 |
Hong Kong Law Reform Commission |
|
[Index]
[Table of Contents]
[Search]
[Help]
Chapter 11 - Summary of
recommendations on completed units offered for sale by developers
_______________________________________
This
chapter gives a summary of recommendations made for completed units sold in the
first-hand market.
11.1 Sales brochures must be
available from the time the completed properties are offered for sale. All
information in sales brochures must be accurate at the time the completed
properties are offered for sale. (Recommendation
6)
11.2 If there have been any material
changes in the information in the sales brochure between the date of its
printing and the time of sale, a note to that effect should be attached to the
sales brochure or the price list. (Recommendation
7)
11.3 The developer may apply to the relevant
authorities in certain circumstances for exemption from the requirement to
produce a sales brochure. For instance, where a purchaser buys in bulk from the
developer with no intention to re-sell any of those units to the public, there
should not be any need for the developer to produce a sales brochure in respect
of those units. The application for exemption should be accompanied by a
written undertaking from the purchaser not to re-sell the units within a
specified period to be determined by the Government.
(Recommendation 8)
11.4 The definition of
a developer should include someone buying in bulk from the developer at the
first sale of completed residential properties involving strata title.
(Recommendation 9)
11.5 If developers, by themselves or
through estate agents, advertise the sale of local completed residential
properties otherwise than by means of a sales brochure, the advertisement should
advise purchasers to refer to the sales brochure. Information given in the
advertisement must be consistent with that given in the sales brochure.
(Recommendation 10)
11.6 In respect of local
completed residential properties offered for sale in the first-hand market,
"saleable area" should mean:
(1) in relation
to any cockloft, the floor area of that cockloft measured from the interior of
its enclosing walls;
(2) in relation to any
bay window which does not extend to the floor level of a unit, the area of that
bay window measured from the exterior its enclosing walls or glass windows and
from the point where the bay window meets the wall dropping to the floor level
of a unit, but excluding the thickness of that
wall;
(3) in relation to any carparking space,
the area of that carparking space measured from the interior of its demarcating
lines or enclosing walls, as the case may
be;
(4) in relation to any yard, terrace,
garden, flat roof or roof, the area of that yard, terrace, garden, flat roof or
roof measured from the interior of their boundary lines. Where the boundary
consists of a wall, it shall be measured from the interior of that wall.
(Recommendation 11)
11.7 Where the property
includes any incorporated item in the definition (such as a cockloft, bay
window, carparking space, yards, terrace, garden, flat roof or roof), the
saleable area of each of them should be specified and described separately in
the sales literature. (Recommendation
11)
11.8 In respect of local completed
residential properties offered for sale in the first-hand market, "saleable
area" in relation to a unit enclosed by walls, should mean the floor area of
that unit (which shall include the floor area of any balconies and verandahs),
measured from the exterior of its enclosing walls except where those enclosing
walls separate two adjoining units in which case the measurement shall be taken
from the middle of those walls, and shall include the internal partitions and
columns within such unit; but shall exclude the common parts outside its
enclosing walls. Provided that if any of the enclosing walls abut onto a common
area, then the whole thickness of the enclosing walls which so abut shall be
included. (Recommendation 12)
11.9 (1) The
above mentioned definitions of saleable area should be recognised in legislation
as the standard method to describe saleable area in all sales literature in
respect of local completed residential
properties;
(2) the inclusion of saleable areas
in sales literature should be made mandatory by
legislation;
(3) any areas exempted from the
calculation of gross floor area should be excluded from the calculation of
saleable areas of the individual units. (Recommendation
13)
11.10 (1) The sales brochure should contain
floor plans which:
| (a) | specify
the external dimensions of individual units; |
| (b) | are
presented according to conventionally accepted
scales; |
| (c) | show
separately non-typical floors, the entrance floors, and the
roof; |
| (d) | show
the location, the number and the minimum dimensions of the car parking
spaces; |
| (e) | show
the orientation of the building and the location of ingress and egress
points; |
| (f) | show
the structural walls; and |
| (g) | show
any known features within the unit that would materially affect a reasonable
purchaser's enjoyment of the property, such as exposed
pipes. |
(2) The sales brochure
should also contain:
| (a) | schedules
listing the saleable area of the unit and of any bay window areas, roof areas,
flat roof areas, open yard areas, air-conditioning plant within the building,
etc; and |
| (b) | a
note that the internal area of units on the upper floors may be slightly greater
than that of the lower floors, if that is the
case. |
(3) Certified copies of the
latest approved building plans should be made available for free inspection at
the sales office during normal office
hours.
(4) There should be a legal obligation
on the developer upon completion to inform purchasers of the saleable area (as
provided by the Authorised Person). (Recommendation
14)
11.11 Where there is no right of
inspection before entering a preliminary sale and purchase agreement, the
sales brochure should contain:
| (i) | at
least details of the fittings and finishes as stated in Appendix XII B of Legal
Advisory Conveyancing Office Circular Memorandum No 40 (LACO CM
40); |
| (ii) | a
description of air-conditioners where supplied and descriptions, such as
locations, of air-conditioning plants; |
| (iii) | information
on the flush water/sewage treatment plants where they are supplied, including
information on the maintenance of the treatment plants. (Recommendation
15) |
11.12 The sales brochure
should also state the brands and countries of origin of the fittings and
finishes to be used. (Recommendation
15)
11.13 In addition, photographs of the
fittings and finishes should be shown on the sales brochure. (Recommendation
15)
11.14 If there are discrepancies between
the Chinese and English versions of the specifications of fittings and finishes
in the sales brochure, purchasers can choose which language version they rely
on. (Recommendation 16)
11.15 Where there is no right of
inspection before entering into a preliminary sale and purchase agreement
and mock-up or sample flats are provided, the mock-up of at least one flat
should be accurately representative of the actual unit in all aspects including
quality and dimensions. The Authorised Person of the development project should
certify a schedule of specifications of such mock-up flats. The developer
should have a duty to keep a record of the certified schedule. (Recommendation
17)
Location
plan
11.16 (a) A location plan should be provided in all
sales brochures. The location plan should include up-dated information on
prominent environmental features in the vicinity, eg public park, swimming pool,
refuse collection point etc.
(b) The date and
the reference number of the latest outline zoning plans at the date of printing
of the sales brochure should be stated in all sales brochures. There should
also be a note stating that outline zoning plans are subject to change and that
the latest outline zoning plans at the date of printing of the sales brochure
are available for free inspection during normal office hours at the sales
office. (Recommendation 18)
Layout
plans
11.17 All sales brochures should provide a layout
plan drawn to scale, showing communal facilities (and their completion dates if
possible) undeveloped land and its intended and permitted use within the
boundary of the development and the scale used. The layout plans provided in
sales brochures should be the latest approved plans at the date of printing of
the sales brochure. The expected completion dates of communal recreational
facilities should be included in the layout plans. (Recommendation
18)
Uses of
land
11.18 (a) If there are specific covenants in the
Government Lease requiring the developer to put land inside or outside the
boundaries of the development to particular uses, the developer should state
accurately those particular uses in the sales literature.
(b) The developer should be required to
state accurately in the sales brochure the intended uses of the land within the
boundaries of the development which are known to the developer at the date of
printing of the sales brochure.
(c) Except for
specific uses required of developers by the terms of the Government Lease,
developers should not be required to disclose the intended uses of land outside
the boundaries of the development.
(d) If the
developer chooses to disclose in the sales literature any information about the
use of land outside the boundaries of the development, the information so
disclosed must be accurate at the date of printing of the sales literature.
(Recommendation 18)
11.19 Artistic
impressions in whatever form should give accurate representations of the
surroundings of the property development. (Recommendation 19)
11.20 The sales brochures should give the
following details about the clubhouse and other facilities in the
development:
| (i) | whether
they are communal
facilities; |
| (ii) | who
has
ownership; |
| (iii) | who
has responsibility for their management;
and |
| (iv) | the
duration of the management. (Recommendation 20) |
11.21 All sales brochures should state the
date of completion of sale and purchase and the date of vacant possession. The
dates need not be expressed in terms of actual dates in the calendar. Instead,
they can be expressed by reference to a time frame, such as, a certain period of
time from the signing of the ASP. (Recommendation
21)
11.22 If any of the payment terms is
dependent on the occurrence of a contingent event (such as execution of the
assignment), the sales brochure or the price list should state the date of the
happening of that event. (Recommendation 21)
11.23 Where developers impose any fees or
charges on transfer of title from the original purchaser to a sub-purchaser, or
on the cancellation of the purchase agreement, the amount of such fees or
charges and the procedures for transfer should be specified clearly in the sales
brochure. (Recommendation 22)
11.24 (a) Where
the developer quotes in any sales literature or advertisement a list of banks
providing initial finance, the sales literature should contain a general
description of the finance schemes available from the banks so quoted. Where
the interest is specified, it should be the rate per
annum.
(b) Where the developer arranges
finance, whether solely or to top up other loans, details of those facilities
and the interest rates per annum should be disclosed in the sales
literature.
(c) Where the developer provides
initial finance but later arranges for replacement finance, purchasers should be
informed in the sales literature of the possibility of the costs of replacement
finance which may be passed to them. (Recommendation 23)
11.25 The rate of interest per annum chargeable under
the ASP for late payment of any part of the purchase price should be stated in
the sales literature. (Recommendation
24)
11.26 There should be a cooling-off period
of three working days after signing the preliminary agreement for local
completed residential properties in the first-hand market. A purchaser can
elect to cancel the preliminary agreement within the cooling-off period subject
to forfeiture of five percent of the purchase price or the amount of the
preliminary deposit, whichever is the lower. (Recommendation
25)
11.27 Sales brochures should state that
the preliminary agreement or Memorandum for Sale is subject to a cooling-off
period of three working days after signing the preliminary agreement. Sales
brochures should also state that a purchaser can elect to cancel the preliminary
agreement within the cooling-off period subject to forfeiture of five percent of
the purchase price or the amount of the preliminary deposit, whichever is the
lower. (Recommendation 26)
11.28 If there is no right of inspection
prior to signing of the preliminary agreement, the purchaser of a completed
residential unit in the first-hand market should not be liable to forfeiture of
his preliminary deposits where he takes advantage of the cooling-off period to
cancel the preliminary agreement. (Recommendation 27)
11.29 Sales literature should state the
duration of the Defect Liability Period and when it will start to run.
(Recommendation 28)
11.30 If the developer is wound up, the
benefits of any warranties made to the developer by contractors should be passed
on to the Owners' Corporation or the Manager of the development.
(Recommendation 29)
11.31 Notwithstanding any
term in the building contract between the developer and the contractor
prohibiting the assignment of the developer's rights against the contractor, the
purchasers should have the right to take direct legal action against the
contractor for any defects in the units.
(Recommendation 29)
11.32 Sales brochures
should state the salient provisions of the Deed of Mutual Covenant (DMC). The
list should include those clauses in the DMC imposing financial obligations and
those touching upon everyday usage of the property. (Recommendation
30)
11.33 The developer should deposit copies
of the English and Chinese versions of the DMC at the sales office or the
solicitors' office for free inspection during normal office hours. The sales
brochure should contain a statement to the effect that the English and Chinese
versions of the DMC are so available for inspection. (Recommendation
31)
11.34 If there is actual or potential
responsibility for maintaining private slopes, there should be clear
notification to purchasers in the sales brochure of that responsibility. The
sales brochure should also disclose any existing notice from the authorities to
repair and maintain private slopes at the date of its printing. Moreover, if
there is responsibility in the Government Lease for maintaining private slopes,
that responsibility should be spelt out in the sales brochure. (Recommendation
32)
11.35 If an uncompleted development has a DMC, developers
should have an obligation to keep its terms unchanged when the development later
becomes completed with the issue of the occupation permit. (Recommendation
33)
11.36 Sales brochures should state the
following:
| (1) | the
permitted uses of the individual units as stated in the approved building plans,
together with any restrictions on use contained in the Government lease or
Conditions of Grant of the land; |
| (2) | the
original term of the Government lease and its date of
expiry; |
| (3) | the
rent provisions in the Government lease; and |
| (4) | that
the renewed Government rent may be an apportioned amount of three percent of the
rateable value of the building. (Recommendation
34) |
11.37 Sales brochures should
also contain a general notification to the effect that the Government lease will
impose various financial obligations on purchasers and that they are advised to
consult their professional advisers accordingly. (Recommendation
34)
11.38 The price lists of all units offered for sale should be
made available to prospective purchasers by developers or their estate agent
prior to the payment of any reservation fee or the signing of any preliminary
agreement. We recommend that if developers advertise that a certain number of
units will be offered for sale, that number of units should be available for
sale to the public. (Recommendation 35)
Name of main
contractors, Authorised Person and his firm
11.39 The names of the main contractors and the
Authorised Person and his firm should be disclosed in the sales brochure.
For the present purpose, the Authorised Person means the
person occupying that position at the time of printing of the sales brochures.
(Recommendation 36)
Responsibility for
transaction fee
11.40 Whenever the sales literature contains
information about the prices of the units, it should also state with whom the
responsibility for legal costs and stamp duties lies. (Recommendation
37)
Scales of legal costs
and stamp duties
11.41 Information on the scales of legal costs (if
any) and stamp duties should be provided by developers to purchasers upon
request and a note to this effect should appear in the price list or other sales
literature containing information about the prices of the units.
(Recommendation 37)
Date of printing of
sales brochure
11.42 The sales brochure should carry its date of
printing. (Recommendation 37)
Supplementary charges
upon taking possession
11.43 The sales brochure should provide an itemised
list of supplementary charges payable by purchasers upon taking possession of
their units. If the exact amounts of such charges are unknown, the obligation
to pay them should be disclosed in the sales brochure. (Recommendation
37)
Licence fee to
Government and charges for right of way
11.44 Where applicable, the sales brochure should
state any way leave charges, licence fees or waiver fees payable to Government
for water supply/drainage system going through Government land and/or pump room
situated on Government land and any fees or charges payable to adjoining lot
owners for right of way or easements. The amount of such charges or fees should
also be stated, if known. (Recommendation 37)
Car park
spaces
11.45 The sales brochure should contain a description of the
car park spaces within the development, including their respective numbers for
sale, for rent, and those for visitors. If the developer has not yet decided at
the date of the printing of the sales brochure any of these matters, the sales
brochure should clearly state this fact. Moreover, any descriptions of car park
spaces in the sales brochure should be binding on the developer.
(Recommendation 38)
11.46 Our recommendations on local
completed residential properties sold in the first-hand market should be
enforced by legislation. (Recommendation
39)
11.47 The proposed legislation should have
the following features:
| (1) | Fines
should be sufficiently high to be an adequate
deterrent; |
| (2) | Civil
remedies should be available to enable purchasers to claim damages for loss
suffered as a result of a breach of the proposed legislation. A breach of the
proposed legislation should be a statutory tort. This remedy of damages for
breach of the proposed legislation should only be available to purchasers and
sub-purchasers but not to potential purchasers. (Recommendation
39) |
11.48 There should be clear
provisions in the new legislation that nothing in the legislation will detract
from the rights of the purchaser under the ASP, and that no clauses in the ASP
will detract from the statutory remedies in the legislation. (Recommendation
39)