Buying a home in Hong Kong? It’s easy as 123, staring with the paperwork
Louis Chan Wing-kit, Asia-Pacific CEO (residential) at Centaline Property Agency, goes through the paperwork needed when a deal is struck between a buyer and seller.
What is the paperwork involved in a property deal?
Before an estate agent takes you to view the property, you will have to sign an estate agency agreement, also known as viewing form, to indicate your interest. Once signed, you are supposed to go through the same estate agent if you decide to buy the flat. If you end up buying the same flatthrough another estate agent, you are liable to pay a commission to the first agent for services rendered. Assuming that you are going to buy that flat, the vendor and purchaser will then enter a provisional agreement for sale and purchase (PASP), usually through the estate agent. It is essentially a tripartite contract between the vendor, purchaser and estate agent, whereby the purchaser confirms that he or she will pay the agreed commission to the agent for services rendered. If you need to secure a mortgage loan from a bank, apply for one with the signed PASP, along with your identity documents and income proof.
How can a buyer be sure that the property is owned by the seller?
Before you enter into a PASP, your appointed estate agent should have provided you with a property information form and a copy of the latest land search record about the real estate you are interested in buying. Information listed in the property information form includes ownership, subsisting encumbrances [if any], the floor area, year of completion, and user restrictions on the property.
The land search record gives you more details, including the present owner and all the previous owners of the flat; whether there are “defects”, such as a government order, a repair order or an order to demolish an unauthorised structure; any mortgage not yet discharged; or any lawsuit concerning the flat. The estate agent is legally required to carry out a land search for the prospective buyer to make sure that the property is owned by the seller.
How can the buyer ensure that the estate agent is looking after his or her rights?
All estate agents must be licensed by the Estate Agents Authority (EAA) in order to provide agency services. In Hong Kong, most estate agents represent the buyer and seller. If the agent you appoint also represents the seller, as a dual agent he or she must make it clear in the estate agency agreement. If you do not want your agent to represent both sides, you can make such a request when appointing the agent. According to the code of ethics issued by the EAA, estate agents must serve their clients with honesty, fidelity and integrity, protect and promote the interests of their clients, and act in a fair and impartial manner to all parties involved in the transaction.
Can the buyer carry out a building survey before signing the PASP?
You can as long as the seller agrees and provides a written agreement for you to do so. In practice, it is rare for buyers to make such a request. Typically, properties in Hong Kong are sold to the purchaser on an “as is” basis. That said, the property will be sold and delivered to the purchaser in such physical condition as at the time the agreement is signed. It should be noted that the sale on an “as is” basis does not protect the vendor from failing to disclose any unauthorised alterations affecting the property. Unless the purchaser accepts such unauthorised structures/alterations, the purchaser may challenge the title of the property on this basis.