No rush for legal action expected after compliance certificate fiasco

PUBLISHED : Friday, 01 January, 1999, 12:00am
UPDATED : Friday, 01 January, 1999, 12:00am

Legal experts in the Planning, Environment and Lands Bureau say they do not anticipate a spate of legal actions following a Court of Final Appeal ruling which quashed a flat sale because the vendor could not produce a certificate of compliance for the property.

However, after studying the court's decision, the bureau said the real problem lay in that the vendor did not tell the buyer he did not possess such a certificate.

A Certificate of Compliance is a government document which confirms that the developer has completed all building work on the property and gives the owner legal entitlement to the flat.

Without such a document, an owner only has an equitable interest in the property, according to lawyers.

Lawyers familiar with the case said the buyer signed a provisional sales agreement which made no mention of the distinction.

As such, the buyer signed the agreement thinking he was getting legal entitlement when in fact he would only receive an equitable interest in the property.

According to a bureau official, the court ruling should have little impact on property deals in Hong Kong as long as both buyers and vendors know the true legal status of the property.

In cases where no certificate has been issued by the developer, the bureau said both sellers and buyers should understand that equitable interest and not legal title was being transferred.