or in default of an amicable agreement possibly take judicial steps either to request an extension of such time limit, where justified, or to enforce the specific performance of the obligations undertaken in virtue of the Promise of Sale agreement, inclusive of a potential action for damages.

All this has been severely impacted by the Covid-19 Pandemic which has amongst many other things resulted in the closure of the registry of the Courts of Malta, the Court themselves and various other government departments, affecting the rights of the parties and the possibility of filing legal action in a timely manner.

Conscious of this situation the Government of Malta issued a number of measures in order to prevent or mitigate problems arising as a consequence of the current situation, amongst which the measures introduced by Legal Notice 75 of 2020 (“Suspension of Legal Times relating to Promise of Sale Agreements, Notarial and other related matters (Epidemics and Infectious Disease) Order, 2020”) published on the 17th March 2020 and effective immediately, which amongst others states that all Promise of Sale agreements that have been duly registered with the Commissioner of Revenue, shall have their term automatically suspended. This allows for the promise of sale agreements to be automatically extended without the need for a specific agreement between the parties or the institution of judicial proceedings. This suspension will remain effective until 20 days following the lifting of the suspension order.

This legal notice is applicable to any Promise of Sale agreement which was due to expire on or subsequent to the 16th March 2020, namely the date on which the Superintendent of Health ordered the closure of the Courts of Malta and the Court’s registry.

Any promise of sale which satisfies the requisites of the said Legal notice has thus been automatically extended through this legal notice, and the parties have had their obligations suspended temporarily.

It is important to highlight that a previous legal notice regulating the same subject matter, namely Legal Notice 43 of 2020 (“Epidemics and Infectious Disease (Suspension of legal times relating to promise of sale agreements, notarial and related matters) Order, 2020”) which suspended the term of such agreements by 45 days subsequent to the re-opening of Government Departments by the Superintendent of Health has been repealed by Legal Notice 75 and is no longer applicable.

This article is only for information purposes and individuals should always seek legal advise before taking any actions or omitting to do so. Feel free to contact us on [email protected] for further information

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