Hong Kong Law Reform Commission

Annex II - Relevant text of Legal Advisory Conveyancing Office Circular Memorandum No 40

(Reproduced by permission of the Legal Advisory
and Conveyancing Office Lands Department)

Lands Department Consent Scheme for
Sale of Units in Uncompleted Private Residential Developments
(Excluding Private Sector Participation Scheme,
Sandwich Class Housing Scheme and Flat for Sale Scheme)

The Lands Department Consent Scheme was introduced by the Government in 1961. The current purposes of the Consent Scheme are:

(i) to allow for the entry into agreements for sale and purchase of flats in uncompleted developments, ensuring that arrangements are in place for the completion of the construction of those flats;

(ii) to provide for fair practice in the sale and purchase of uncompleted units in developments; and

(iii) to give effect to Government policy in promoting a healthy property market.

2. Under the Scheme, if the Government Grant so requires, the developer must apply to the Director of Lands (“the Director”) for his consent if he wants to sell the units in an uncompleted development before a Certificate of Compliance is issued. In order to obtain the Director’s consent, the developer, through a solicitor who submits the application on his behalf, must satisfy all the requirements imposed by the Director (previously the Registrar General (Land Officer)). These requirements have been set out in a number of Land Office Circular Memoranda and Legal Advisory and Conveyancing Office Circular Memoranda.

3. As the social and economic environment has changed over time, and in response to changes in Government policies and recommendations made by community organizations (such as the Law Society, Real Estate Developers’ Association and the Consumer Council), such requirements have from time to time been revised. Circular Memoranda were revised or cancelled and new ones were issued. Solicitors for the developers have to refer to different Circular Memoranda for the up-to-date instructions and may find it confusing as to which instructions still prevail today. This has occasionally led to them experiencing difficulties resulting in delay in their complying with the procedures in order to obtain the Director’s consent. To improve efficiency, it has been decided to issue a single Circular Memorandum to cover all the current instructions still in force so that the legal profession and their developer clients will have a handy reference for the current rules of the Scheme.

2

4 The purpose of this Circular Memorandum is to consolidate all the prevailing rules and instructions currently governing the Lands Department Consent Scheme in relation to the sale of units in uncompleted private residential developments (excluding the Private Sector Participation Scheme (“PSPS”), Sandwich Class Housing Scheme and Flat for Sale Scheme). Where appropriate, the wording of Circular Memoranda replaced by this Circular Memorandum has been amended to assist in an easier understanding of the current prevailing rules and instructions. The current rules and instructions are contained in the Annex to this Memorandum. Separate consolidated Circular Memoranda will be issued in due course for sales of units in subsidized housing and commercial developments and for approval of Deeds of Mutual Covenant.

5 Inevitably, the rules and instructions cannot be exhaustive. I wish to emphasize that the Director may in individual cases impose such other or varied conditions as he may deem appropriate depending on the exact nature and circumstances of the many and, sometimes, complex developments involved, while at the same time bearing in mind the objectives of the Scheme. However, this Circular forms the essential framework on which consents will be issued.

6 The rules contained in this Circular Memorandum will, as has been done in the past, be reviewed from time to time. Consolidating Circular Memoranda will then be issued and the relevant files on Lands Department website www.info.gov.hk/landsd/ will be updated. Every effort will be made, as with this Memorandum, to issue these Memoranda in a user-friendly format.

7 The Land Office Circular Memoranda and Legal Advisory and Conveyancing Office Circular Memoranda for the Lands Department Consent Scheme specified below in so far as they relate to sale of units in uncompleted private residential developments (excluding PSPS, Sandwich Class Housing Scheme and Flat for Sale Scheme) are hereby replaced by this Memorandum :-

(Relevant text of Appendix XII to LACO Circular Memorandum No 40)

Information To Be Incorporated In A Sales Brochure

1. Introduction

General description of development; the identity of the intended manager, if known.

2. Location Plan

Including up-dated information on prominent environmental features in the vicinity, e.g. public park, swimming pool, refuse collection point etc.; intended user of surrounding areas, if known.

3. Layout Plan Drawn to Scale

Including communal facilities (and their completion dates if possible); undeveloped land and its intended use within the boundary of the development; the scale used.

4. Salient Points of Government Lease

Including lot number; lease term; user restrictions on the lot; onerous lease conditions (if any) which would restrict purchasers usual legal rights.

5. Detailed Plan of a Typical Floor

Showing all principal external dimensions of the unit; external dimensions of individual compartments in each unit; the scale used, a note informing prospective purchasers (i) the internal areas of units on upper floors will generally be slightly larger than lower floors due to the reducing thickness of structural walls on upper floors (ii) if there are special fittings/features affecting the enjoyment of the owner of a unit (e.g. exposed pipes) (the location of such special fittings/features should be specified).

In case there is any non-typical floor, a separate floor plan should be shown.

6. Schedule of Flat Size

Indicating size of each unit in standard saleable area (Appendix A), areas of bay windows, roofs, flat roofs and open yards (if any) should be specified separately.

7. Fittings and Finishes

Refer to Appendix B.

8. Anticipated Completion Date of the Building

2

9. Salient Points of DMC

Including definition of common areas; terms of appointment of Manager; principle/basis of fixing management fee; management fee deposit; a note informing prospective purchasers that a full script of the DMC is available upon request.

10. Carpark

Specify the location, number and the minimum dimensions of the carparks.

11. Miscellaneous Payments upon Delivery of Unit

Including debris removal deposit, reimbursement to vendor for water/electricity/gas deposit (inform purchasers of the obligation to pay such fees even though the exact amount is unknown)

12. Date of Printing of Sales Brochure

13. Names of Contractors and other Authorized Persons

14. Maintenance of Slopes

If the Government Grant requires the owners to maintain at their expense any slopes within and/or outside the lot, a note informing prospective purchasers of such requirement and that under the Deed of Mutual Covenant the Manager is to be given full authority by all the owners to carry out the necessary slope maintenance works in accordance with all guidelines issued from time to time by the appropriate government department and each owner will be obliged to make contributions towards the costs of such works. A plan showing the slopes and any retaining walls or other related structures already constructed or to be constructed within and/or outside the lot should be included in the sales brochure.

15. Cashier Order

The sales brochure should contain a prominent statement that the cashier orders tendered by applicants at the time of registration will be encashed and the proceeds thereof held or refunded by the stakeholders without interest.

16. Cancellation Agreement

The sales brochure should contain a prominent statement that in the event of the vendor, at the request of the purchaser, agreeing (at his own discretion) to cancel the sale and purchase or the obligations of the purchaser thereunder, the vendor will retain the sum of 5% of the total purchase price of the unit (and any parking space) in addition to payment by the purchaser of all legal costs, charges or disbursements (including stamp duty, if any) incurred by the vendor in connection with the cancellation of the sale and purchase.

A Recommended List Of Fittings And Finishes In A Development

EXTERIOR

External Walls

The type of external finishes

Windows

The material of the frames and glass

Bay Windows

The material and windowsill finishes of the bay windows

Planter

The type of finishes of the planters

Verandah/Balcony

The type of finishes and whether the verandah/balcony is covered or not

Drying Facilities for Clothing

The type and material of the drying facilities for clothing

INTERIOR FINISHES

Lobbies

The type of wall, floor and ceiling finishes in the lobbies

Internal Walls and Ceilings

The type of bedroom and living/dining room wall and ceiling finishes

Floors

The material of the floor and skirting of the bedrooms and the living/dining rooms

Bathroom

The type of wall, floor, and ceiling finishes and whether the wall finishes run up to the ceiling

Kitchen

The type of wall, floor, ceiling, and cooking bench finishes and whether the wall finishes run up to the ceiling

INTERIOR FITTINGS

Doors

The material, finishes and accessories of the doors (especially the entrance door to each individual unit)

Bathroom

The type and material of the fittings and equipment in the bathroom; the water supply system; bathing facilities i.e. shower or bath tub and size of bath tub if applicable

Kitchen

The material of the sink unit; the water supply system; the material and finishes of the kitchen cabinets; the type of all other fittings and equipment in the kitchen

Bedroom

The type and material of all the fittings (such as wardrobes) in the bedroom

Telephone and Aerials

The locations and number of such utilities

Electricity

Details of the fittings including safety devices, concealed or exposed conduits, the location and number of power points, sockets, air-conditioner points etc.

Gas/Electricity Supply

The type, system and location of the gas/electricity supply

Washing Machine Connection Point

The location and design of the washing machine connection point

Water Supply & Pipes

The material of the water pipes, whether they are concealed or exposed and whether hot water is available etc.

SECURITY FACILITIES

A description of security services including details of all built-in provisions and their locations

MISCELLANEOUS

Lifts

The country of origin/brand name of the lifts and whether the lifts serve all floors

Letter Box

The letter box material

Refuse Collection

The means of refuse collection, location of refuse room etc.

Water/Electricity/Gas Meters

The location of the meters and whether there are separate or communal meters of individual apartments

N.B.

(1) If the country of origin/brand name is mentioned, the developer should undertake that materials of comparable quality will be used if the intended source becomes unavailable.

(2) Mock-up units of accurate size and structural layout should be set up wherever possible.

(Text of Appendices XIII and XIV to LACO Circular Memorandum No 40)

Appendix XIII

Information To Be Incorporated In A Price List

1. Price of individual units

2. Purchase procedure

3. Payment terms

4. Responsibility for legal fees

5. Administration charges for execution of any documents

6. Instalment payment methods and interest rates in case of restricted choice of mortgage

7. Number of units available for sale

Appendix XIV

Information To Be Disclosed Upon Request

1. Charges for conveyancing and mortgage, stamp duties

2. A complete set of up-dated layout plans (if any) and building plans as approved by the Building Authority under the Buildings Ordinance

3. Full script of the form of DMC as approved by LACO