Protect buyers in Hong Kong but don't mollycoddle them

A few months ago I described the amazing procedures I had to go through to open an account with a local Hong Kong bank. It was a lengthy process involving a lot of form-filling and even tape-recorded interviews. It seemed to me that, after the public outcry over banks' methods of selling investment products, we might have gone too far in protecting bank customers.

That is certainly not the case where the property market is concerned. Many people believe that buyers in Hong Kong need more protection from misleading information from sellers. But how far would we want to go?

I was recently involved in a property transaction in California, and I was surprised by the amount of buyer protection built into the system. The seller has to sign a lead-based paint hazards disclosure form, and a form to confirm water heater and smoke detector compliance. He has to initial an advisory concerning geologic hazards, soil stability, fungi, formaldehyde, wood-destroying pests, flood hazards, earthquake zones and much more, including the potential dangers of owning a home near a golf course.

Sellers also have to tick a huge list of boxes to disclose any type of problem with the property. This includes not only the structure and appliances but past damage from natural disasters, problems with pets or livestock, flooding, tree diseases and conflicts with other property owners. It then goes into a wide range of neighbourhood issues like noise, traffic, aircraft, restaurants and parties.

These are affidavits required by the state realtors' association. The city - San Francisco - has some more forms for you to fill in. These include storage tank disclosure, parking and storage disclosure, energy and water conservation compliance, a questionnaire similar to the state realtors' one about potential problems, and even a disclosure of methamphetamine contamination - in other words, were the premises ever used to manufacture illegal drugs?

Much of this paperwork I have described - and I am skipping quite a bit of the details - is about protecting the estate agents from getting sued by a buyer who did not check the property carefully enough. The US is notorious for litigation, and all this paperwork is simply to ensure that if someone does not check the property and its surroundings, they can still sue someone if something goes wrong, but it will not be the agent. The rest of the bureaucracy was the result of government regulation aimed at reducing a wide range of health and environmental risks.