Developers' group against letting buyers off the hook
The Real Estate Developers' Association (Reda) is against the idea of a cooling-off period for home buyers, because it could undermine the whole system of contracts.
Secretary-general Louis Loong Hon-biu said the association had informed the Department of Justice about its in-principle objections to the idea.
The Department of Justice recently called for opinions on the idea of imposing a cooling-off period and the standardisation of provisional agreements for sale and purchase.
A cooling-off period - adopted by some countries, such as Canada - allows buyers to change their minds within several days after signing provisional agreements.
The provision aims to protect home buyers from psychological interference and advertising lures by agents, vendors and developers. The initial responses from the industry in Hong Kong - including agents and developers - have been negative.
Mr Loong said that, if a cooling-off period were in place, there would be uncertainty over the binding power of contracts between buyers and sellers.
It would open up a situation whereby everyone would feel free about signing contracts knowing there was no penalty if they changed their minds, he said.
The certainty of contracts played a significant role in a commercial society such as Hong Kong, Mr Loong said.
The contractual spirit, a pillar of the commercial society, could suffer if a cooling-off period was introduced, he said, adding that the situation in Hong Kong was not the same as in other countries.
Reda also reacted negatively to the suggestion of standardising the provisional agreements for sale and purchase.
Mr Loong said the association preferred to give individual developers the autonomy to prepare their own provisional agreements.
A provisional agreement is usually prepared by agents or developers before being replaced by a formal agreement handled by lawyers.
Mr Loong said each project had its peculiarities and it was difficult to prepare a standard form to fit all.
Law firm Baker & McKenzie partner Angela Lee said a cooling-off period was not suitable in Hong Kong, where speculation was rife and the market fast-changing.
It would open up opportunities for speculators to bet on the market trend - to honour the contracts if prices went up but quit if they went down, she said.
To curb speculation during the market boom in 1997, the Government even increased the contract deposit requirement from 3 per cent of a property's value to 5 per cent for people buying uncompleted flats from developers.