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Analysis | Could digital signatures, e-contracts take the costs and hassle out of residential property transactions in Hong Kong?
- Regulations requiring deals to be completed in person make the process time-consuming and expensive – especially during a pandemic
- But allowing digital signatures poses problematic issues such as potential fraud and identity verification, lawyers warn
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Wang On Properties, a mid-tier developer in Hong Kong, typically has to set aside tens of millions of dollars to build an exhibition venue every time it launches a new residential real estate project.
The venue, ideally measuring 5,000 square feet (464 square metres) and costing between HK$300,000 and HK$400,000 (US$51,000) per month in rent, serves several functions: show flat complete with amenities and furnishings for viewing, and an office for completing the sales contracts.
“It adds up to HK$10 million on a two-year leasing term until the whole project sells out,” said the developer’s chief executive Nick Tang Ho-hong.
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“Imagine if we could complete the whole process of [selling] homes online. It could save a lot.”
Tang’s wish is nowhere near coming to fruition, as a litany of laws and regulations in Hong Kong require manual signatures and paper contracts to be presented in any transaction related to land. That renders digital signatures and e-contracts useless in real estate conveyancing, putting a physical barrier in the way of the full digitalisation of the process.
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The Electronic Transactions Ordinance, which was enacted in January 2000 and updated in June 2004, excludes any instrument related to land, meaning electronic signatures are not allowed for property transactions.
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