HKLII

Hong Kong Law Reform Commission
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Chapter 6 - Summary of recommendations on completed units sold in the second-hand market


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This chapter gives a summary of recommendations made for completed units sold in the second-hand market.

6.1 "Completed residential property" should refer to residential units in respect of which there is an Occupation Permit under the Buildings Ordinance or, in the case of the Housing Authority's Home Ownership Scheme, in respect of which the completion certificate has already been issued by the Director of Housing. This definition should be suitably modified in the case of exempted houses in the New Territories. (Recommendation 1)

6.2 The introduction of a Vendor's Information Form for the sale of completed residential properties in the second-hand market. Relevant bodies in Hong Kong should be encouraged to make Vendor's Information Form a market practice in the near future. The Government should monitor the situation at some stage later. Unless a market practice can be established by then, the Government should introduce legislation making it compulsory to provide a Vendor Information Form. (Recommendation 2)

6.3 A vendor must make available a Vendor's Information Form when his unit is put on the market (whether through an estate agent or not). The proposed Vendor's Information Form should contain at least the following warning clauses and property particulars:

Warning clauses

lIt is only a summary of the main terms.

lIt does not explain everything and purchasers should take legal advice.

lCircumstances may have changed since the date of the Vendor's Information Form.

lThe purchaser should inspect the property before making an offer to buy.

lThe state of repair and physical condition is not given. The purchaser should inspect the property and consult his professional advisors.

lBefore making an offer to buy, the purchaser should make sure that the required borrowing will be readily available.

lIt is a legal document and that the vendor will bear responsibility for its accuracy.

Property particulars

lThe seven property particulars currently to be supplied by estate agents under section 36(2)(a) to (g) of the Estate Agents Ordinance.

lDetails of the saleable area and any other statutory measurement methods that may eventually be enacted by the proposed Sales Descriptions of Uncompleted Residential Properties Bill.

lThe availability of services known to the vendor (such as water (fresh/sea), drainage, gas (what kind) and electricity).

lThe management fees for the current month.

lState the amount of Government rent so far as it is possible.

lAny notice received by the vendor from the Government, management office, neighboring properties, or any relevant authority of expenditure requiring contribution from the owners.

lState whether there is an owners' corporation and, if so, its name, and the name of the management company.

lAny pending litigation known to the vendor affecting the property.

lA statement to the effect that the vendor will vacate the property and hand over vacant possession upon completion of the sale and purchase and that the property will then be free from mortgages and subsisting tenancies. However, if there are subsisting tenancies, the terms of those tenancies should be spelt out.

lMake reference to any septic tank if it is being used.

lState whether or not the vendor is operating under a Power of Attorney. (Recommendation 2)

6.4 The vendor be required to update the information in the Vendor's Information Form if he knows of changes subsequent to the date of its preparation. (Recommendation 2)

6.5 If the Government should decide to make Vendor's Information Form compulsory, the Government should embark on a review of the Estate Agents Ordinance with a view to reconciling the disclosure duties of the vendor and the estate agent. (Recommendation 2)

6.6 The Administration should consider exploring the option of establishing a centralised property information system. (Recommendation 3)

6.7 The preliminary agreement for the purchase of second-hand completed flats should contain a standard clause giving the purchaser a cooling-off period of three working days. In exercising the right to rescind the preliminary agreement during the cooling-off period, the purchaser is liable to forfeit to the other party of an amount equal to five percent of the purchase price or the preliminary deposit whichever is the lower. The purchaser should not have the right to sub-sell during the cooling-off period. (Recommendation 4)
6.8 The standard clause allowing a three-day cooling-off period to purchasers should be implied by legislation into preliminary agreements for sale and purchase of second-hand completed residential properties. (Recommendation 5)