HKLII

Hong Kong Law Reform Commission
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Chapter 7 - The importance of public education

7.1 We take the view that the best way to protect purchasers is for purchasers themselves to exercise due care before entering into a transaction. In this respect, public education is very important. There was general support in the public responses for Government to launch publicity programmes to educate the public on the need to exercise due care in buying properties.

7.2 One submission commented that many purchasers are misled by the name of the preliminary agreement. Purchasers believe that the preliminary agreement is not important because their solicitors will finalise the terms of the deal for them. It was pointed out in the submission that this misconception is sometimes reinforced by estate agents who tell the parties that, if they have any special requirements, they can ask their solicitors to negotiate with the solicitors for the other party later. The true position is, however, that if the special term is not in the preliminary agreement, it will be difficult for the solicitors later to incorporate such a term in the formal agreement.

7.3 The submission therefore suggested that parties should be reminded that the preliminary agreement is a binding agreement and, once signed, its terms cannot be changed without the agreement of the other party. If the parties have any specific requirements, they should require them to be included in the preliminary agreement or consult their solicitors before signing the preliminary agreement. We agree with the suggestion and have included it in our recommendation.

Recommendation 41

We recommend that the Government should launch publicity programmes to educate the public on the need to exercise due care in buying properties. The publicity programmes should alert the public to the need to:
  • Be aware that the purchaser may not be able to obtain the financing advertised.
  • Note and report defects in the property as soon as possible and in any event within the Defect Liability Period.
  • Check carefully the Deed of Mutual Covenant as it is an important document.
  • Check the land uses carefully.
  • Consider the inherent risks if it is a confirmor sale.
  • Take note of the charge of Government rent in certain developments.
  • Include any specific requirements of the parties in the preliminary agreement, or consult their solicitors before signing the preliminary agreement, because it is a binding agreement which cannot be changed later without the consent of the other party.