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Complex system makes buying a risky business

BUYING unfinished flats in China can be dangerous, unless you understand the mainland system and are careful enough to take care of every detail of the transaction.

Stringent rules govern which developments can be sold overseas and developers must obtain five certificates from the local authorities before they can market the projects aboard.

These certificates cover: Government approval; Land use certificate for either residential or commercial use; Government approval for flats to be sold overseas; Permission to start work; Permission to construct.

In addition, separate land and property title documents are required before a home can be sold or purchased overseas.

According to Chinese laws, all documents related to property transactions have to be notarised by mainland attesting officers who are empowered to check the availability and validity of all the certificates on behalf of their clients.

To help the bulk of buyers mainly from Hongkong, the Chinese Government has appointed 48 local lawyers as attesting officers to act as notaries.

But the Consumer Council warns that these 48 lawyers do not have a mandate to conduct any investigation in China, and therefore cannot check if information on a property is correct or not.

This is different to the Hongkong system, under which solicitors have a duty to use their powers to check every detail of the flats to be sold, including titles, land use and the quality of flats.

Nevertheless, the Association of China-Appointed Attesting Officers, to which all the 48 lawyers belong, claims their responsibilities are very much the same as their mainland counterparts in that they will go to China and check all required documents and certificates before notarising the provisional sales contracts.

Secretary of the association, Ms Elsie Leung Oi-sie, said that after buyers had signed contracts, the next step would be for the documents to be notarised by Chinese attesting officers.

When all these procedures were completed, the contracts would then be sent back to the buyers for their reference, Ms Leung said.

She said association guidelines on fees for notarising the sales and purchase contracts usually ranged between $3,000 and $4,000, but depended on the property price.

To avoid any dispute, the Consumer Council advises potential buyers to check with local attesting officers what they can and cannot do.

The buyers should also travel to China to make sure that the property is the type they want, and not depend on the lawyers entirely.

The lawyers themselves should also make it clear to clients their responsibilities and what legal protection they can provide.

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